Once the contract agent has given notice of termination, a Termination Contract Agent (TCO) may be appointed to manage the termination. The TCO is responsible for negotiating an agreement with the Contractor, including, where applicable, a free agreement. Clause in FAR 52.212-4 allows the government to terminate a contract for commercial items, either for government reasons or for cause. However, paragraphs 52.212-4 entitled “Termination for Government Reasons” and “Termination for Cause” contain concepts that differ from those of the termination clauses prescribed in Part 49. Therefore, the requirements of Part 49 do not apply to the termination of contracts for commercially available goods. However, contract agents may continue to use Part 49 as a guide, provided that Part 49 does not conflict with FAR 12.403 and the wording of the termination paragraphs in 52.212-4. The contractor benefits from the preparations and work performed for the terminated portion of the contract, but not from the processing costs. Anticipated profits and consequential damages are not allowed. When determining the total permissible slaughter rate, account may be taken of the effort made by the supervisor in dealing with subcontracts. Various other factors that can be taken into account when negotiating or determining profit are listed in the FAR. A profit is not allowed if it appears that the contractor would have suffered a loss if the entire contract had been concluded. Therefore, an adjustment for this loss of the settlement amount is required.

The contract agent should exercise the government`s right to terminate a commercial property contract, either for reasons of convenience or for cause, only if such termination would be in the best interests of the government. The contract agent should consult the lawyer before dismissal for cause. Once the decision on the notice of termination has been made, the Contractor should, to the extent possible, inform the Contractor in writing of the possibility of termination. The notice will also refer to the Contractor`s contractual obligations and ask the Contractor to provide a reason why the Contract should not be terminated for default. The notification may also indicate that the contractor`s failure to make a declaration may be regarded as an admission that there is no valid declaration. If applicable, the contractor may be invited in the notice to discuss the matter at a conference. A format for a notification about the cause of a show is 49,607. The Contractor unconditionally waives all costs against the Government due to the termination of the Contract and releases the Contractor, except as set forth below, from all obligations under the Agreement or as a result of its termination.

The Government agrees that all obligations under the Agreement be entered into, with the exception of the following: [List of rights and responsibilities reserved or excluded. See 49.109-2 and 49.603-1(b)(7).] The termination guidelines for contracts for commercial and non-commercial items under simplified procurement procedures state that the government is not liable to the contractor for any amount. However, the Contractor is liable to the Government for all rights and remedies provided by law. If the supplies or services are still required after termination, the government`s preferred remedy is to purchase the same similar supplies or services from another source and charge the defaulting contractor for the excess replacement costs. The Contractor should: The “Demonstrate Cause” notice is issued if there is not enough time in the delivery schedule to resolve the issue (usually 10 days) or if the Contractor has not responded to a healing notice already sent. The Notice of Justification warns the Contractor of the consequences of a termination and asks the Contractor to “demonstrate the reason” why the Contract should not be terminated. See the format for a clue about the cause of the show under FAR 49.607. Termination for cause is very similar to a common law violation in which a party fails to comply with its obligations. .