Termination for Default

April 13, 2006

	Visited: 118
	Not rated
	Rate:

A termination for default (T for D) means that the government believes that you, the contractor, have not performed in accordance with the terms of the contract.

The government may terminate all or part of a contract for anything that was done that was not in the interest of the government, including:

Attempted fraud
Failure to meet quality requirements
Failure to deliver the supplies or perform the services within the time specified in the contract
Failure to make progress and that failure endangers performance of the contract
Failure to perform any other provisions of the contract.

Cure Notice. Before terminating a contract for default because of your failure to make progress or to perform, the contracting officer will usually give you a written notice, called a "cure notice." That notice allows you at least 10 days to cure any defects. Unless the failure to perform is cured within the 10 days, the contracting officer may issue a notice of termination for default.

Show-Cause Notice. If there is not sufficient time for a cure, the contracting officer will usually send a show-cause notice. That notice directs you to show why your contract should not be terminated for default. It ensures that you understand your predicament, and your answer can be used in evaluating whether circumstances justify default action.

Upon termination for default, you are entitled to payment on the contract only for items accepted by the government. Under a default clause, the government has the right to repurchase the item elsewhere and charge any excess re-procurement costs to the contractor.

Excusable Failure To Perform. If you can show that your failure to perform the contract is excusable, your contract cannot be terminated for default. To be excusable, the failure must be beyond your control and not caused by your fault or negligence.

Examples of excusable failure include:

Acts of God
Acts of a public enemy
Acts of government
Fires
Floods
Epidemics
Quarantine restrictions
Strikes
Freight embargoes
Unusually severe weather

Here's a happy thought! If, after termination, you are found not to be in default or the default is found to be excusable, the termination will be treated as one for the convenience of the government. This means that not only will you have removed the tarnished image that a T for D gives a contractor, but you will also get some of your money back as well!