FCC Termination for Convenience & Default 1 — Questions and Answers
Question 1: Under FAR Part 49, which type of termination allows the government to stop work on a contract for any reason, even without contractor fault?
- Termination for Default
- Termination for Convenience (Correct answer)
- Termination for Cause
- Mutual Termination
Correct answer: Termination for Convenience
Termination for Convenience (FAR Part 49) allows the government to terminate a contract at any time without fault on the contractor's part.
Question 2: When a contract is terminated for default, what is the contractor generally entitled to receive?
- The full contract price including unfinished portions
- Compensation only for work completed and accepted before termination (Correct answer)
- A settlement including overhead and profit on uncompleted work
- Full termination settlement costs plus anticipated profits
Correct answer: Compensation only for work completed and accepted before termination
In a termination for default, the contractor receives payment only for work completed and accepted prior to termination, with no settlement costs or anticipated profits.
Question 3: What is the minimum cure notice period a Contracting Officer must provide before terminating a contract for default due to a contractor's failure to perform?
- 5 calendar days
- 10 calendar days (Correct answer)
- 15 calendar days
- 30 calendar days
Correct answer: 10 calendar days
FAR 49.607 requires the Contracting Officer to issue a cure notice giving the contractor at least 10 days to cure the failure before a default termination.
Question 4: Under FAR Part 49, which of the following is NOT an allowable cost in a termination for convenience settlement?
- Costs of settling subcontractor termination claims
- Costs incurred in performance of work before termination
- Reasonable profit on work performed before termination
- Anticipated profits on the terminated portion of work (Correct answer)
Correct answer: Anticipated profits on the terminated portion of work
Anticipated profits on terminated work are not allowable in a termination for convenience settlement; only actual costs and reasonable profit on work performed are recoverable.
Question 5: A 'show cause' notice is typically issued by the Contracting Officer when the contractor:
- Requests a contract modification for additional funding
- Is in imminent danger of failing to meet a delivery schedule (Correct answer)
- Has exceeded the contract's not-to-exceed ceiling
- Fails to submit required monthly progress reports
Correct answer: Is in imminent danger of failing to meet a delivery schedule
A show cause notice is issued when the contractor is in danger of defaulting, requiring the contractor to explain why the contract should not be terminated for default.
Question 6: Which FAR clause is typically included in fixed-price contracts to authorize the government to terminate for convenience?
- FAR 52.249-1 (Correct answer)
- FAR 52.212-4
- FAR 52.215-2
- FAR 52.203-3
Correct answer: FAR 52.249-1
FAR 52.249-1 (Termination for Convenience of the Government — Fixed-Price) is the standard clause authorizing government termination for convenience in fixed-price contracts.
Question 7: When a contractor believes a termination for default was improper and a court or board later agrees, what is the legal effect?
- The contract is reinstated and work must resume immediately
- The termination is converted to a termination for convenience (Correct answer)
- The contractor receives punitive damages from the government
- The contracting officer is held personally liable for the error
Correct answer: The termination is converted to a termination for convenience
If a termination for default is found to be improper, it is converted to a termination for convenience, entitling the contractor to a full convenience settlement.
FCC Termination for Convenience & Default 1
Under FAR Part 49, which type of termination allows the government to stop work on a contract for any reason, even without contractor fault?