Termination for Cause

Nonconformance of Supplies/Services (Refer to FAR 8.406-3)

If a contractor delivers a supply or service, but it does not conform to the order requirements, the ordering activity shall take appropriate action in accordance with the inspection and acceptance clause of the contract, as supplemented by the order.

If the contractor fails to perform an order, or take appropriate corrective action, the ordering activity may terminate the order for cause or modify the order to establish a new delivery date (after obtaining consideration, as appropriate). Ordering activities shall follow the procedures in FAR 8.406-4 when terminating an order for cause.

The contracting officer must send a cure notice prior to terminating an order for a reason other than late delivery. A cure notice is not needed when the reason for termination is late delivery.

If the time remaining in the order delivery schedule is not sufficient to permit a realistic cure period of 10 days or more, the cure notice should not be issued and the performance period should be allowed to expire. The cure notice should:

Once the contractor receives the cure notice, he/she has the opportunity to remedy the problem.

An ordering activity contracting officer may terminate individual orders for cause. The ordering activity shall notify the Schedule contracting officer of all instances of termination for cause of individual orders or if fraud is suspected. If the contractor asserts that the failure was excusable, the ordering activity Contracting Officer shall follow the procedures in FAR 8.406-6, as appropriate.

The ordering activity Contracting Officer must report any terminations for cause to FAPIIS. See FAR 8.406-4(e) and 42.1503(f).

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NUTS AND BOLTS TIP
Only the Schedule Contracting Officer may modify the Schedule contract to terminate any or all supplies or services covered by the Schedule contract for cause (refer to FAR 8.406-4(d)).

Government’s Best Interest

The contracting officer should exercise the ordering activity’s right to terminate an order for cause only when such a termination would be in the best interests of the government. The ordering activity Contracting Officer should consult with legal counsel prior to terminating for cause.

When a termination for cause is appropriate, the ordering activity Contracting Officer must send the contractor a written notification regarding the termination. The ordering activity sends a Notice of Termination for Cause to the Schedule contractor. The Schedule contractor must immediately stop work.

If the Schedule contractor asserts that the failure that led to the Schedule order termination for cause was excusable, the ordering activity Contracting Officer must follow the appropriate procedures for dispute resolution.

If a repurchase order is placed, the ordering activity sends copies of the order to both new and terminated contractors and, if appropriate, collects excess repurchase costs from the terminated Schedule contractor.

Termination for Cause Notification to GSA

The ordering activity must notify the GSA Schedule Contracting Officer in all instances where an ordering activity Contracting Officer has terminated a GSA Schedule order for cause or suspected fraud. The GSA Contracting Officer information is located at www.gsaelibrary.gsa.gov. A search can be conducted for the contractor by name or contract number and a link can be followed to the contractor information page.

FAR 8.406-4, Termination for Cause

Termination for cause shall comply with FAR 12.403 and may include charging the Schedule contractor with excess costs resulting from repurchase.

If the contractor is charged excess costs, the following apply:

The notice shall include the following information about the terminated order:

The notice shall also include the following information about the purchase contract:

Only the Schedule Contracting Officer may modify the contract to terminate for cause any or all supplies or services covered by the Schedule contract. If the Schedule Contracting Officer has terminated any supplies or services covered by the Schedule contract, no further orders may be placed for those items. Orders placed prior to termination for cause shall be fulfilled by the contractor, unless terminated for the convenience of the government by the ordering activity Contracting Officer.