Termination for Cause
- FAR Subpart 8.406-4
- The ordering activity has the right to terminate all or part of an order when the
contractor defaults or fails to comply with any of the contract terms and
conditions, or fails to provide the government, upon request, with adequate
assurances of future performance.
- Ordering activity must notify GSA when:
- Schedule order is terminated for cause
- Fraud is suspected
According to the termination for cause terms in FAR 52.212-4 (Deviation) and FAR
52.212-4 (Alternate I) (Deviation), the ordering activity reserves the right to terminate the
order, or any part thereof, for cause:
- In the event of any default by the contractor
- If the contractor fails to comply with any contract term or condition
- If the contractor fails to provide the government (upon request) with adequate
assurances of future performance
Schedule orders cannot be terminated for cause if it is determined that a Schedule
contractor has a valid excusable failure.
The ordering agency is not liable for any services or supplies not accepted.
The contractor is liable for all rights and remedies provided by law. The government’s
preferred remedy is to acquire similar items from another contractor and to charge
the defaulted contractor with any excess repurchase costs and any incidental or
consequential damages incurred due to the termination.
If the termination remedy is repurchase, and the terminated contractor is charged
any excess costs, the ordering activity must repurchase at the lowest price possible,
considering the quality required by the government, delivery requirements, and
When excess costs are anticipated, the ordering activity may withhold funds due to
the contractor as offset security. Ordering activities must minimize excess costs to be
charged against the contractor and collect or set-off any excess costs owed.
If an ordering activity is unable to collect excess repurchase costs, it must notify the
Schedule contracting office after final order payment to the contractor.