FAR 52.249-2 — Termination for Convenience of the Government (Fixed-Price)
Allows the government to terminate all or part of a fixed-price contract for its convenience and pay the contractor reasonable settlement costs.
When This Clause Applies
Required in fixed-price contracts above the simplified acquisition threshold. Variants exist for cost-reimbursement (52.249-6) and commercial items (in 52.212-4).
What This Means for Contractors
The government can walk away from the contract at any time without breach liability. The contractor is entitled to (1) the contract price for accepted items, (2) costs incurred on unaccepted work, and (3) a reasonable profit on work performed. Settlement proposals must be submitted within 1 year of the termination notice.
Common Pitfalls
- 1Not stopping work immediately upon termination notice (limits cost recovery)
- 2Missing the 1-year deadline for settlement proposal submission
- 3Inadequate accounting records to support termination costs
- 4Overlooking subcontractor settlement claims that must be passed through
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