Termination for Default FAR
Cure Notice & Show Cause Letter – Letter of Concern
FAR 49.607 Delinquency Notices
Termination for Default under the FAR. U.S. Government Contracts. Cure Notice vs Letter of Concern. Termination for Default Consequences. Lawyer.
Termination for Default – FAR. Federal Acquisition Regulation (FAR) 49.607 authorizes the Contracting Officer to issue two types of Delinquency Notices under U.S. Government contracts: Cure Notice and Show Cause Letter. A contractor may receive one – or both – of these notices under its contract. These notices are frequently precursors to Government TERMINATION FOR DEFAULT or CAUSE of the contract. The consequences of a Government contract termination for default are severe – the are both monetary (damages) and non-monetary (survival of your business) impacts.
Regardless of which notice is received, it requires IMMEDIATE action by the contractor. It is HIGHLY RECOMMENDED that you hire a termination for default lawyer at such time.
IMPORTANT NOTE : If your Government contract was awarded under FAR Part 12 – Acquisition of Commercial Items – then your contract will contain the clause at FAR 52.212-4. Paragraph (m) of this clause is entitled Termination for Cause, and this is the type of termination you will be facing. If your contract was awarded under FAR Parts 14 – Sealed Bidding – or Part 15 – Contracting by Negotiation, then your contract will contain the clause at FAR 52,249-8 Default (Fixed-Price Supply and Service) or FAR 52.249-10 Default (Fixed-Price Construction), and this will be the type of termination you will be facing.
While the terminology is different – use of the word cause vs default – the procedures are very similar and the results are the same: very bad.
Jeffrey Giancola, the Principal, is a cum laude graduate of Columbia University and received his law degree from the University of Virginia. He is a member of the State of Maryland Bar and has 30 years of experience in the Government procurement field. This firm focuses exclusively on U.S. Federal Government contract matters and has a nationwide practice. We can also assist with overseas U.S. Government contracts. Small Business Government contracting lawyers.
CLICK HERE to immediately contact Mr. Giancola: TERMINATION FOR DEFAULT LAWYER
6 Important Facts about Termination for Default and FAR 49.607 Delinquency Notices:
Cure Notice vs Letter of Concern FAR:
NOTE: You may receive a so-called “letter of concern” from the Contracting Officer prior to receiving the formal legal delinquency notices discussed in this article. These types of letters are a notch under the Cure Notice or Show Cause Letter in terms of legal seriousness; that being said, the letter of concern may be a precursor to the formal delinquency notices, and we recommend that you retain a competent lawyer at this time.
1. All notices are sent to the contractor with proof of delivery requested. Note: In some instances, the Contracting Officer will send out a Stop-Work Order letter to the contractor concurrent with either a Cure or Show Cause Notice letter. See FAR subpart 42.13 for Stop-Work Orders. This creates a more complicated scenario (e.g., status of contractor employees).
2. CURE NOTICE: If a contract is to be terminated for default before the delivery date, a “Cure Notice” is required by the Default clause. Before using this notice, the Contracting Officer (CO) must be ascertain that an amount of time equal to or greater than the period of “cure” remains in the contract delivery schedule or any extension to it. If the time remaining in the contract delivery schedule is NOT sufficient to permit a realistic “cure” period of 10 days or more, the “Cure Notice” is not issued. Instead, the CO will consider issuing a Show Cause Letter immediately.
FAR Cure Notice Template:
3. The Cure Notice will conform to the following format:
“You are notified that the Government considers your ____ [it will specify the contractor’s failure or failures] a condition that is endangering performance of the contract. Therefore, unless this condition is cured within 10 days after receipt of this notice [or a longer time if the CO deems this appropriate and reasonably necessary], the Government may terminate for default under the terms and conditions of the _______ [insert clause title] clause of this contract. ” [End of notice]
CLICK HERE: WE RECEIVED A CURE NOTICE FROM THE GOVERNMENT to immediately contact Mr. Giancola regarding this Notice.
4. Show Cause Letter (or Notice): If the time remaining in the contract delivery schedule is NOT sufficient to permit a realistic “cure” period of 10 days or more, the following “Show Cause Notice” may be used. It is usually sent immediately upon expiration of the delivery period.
5. SHOW CAUSE LETTER (or Notice):
“Since you have failed to ____ [insert “perform Contract No. ___ within the time required by its terms,” or “cure the conditions endangering performance under Contract No _____ as described to you in the Government’s letter of _____ (date)”], the Government is considering terminating the contract under the provisions for default of this contract. Pending a final decision in this matter, it will be necessary to determine whether your failure to perform arose from causes beyond your control and without fault or negligence on your part. Accordingly, you are given the opportunity to present, in writing, any facts bearing on the question to ____ [insert the name and complete address of the contracting officer], within 10 days after receipt of this notice. Your failure to present any excuses within this time may be considered as an admission that none exist.
Your attention is invited to the respective rights of the Contractor and the Government and the liabilities that may be invoked if a decision is made to terminate for default.
Any assistance given to you on this contract or any acceptance by the Government of delinquent goods or services will be solely for the purpose of mitigating damages, and it is not the intention of the Government to condone any delinquency or to waive any rights the Government has under the contract.” [End of Letter].
CLICK HERE: WE RECEIVED A SHOW CAUSE LETTER FROM THE GOVERNMENT to immediately contact Mr. Giancola regarding this Letter.
FAR Termination for Default Letter:
6. The formal termination for default of the contract is transmitted to the contractor as an E-mail attachment letter signed by the Contracting Officer. This is considered to be a final decision of the Contracting Officer and may be appealed to a Board of Contract Appeals (BCA) within ninety (90) days of the receipt of the letter. Hopefully, you read this article and contacted my law firm per above before allowing this to happen.
One thing NOT to do: Don’t Go it Alone!
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Helpful Termination for Default FAR Links:
* Where can You Get a Complete Copy of FAR part 49?
Download complete copy of FAR part 49 from this link now.
* What should You do if you have Receive a CURE or SHOW CAUSE Notice from the Contracting Officer?
What to do if You Receive a Cure or Show Cause Notice
* What should You do if You Receive a Termination for Cause?
What to do if You Receive a Termination for Cause
* What should You do if You Receive a Termination for Convenience?
What to do if You Receive a Termination for Convenience
* Do You Need an Overseas Government Contractor Lawyer?
Overseas Government Contractor Lawyer
* Have you Been Accused of Government Procurement FRAUD?
Click Here to Contact a Government Contract Fraud Lawyer Immediately