Termination for Cause FAR
Cure Notice & Show Cause Letter – Letter of Concern FAR
Cure Notice vs Letter of Concern
Termination for Cause – FAR Government Contracts. Cure Notice vs Letter of Concern. Termination for Cause Lawyer.
Federal Acquisition Regulation (FAR) Termination for Cause or Default. 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 CAUSE or DEFAULT of a U.S. Government contract. The consequences of a Government contract termination for cause or default are severe – the are both monetary (damages) and non-monetary (survival of your business) impacts.
Regardless of which delinquency notice is received (and you may receive both), it requires IMMEDIATE action by the contractor. It is HIGHLY RECOMMENDED that you consult a termination for cause lawyer at such time. Discover how a government contracts lawyer can navigate complex regulations and protect your business interests effectively.
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.
IMPORTANT NOTE RE A “LETTER OF CONCERN”: 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. Click here for more guidance on the Letter of Concern: The Letter of Concern
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 CAUSE FAR
5 Important Facts about Termination for Cause or Default and FAR 49.607 Delinquency Notices:
Cure Notice Under the FAR:
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 Notice or Show Cause Letter (or Notice). 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 cause or 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 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.
FAR Show Cause Letter (or Notice) Template):
5. “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 to immediately contact Mr. Giancola regarding this Letter.
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FAR Termination for Cause Letter; Negative Impact on CPAR Ratings:
6. The formal termination for cause 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.
Termination for cause of your Government contract will also have a severe negative impact on your company’s Past Performance Ratings, which are reported by the Contracting Officer terminating your contract for cause to a government-wide database known as the Contractor Performance Assessment Reporting System (CPARS). Please Click here to read my article about negative past performance ratings in CPARS: NEGATIVE CONTRACT PERFORMANCE RATINGS IN CPARS
One thing NOT to do: Don’t Go it Alone!
Helpful Termination for Cause FAR Links:
* Where Can I Find the FAR Citations in this article?
The Federal Acquisition Regulation – FAR
* What should You do if you have Receive a CURE NOTICE or SHOW CAUSE LETTER 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 Convenience?
What to do if You Receive a Termination for Convenience
* What should You do if You Receive a Termination for Default?
What to do if You Receive a Termination for Default
* Have You Received a FAR Cure Notice or a Show Cause Letter from the Government?
Cure Notice – Show Cause Notice – Letter of Concern
* Have Been Accused – or Think You Will Be Accused – of a Government Ethics Violation?
* Have You Been Accused of Government Procurement Fraud?