Contract Closeout and Termination Flashcards

The novation agreement process is required when:

Answer: A contractor transfers its government contracts to a successor in interest due to a merger or acquisition

A novation agreement (FAR 42.12) is a three-party agreement in which the government agrees to recognize the successor company as the new contractor after a transfer of assets.

Which of the following is an excusable delay that can prevent a termination for default?

Answer: Acts of God, acts of the government in its sovereign capacity, fires, floods, or epidemics beyond contractor control

FAR 52.249-8 excuses delays caused by unforeseeable events beyond the contractor's control and without fault, such as natural disasters or government actions in its sovereign capacity.

Liquidated damages in a government contract are intended to:

Answer: Provide a pre-agreed estimate of the government's daily harm from late delivery, avoiding the need to prove actual damages

Liquidated damages represent a reasonable pre-estimate of harm from delay, mutually agreed at contract formation, and they are not a penalty but a damages substitute.

Which of the following best describes the role of the Administrative Contracting Officer (ACO) during contract closeout?

Answer: Manages post-award contract administration including final rate negotiations, property disposal, and closeout actions

The ACO handles all post-award administration duties, which at closeout include negotiating final indirect rates, disposing of government property, and processing the final payment.

A contractor claiming that the government's actions constituted a breach of contract (rather than a change) is significant because:

Answer: A breach entitles the contractor to anticipatory profits, while an equitable adjustment only covers costs and profit on work performed

A breach claim is more powerful because it can include lost profits on unperformed work and consequential damages, unlike an REA which is limited to cost plus profit on work actually done.

Upon final payment and contract closeout, any unused obligation authority on a completed contract must be:

Answer: Deobligated and returned to the applicable appropriation account

Unexpended funds must be deobligated at closeout so they can be returned to the appropriation and either used elsewhere or expire, preventing inappropriate retention of unneeded funds.