FCC Termination for Convenience & Default 2 — Questions and Answers
Question 1: Under a termination for convenience, what document does the contractor typically submit to the Contracting Officer to resolve incurred costs and fees?
- Request for Equitable Adjustment (REA)
- Termination Settlement Proposal (Correct answer)
- Claim under the Contract Disputes Act
- Incurred Cost Submission (ICS)
Correct answer: Termination Settlement Proposal
The contractor submits a Termination Settlement Proposal detailing allowable costs, profit, and fees to settle a convenience termination under FAR 49.206.
Question 2: How long does a contractor typically have to submit a termination settlement proposal after receiving a termination notice under FAR 49.206-1?
- 30 days
- 90 days
- 180 days
- 1 year (Correct answer)
Correct answer: 1 year
FAR 49.206-1 requires contractors to submit termination settlement proposals within one year of the termination notice, absent a Contracting Officer-approved extension.
Question 3: Which of the following excuses may allow a contractor to avoid a termination for default due to late delivery?
- Failure to hire qualified personnel in time
- Financial difficulties caused by poor management decisions
- Government-caused delay that prevented timely performance (Correct answer)
- Subcontractor price increases beyond the prime's expectation
Correct answer: Government-caused delay that prevented timely performance
Government-caused delays constitute an excusable delay under FAR 49.401, protecting the contractor from a default termination when the government itself caused the failure.
Question 4: In a partial termination for convenience, the contractor's obligation to continue performance applies to which portion of the work?
- All remaining work, including the terminated portion
- Only the terminated portion during wind-down
- The unterminated portion of the contract (Correct answer)
- No remaining work; all performance stops immediately
Correct answer: The unterminated portion of the contract
In a partial termination, the contractor must continue performance on the unterminated portion while winding down only the terminated portion.
Question 5: A contractor fails to mobilize within the required period after receiving a Notice to Proceed on a construction contract. Which action is MOST appropriate for the Contracting Officer?
- Issue a bilateral modification extending the mobilization schedule
- Issue a cure notice allowing at least 10 days to remedy the failure (Correct answer)
- Immediately terminate the contract for convenience
- Issue a unilateral change order adjusting the completion date
Correct answer: Issue a cure notice allowing at least 10 days to remedy the failure
Before terminating for default, the CO must issue a cure notice giving the contractor at least 10 days to remedy the failure to perform, as required by FAR 49.607.
Question 6: Under FAR Part 49, which costs are generally NOT recoverable in a termination for convenience settlement?
- Costs of storing and protecting termination inventory
- Reasonable costs of settling subcontractor termination claims
- Pre-contract costs incurred to prepare bid and proposal (Correct answer)
- Profit on work already completed and accepted by the government
Correct answer: Pre-contract costs incurred to prepare bid and proposal
Pre-contract costs such as bid and proposal preparation expenses incurred before contract award are generally not allowable termination settlement costs under FAR 49.206-2.
Question 7: If termination convenience settlement negotiations fail between the parties, how may the dispute be resolved?
- The contractor's full claimed amount is automatically paid
- The dispute is referred only to the Armed Services Board of Contract Appeals
- The Contracting Officer may issue a unilateral determination of the settlement amount (Correct answer)
- All contractor entitlements are cancelled if agreement cannot be reached
Correct answer: The Contracting Officer may issue a unilateral determination of the settlement amount
If settlement negotiations fail, the Contracting Officer may issue a unilateral determination of the settlement amount, which the contractor may then appeal under the Contract Disputes Act.
FCC Termination for Convenience & Default 2
Under a termination for convenience, what document does the contractor typically submit to the Contracting Officer to resolve incurred costs and fees?