Government Contract or Acquisitions: Termination of Government Contracts - Article Example

The FAR clause 49.401 gives the government the right to terminate a contract partially or completely in situations where the contractor has failed to perform a service or deliver supplies on time, make progress or perform any other provisions stated in the contract. In addition, this clause requires that the contractor bears all the costs incurred up to the time of termination and thus, does not hold the government liable. Either this clause allows the government to charge the contractor procurement costs deemed excess, recover actual damages, confiscate inventory related to the contract lieu of excess costs of procurement or recoup unliquidated payments in progress (Feldman, 2013).

However, if it is determined that failure arose because of factors beyond the contractor's control or without fault or negligence of the contractor, the termination will be considered a termination for convenience. Just like the termination for default clause, the termination clause for convenience allows the government to terminate a contract in whole or partial. However, unlike the default clause, the government is liable under this clause for costs incurred by the contractor and hence is required to make the contractor ‘whole’ by reimbursing all allocable costs, reasonable costs and any profit accrued for performing the contract up to the time of termination (Feldman, 2013).

In addition, under this clause the courts of law will not intervene unlike in the default clause unless the contractor proves that the government acted in bad faith, abused its discretion relying on procurement official’s bad faith, there was no better bargain to guarantee termination, or the decision for termination was unreasonable (Feldman, 2013). It is justifiable in both clauses for the government to terminate contracts if the conditions set forth in both clauses are not met. For instance, under the termination for default clause, if a contractor has failed to perform a service or deliver supplies implies that the project for which the supplies or service was meant to accomplish is going to fail.

The Government is a mandate to provide services to its citizens and thus, the performance of contracts by contractors especially for projects meant for the general welfare of the public like construction contracts e.g. roads is not an option but an obligation if the government is to achieve its objectives and mandate of serving its people. In addition, if the government finds a better option under the clause of termination for convenience, then as stated in the FAR 6.1 the government should use competitive procedures to when awarding contracts to ensure that, services or supplies are obtained at the best and reasonable prices (Feldman, 2013).

Thus, a better bargain warranties termination of a contract for convenience. Under the clause for termination for default, the government can terminate a contract if the contractor has failed to perform the service or deliver the supplies in time or the contractor has failed to make progress. These are effective evaluation tools for determining the ability of the contractor to complete the contract on time as specified in the contract. Unless the delay is excusable, and beyond the contractor’s control, then this forms the basis for determining future performance and ability of the contractor to effectively and efficiently complete the contract as per the specifications and terms of the contract.