Legal Advice for Government Contracts Terminated for Default or Cause
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The Whay Law Firm, located in Washington, D.C., is a government contracts law firm, with extensive experience representing small- and medium-sized government contractors in all aspects of government contract matters. In fact, all of our clients are government contractors. Most businesses require expert legal counsel to help them understand the unique laws and regulations governing federal government contracts. The Firm expertly handles the full array of issues faced by companies doing business with the federal government, including assisting clients who have received a notice of contract termination for default.
Government Contract Termination for Default
When a business enters into a procurement contract with the federal government, the complex terms of the contract include a clause that allows the government to terminate the contract "for default.” There are several different clauses that may be used depending upon the type of contract, but each clause gives the government the right to terminate the contract if the government believes the contractor has failed to meet any contractual obligation. Termination for default often involves the contractor’s failure to meet the contract delivery or performance schedule.
Consequences of a Termination for Default
A termination for default has serious consequences, including unexpected expenses and a loss of revenue for the contractor. A default termination may seriously damage a contractor’s reputation and harm its ability to successfully compete in future procurements. One of the most damaging consequences is the impact on the contractor’s past performance record. The contractor will receive lower past performance ratings in future procurements and may not receive a contract award if a contracting officer makes a negative responsibility determination due to the termination. Additionally, the default termination could lead to the contractor being debarred from government contracts.
The contractor may be required to return progress payments to the government and/or may be liable for excess costs the government incurs, such as costs to re-procure services or products. Additionally, the contractor may be liable for actual damages identified by the contracting agency.
What To Do If You Are Notified of Contract Termination
A notification sent to the contractor by the contracting officer communicates the intent to terminate the contract for default, and should identify the specific performance issues. Depending on the state of the project and the contracting officer’s observations, the contractor will receive a “cure” notice or a “show cause” notice. Responding to the contracting officer’s notice within the tight timeline is critically important. It is better to avoid the termination than having to fight it through the appeals process. The government contract lawyers at the Whay Law Firm can assist you in preparing a response to any cure notice or show cause letter. The response should identify the factual and legal basis supporting why the agency should not terminate your contract for default or cause.
If your contract has already been terminated for default, you have the right to appeal the termination. The right to appeal, however, is subject to filing deadlines. Moving quickly to challenge the termination for default will ensure your appeal is timely, and will lessen the time in which your company is saddled with the consequences of the negative past performance associated with the termination.
Contact the Whay Law Firm immediately if you have received a cure notice, a show cause letter, or if your contract has been terminated. As government contract lawyers, we can assist you in crafting an appropriate response and appealing any termination or the assessment of reprocurement costs by the agency.
We recognize that you face unique challenges as a government contractor, and your reputation deserves the best legal advice. We are a full-service government contracts law firm dedicated to providing outstanding legal service to government contractors. Our offices are located in close proximity to Federal offices, including the Civilian Board of Contract Appeals, the Armed Services Board of Contract Appeals, and the Court of Federal Claims.
