Counsel Commentary: Terminations for Convenience: Why Contract Type Matters

Once a contract is terminated for convenience, the contractor and the government engage in a settlement process governed by applicable contract clauses and provisions in the Federal Acquisition Regulation (FAR). The goal of this process is to ensure that the contractor receives “fair compensation” for the termination. 

A contractor’s right to recover “fair compensation” may vary substantially depending on the type of contract at issue. Contractors who have received termination notices must understand their rights in order to maximize the recovery of costs as part of the termination settlement process. 

In his monthly Contract Management Magazine column, “Terminations for Convenience: Why Contract Type Matters,” Rogers Joseph O’Donnell shareholder Stephen L. Bacon breaks down the different contract types and explains how contractors can recover the costs they are entitled to. 

“Given the complexity of that process, the FAR allows contractors to recover their legal and expert consulting costs as termination settlement expenses,” Bacon writes. “For contractors who are or may be facing a termination, it is critically important to understand your termination rights and how to maximize the recovery of costs.” 

The piece, which appears in the magazine’s April issue (subscription required), is the latest entry in Bacon’s monthly Counsel Commentary column and is published by the National Contract Management Association. It was used with permission.

Read Bacon’s latest Contract Management article here.