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Government Did Not Follow FAR Default Termination Procedures

A default termination was converted to a termination for convenience by the Court of Federal Claims because the government did not follow FAR 52.249-8 when it terminated the security guard services contract. The government terminated the $33 million contract three days prior to the performance start date after the contractor did not comply with a cure notice. The government had issued the notice two days earlier, and it required the contractor to provide, within 24 hours, copies of state weapons permits and assurances it could perform. According to the court, the contract incorporated FAR 52.249-8, which allowed the government to terminate for failure to perform on the start date. Prior to that date, the government could only terminate if it gave the contractor a notice of a deficiency in performance and the contractor did not cure within ten days. Since the government here did not give the contractor a ten-day period to cure, the termination for failure to make progress was unlawful. The Defense Contract Audit Agency found the contractor incurred $46,856 in start-up costs, which was the amount the court awarded to the contractor.

Defense Barred

The government had maintained the contractor anticipatorily repudiated the contract, but it was barred from asserting the defense. The doctrine only applies if the contractor fails to give reasonable assurances of performance in response to a validly issued cure notice, and here, the government did not afford the contractor a "validly issued cure notice." The government also argued the default termination was justified because the contractor did not obtain the security guard license required by the contract. Although the solicitation required the contractor to possess a valid state security guard license as of the date of proposal submission, the contractor's failure to obtain the license did not justify the default termination because the government could have ascertained the contractor's compliance with the requirement prior to award. Further, since the contract had been awarded, the government was required to give the contractor notice of the defect and ten days to cure prior to terminating the contract on this basis. (NCLN20, Inc. v. U.S., FedCl, 55 CCF 79,626)




(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )


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