Termination for Default -- Option CLIN Not Exercised

[tnt2k1]

Question: Can the Government terminate a contract for default when the contractor notified the Government that it cannot perform an option CLIN within the period of performance specified in the contract? Contractor notified the Government of this 10 days prior to option CLIN exercise expiration date. Option CLIN remains unexercised.

[Guest Vern Edwards]

I don't understand the situation. Is the termination for default based on your refusal to perform in accordance with the option, or is it based on some other reason? Did you mean to ask: "Can the Government terminate a contract for default because the contractor notified the Government that it cannot perform an option CLIN within the period of performance specified in the contract"?

[tnt2k1]

Termination for default is based on the contractor's inability to perform the option CLIN within the period of performance (will need more time to complete the option than what was initially proposed to the Government). The curve ball is: Option CLIN has yet to be exercised.

Yes, meant to say "because."

Thanks!

[Guest Vern Edwards]

I suspect that what has happened is that you told the government that you could not perform in accordance with the terms of the option and they decided to terminate you for "anticipatory repudiation." (Have they terminated you yet?) Anticipatory repudiation is a common law basis for T for D. See Cibinic, Nash and Nagle, Administration of Government Contracts 4th, pp. 932 - 940. See especially the section on anticipatory repudiation through an express statement of inability to perform, which beings on page 937.

I'm not sure, but I think that they can T for D based on anticipatory repudiation without exercising the option first.

I hope that you have consulted an attorney. If not, I suggest that you do so immediately. You could be in serious trouble if they T for D.

[Retreadfed]

Termination for default is based on the contractor's inability to perform the option CLIN within the period of performance (will need more time to complete the option than what was initially proposed to the Government). The curve ball is: Option CLIN has yet to be exercised.

Yes, meant to say "because."

Thanks!

From what you have written, it appears that the time for exercise of the option has passed. If that is the case and no notice of termination has been provided to you, the contract has not been terminated. The failure to exercise an option is not usually considered a termination.