Termination for Default without Show Cause

[Whynot]

Can an agency move right to a termination for default without first issuing a show cause or other opportunity to correct?

[Retreadfed]

The FAR does not require the government to issue a show cause letter in any circumstance. Note that no termination clause requires one. As for a cure notice, what is the basis for the default termination and what clause applies to the default?

[wvanpup]

Though there is no formal FAR requirement for a show cause notice, there may be an agency policy that requires the notice. What does your agency require?

[wvanpup]

Somehow I am unable to edit my previous post. You asked about providing an opportunity to correct. A show cause notice (which is not required by the FAR but might be required by agency policy) does not provide an opportunity to correct, it provides an opportunity for the contractor to explain why the contract should not be terminated for default (e.g., the contractor can explain why it is not in default, or explain why it might be to the Government's advantage to permit correction rather than to terminate the contract). A cure notice, on the other hand, directs the contractor to correct the default, and may be required depending on the nature of the default. You need to look at the termination clause of your contract to determine if a cure notice is required.

[RCB]

FAR 52.249-8, the Default clause for fixed price supply and service contracts, in section (a)(2) states that a failure to make progress termination or a failure to perform any other material portion of the contract must be preceded by a written cure notice to the contractor providing at least a 10-day period to notify the Govt of how it plans to address performance problems. However,no such prior notice is required for a failure to perform or deliver by delivery date reflected in the contract.

[DingoesAteMyBaby]

Somehow I am unable to edit my previous post. You asked about providing an opportunity to correct. A show cause notice (which is not required by the FAR but might be required by agency policy) does not provide an opportunity to correct, it provides an opportunity for the contractor to explain why the contract should not be terminated for default (e.g., the contractor can explain why it is not in default, or explain why it might be to the Government's advantage to permit correction rather than to terminate the contract). A cure notice, on the other hand, directs the contractor to correct the default, and may be required depending on the nature of the default. You need to look at the termination clause of your contract to determine if a cure notice is required.

Exactly.

I have seen the show cause come after the cure notice failed to result in a reversal of the contractor's imminent repudiation of a material contract requirement. Then the default termination. But this depends on an entire set of facts that need to be considered by an experienced multi-functional acquisition team (i.e. PCO/ACO/KO as applicable, program manager, project manager, legal counsel, often one or more levels of management above the acquisition team members).

A termination for default is a very complex road to go down. I highly suggest seeking legal advice from your agency's contracts law division or general counsel and involvement of your management.

[joel hoffman]

... But this depends on an entire set of facts that need to be considered by an experienced multi-functional acquisition team (i.e. PCO/ACO/KO as applicable, program manager, project manager, legal counsel, often one or more levels of management above the acquisition team members).

Thanks for using the old fogy acronym in bold above