Subcontract Termination

[Guest jrt132]

The company I work for is a prime contractor on a Federal contract. As the prime, we are going to be terminating one of our subcontractors for convenience. The only termination clause in the subcontract is a flow-down of the prime contract, 52.249-6, Termination (cost reimbursement). The authority to terminate the subcontract was going to be that clause. Can a prime contractor use a Government flow-down clause to terminate even if the prime contract is not being terminated? If not, does anyone have a recommendation on how to either terminate or end the subcontract?

Looking forward to the discussion.

[Guest Vern Edwards]

Can a prime contractor use a Government flow-down clause to terminate even if the prime contract is not being terminated?

Prime contractors can use clauses in their subcontracts that are based on FAR clauses in the prime contract. This is often done by incorporating the FAR clause in the subcontract and adding language to the effect that where the clause says "Government" it shall be interpreted to mean the prime contractor, and where it says "contractor" it shall be interpreted to mean subcontractor.

The prime's authority to terminate the subcontract for convenience depends entirely on the text of the termination clause in the subcontract. The only intelligent answer to your question is: I don't know. Why are you asking us? What does the subcontract say? If the subcontract says that the prime can terminate it for convenience and does not condition the prime's right to terminate on the government's termination of the prime contract, then the answer to your question is yes, the prime can terminate the sub even if the prime contract is not being terminated.

If the termination clause in the subcontract is based upon the text of the termination clause at FAR 52.249-6, and if the clause hasn't been modified to condition the prime's right to terminate the subcontract on the government's termination of the prime contract, then the prime can terminate the subcontract even though the government has not terminated the prime contract.

There's really nothing to discuss.

[Guest jrt132]

Prime contractors can use clauses in their subcontracts that are based on FAR clauses in the prime contract. This is often done by incorporating the FAR clause in the subcontract and adding language to the effect that where the clause says "Government" it shall be interpreted to mean the prime contractor, and where it says "contractor" it shall be interpreted to mean subcontractor.

The prime's authority to terminate the subcontract for convenience depends entirely on the text of the termination clause in the subcontract. The only intelligent answer to your question is: I don't know. Why are you asking us? What does the subcontract say? If the subcontract says that the prime can terminate it for convenience and does not condition the prime's right to terminate on the government's termination of the prime contract, then the answer to your question is yes, the prime can terminate the sub even if the prime contract is not being terminated.

If the termination clause in the subcontract is based upon the text of the termination clause at FAR 52.249-6, and if the clause hasn't been modified to condition the prime's right to terminate the subcontract on the government's termination of the prime contract, then the prime can terminate the subcontract even though the government has not terminated the prime contract.

There's really nothing to discuss.

Vern,

Thank you for your reply. I attended a seminar and the instructor said, "He doubts I can use the T4C clause without the prime contract being terminated to." This is the reason I am asking the question. Before that comment I was going to proceed with the termination utilizing the FAR Clause 52.249-6 that is included in the subcontract with the proper modifications to the parties.

I am new to subcontract management but, not contracting and wanted to get the opinions of other contracting professionals with more experience in this specific area. Thanks you again and unless someone chimes in with a different way of thinking I will proceed with the termination.

JRT132

[Guest Vern Edwards]

There is no way to evaluate the instructor's assertion without an explanation for why he said what he did.

[Guest jrt132]

Vern,

Agreed. The instructor didn't provide any detail on how he came to that statement. He was in a bit of a rush after a few questions during the end of the seminar. Another reason I posted on here...wanted more detail on the topic.

I will stick with my original thought confirmed by your reply.

Thank you again