When a T&M contract is terminated for convenience, FAR 52.249-6 Alt IV specifies a relatively narrow range of recoverable costs. If a contract with a large number of assigned employees is terminated, the contractor may be subject to the provisions of the WARN Act, which requires 60 days notice (and continuing employment) prior initiating any layoffs of the affected staff. Is there case law on the allowability of the cost of labor incurred in the period between the actual contract termination date and the end of the 60 days?

Thanks.

Why would you terminate the contract instead of just not placing any additional orders against it, and let it run its term?

I don't see how the WARN Act impacts a T for C. The Government isn't telling a company to lay off employees or not. The Government is just terminating the contract. It doesn't tell the contractor what to do with their employees after that

George - I believe this is a T&M contract that doesn't involve issuing task orders.

As suggested by formerfed, the contract is T&M but not ID/IQ. The T for C resulted from cancellation of a program that supported the overwhelming majority of staff at the contractor's facility. The WARN Act forces the contractor to incur substantial costs that, but for the termination, would not have been incurred. Is there any case law that enables some of these costs to be considered termination costs?

Is there any case law that enables some of these costs to be considered termination costs?

In a quick search of of all court and board decisions in which the terms "termination for convenience" and "WARN Act" appear, I found only one mention of the WARN Act, and it was not pertinent.

Contractman, the WARN Act provides several scenarios in which the 60 day period required before a layoff may be reduced. See 23 USC ? 2101. Specifically, ? 2102 paragraph ( states:

(1) An employer may order the shutdown of a single site of employment before the conclusion of the 60-day period if as of the time that notice would have been required the employer was actively seeking capital or business which, if obtained, would have enabled the employer to avoid or postpone the shutdown and the employer reasonably and in

good faith believed that giving the notice required would have precluded the employer from obtaining the needed capital or business.

(2)(A) An employer may order a plant closing or mass layoff before the conclusion of the 60-day period if the closing or mass layoff is caused by business circumstances that were not reasonably foreseeable as of the time that notice would have been required.

Without knowing all of the information, I cannot say with certainty, but I?m guessing one of the two above could apply in your situation. Was the t4c reasonably foreseeable by the contractor? If not and now the plant must close, the contractor need only give ?as much notice as is practicable?? 23 U.S.C. ? 2102.