XL EagleTermination for convenience (Termination for convenience (T4C))
Termination for convenience stands for Termination for convenience (T4C). Termination for convenience is the government's right to end all or part of a contract when it is in the government's interest, even if the contractor did nothing wrong. Budget cuts, changed needs, or a protest outcome can lead to it.
The contractor stops work as directed and is generally paid for work performed, reasonable costs to wind down, and a reasonable profit on work done, but not profit on work it never performed. Under commercial contracts, payment is generally a percentage of the contract price for work done plus reasonable charges from the termination. Settlement proposals have deadlines, usually one year.
Why it matters to a small contractor
Every federal contract can be cut short, so avoid big upfront purchases you cannot recover. If you get a termination notice, stop work as told, document your costs and any materials on hand, and file your settlement proposal on time. Subs should check how their subcontract handles a prime's termination.
Example
A grounds contract is terminated for convenience halfway through the season because of budget cuts. The contractor submits a settlement for the mowing already performed and the cost of returning leased equipment early.
Termination for convenience: common questions
Can the government cancel a contract for no reason?
Yes, through termination for convenience, if it is in the government's interest. The contractor is generally paid for completed work and reasonable termination costs.
Do I get lost profits if terminated for convenience?
Generally no profit on the unperformed work. You can recover a reasonable profit on work actually done, unless you were in a loss position.
Want the contract without the paperwork? Send XL Eagle your price on an open government job. We write and submit the bid under our registrations, free to you. Find open jobs →