Subpart 49.5 - Contract Termination Clauses

Parent topic: Part 49 - Termination of Contracts

49.501 General.

This subpart prescribes the principal contract termination clauses. This subpart does not apply to

contracts that use the clause at 52.213-4, Terms and Conditions-Simplified Acquisitions (Other Than

Commercial Products and Commercial Services). In appropriate cases, agencies may authorize the

use of special purpose clauses, if consistent with this chapter.

49.502 Termination for convenience of the Government.

(a) Fixed-price contracts that do not exceed the simplified acquisition threshold (short form)-

(1) General use. The contracting officer shall insert the clause at 52.249-1, Termination for

Convenience of the Government (Fixed-Price) (Short Form), in solicitations and contracts when a

fixed-price contract is contemplated and the contract amount is not expected to exceed the

simplified acquisition threshold, except-

(i) If use of the clause at 52.249-4, Termination for Convenience of the Government (Services) (Short

Form) is appropriate,

(ii) In contracts for research and development work with an educational or nonprofit institution on a

no-profit basis,

(iii) In contracts for architect-engineer services, or

(iv) If one of the clauses prescribed or cited at 49.505(a) or (c), is appropriate.

(2) Dismantling and demolition. If the contract is for dismantling, demolition, or removal of

improvements, the contracting officer shall use the clause with its AlternateI.

(b) Fixed-price contracts that exceed the simplified acquisition threshold-

(1)

(i) General use. The contracting officer shall insert the clause at 52.249-2, Termination for

Convenience of the Government (Fixed-Price), in solicitations and contracts when a fixed-price

contract is contemplated and the contract amount is expected to exceed the simplified acquisition

threshold except in contracts for -

(A) Dismantling and demolition,

(B) Research and development work with an educational or nonprofit institution on a no-profit basis,

or
(C) Architect-engineer services; it shall not be used if the clause at 52.249-4, Termination for

Convenience of the Government (Services) (Short Form), is appropriate (see 49.502(c)), or one of the

clauses prescribed or cited at 49.505(a) or (c), is appropriate.

(2) Construction. If the contract is for construction, the contracting officer shall use the clause with

its AlternateI.

(i) Partial payments. If the contract is with an agency of the U.S. Government or with State, local, or

foreign governments or their agencies, and if the contracting officer determines that the

requirement to pay interest on excess partial payments is inappropriate, the contracting officer shall

use the clause with its AlternateII. In such contracts for construction, the contracting officer shall

use the clause with its AlternateIII.

(ii) Dismantling and demolition. The contracting officer shall insert the clause at 52.249-3,

Termination for Convenience of the Government (Dismantling, Demolition, or Removal of

Improvements) in solicitations and contracts for dismantling, demolition, or removal of

improvements, when a fixed-price contract is contemplated and the contract amount is expected to

exceed the simplified acquisition threshold. If the contract is with an agency of the U.S. Government

or with State, local, or foreign governments or their agencies, and if the contracting officer

determines that the requirement to pay interest on excess partial payments is inappropriate, the

contracting officer shall use the clause with its AlternateI.

(c) Service contracts (short form). The contracting officer shall insert the clause at 52.249-4,

Termination for Convenience of the Government (Services) (Short Form), in solicitations and

contracts for services, regardless of value, when a fixed-price contract is contemplated and the

contracting officer determines that because of the kind of services required, the successful offeror

will not incur substantial charges in preparation for and in carrying out the contract, and would, if

terminated for the convenience of the Government, limit termination settlement charges to services

rendered before the date of termination. Examples of services where this clause may be appropriate

are contracts for rental of unreserved parking space, laundry and dry cleaning, etc.

(d) Research and development contracts. The contracting officer shall insert the clause at 52.249-5,

Termination for the Convenience of the Government (Educational and Other Nonprofit Institutions),

in solicitations and contracts when either a fixed-price or cost-reimbursement contract is

contemplated for research and development work with an educational or nonprofit institution on a

nonprofit or no-fee basis.

(e) Subcontracts-

(1) General use. The prime contractor may find the clause at 52.249-1, Termination for Convenience

of the Government (Fixed-Price) (Short Form), or at 52.249-2, Termination for Convenience of the

Government (Fixed-Price), as appropriate, suitable for use in fixed-price subcontracts, except as

noted in paragraph (e)(2) of this section; provided, that the relationship between the contractor and

subcontractor is clearly indicated. Inapplicable conditions (e.g., paragraph (d)) in 52.249-2 should be

deleted and the periods reduced for submitting the subcontractor’s termination settlement proposal

(e.g.,6 months), and for requesting an equitable price adjustment (e.g.,45 days).

(2) Research and development. The prime contractor may find the clause at 52.249-5, Termination

for the Convenience of the Government (Educational and Other Nonprofit Institutions), suitable for

use in subcontracts placed with educational or nonprofit institutions on a no-profit or no-fee basis;

provided, that the relationship between the contractor and subcontractor is clearly indicated.
Inapplicable conditions (e.g., paragraph (h)) should be deleted, the period for submitting the

subcontractor’s termination settlement proposal should be reduced (e.g.,6 months), the subcontract

should be placed on a no-profit or no-fee basis, and the subcontract should incorporate or be

negotiated on the basis of the cost principles in part 31 of the Federal Acquisition Regulation.

49.503 Termination for convenience of the Government and

default.

(a) Cost-reimbursement contracts-

(1) General use. Insert the clause at 52.249-6, Termination (Cost-Reimbursement), in solicitations

and contracts when a cost-reimbursement contract is contemplated, except contracts for research

and development with an educational or nonprofit institution on a no-fee basis.

(2) Construction. If the contract is for construction, the contracting officer shall use the clause with

its AlternateI.

(3) Partial payments. If the contract is with an agency of the U.S. Government or with State, local, or

foreign governments or their agencies, and if the contracting officer determines that the

requirement to pay interest on excess partial payments is inappropriate, the contracting officer shall

use the clause with its AlternateII. In such contracts for construction, the contracting officer shall

use the clause with its AlternateIII.

(4) Time-and-material and labor-hour contracts. If the contract is a time-and-material or labor-hour

contract, the contracting officer shall use the clause with its AlternateIV. If the contract is with an

agency of the U.S. Government or with State, local, or foreign governments or their agencies, and if

the contracting officer determines that the requirement to pay interest on excess partial payments is

inappropriate, the contracting officer shall use the clause with its Alternate V.

(b) Insert the clause at 52.249-7, Termination (Fixed-Price Architect-Engineer), in solicitations and

contracts for architect-engineer services, when a fixed-price contract is contemplated.

(c) Subcontracts. The prime contractor may find the clause at 52.249-6, Termination (CostReimbursement), suitable for use in cost-reimbursement subcontracts; provided, that the

relationship between the contractor and subcontractor is clearly indicated. Inapplicable conditions

(e.g., paragraphs (e), (j) and (n)) should be deleted and the period for submitting the subcontractor’s

termination settlement proposal should be reduced (e.g.,6 months).

49.504 Termination of fixed-price contracts for default.

(a)

(1) Supplies and services. The contracting officer shall insert the clause at 52.249-8, Default (FixedPrice Supply and Service), in solicitations and contracts when a fixed-price contract is contemplated

and the contract amount is expected to exceed the simplified acquisition threshold. The contracting

officer may use the clause when the contract amount is at or below the simplified acquisition
threshold, if appropriate (e.g., if the acquisition involves items with a history of unsatisfactory

quality).

(2) Transportation. If the contract is for transportation or transportation-related services, the

contracting officer shall use the clause with its AlternateI.

(b) Research and development. The contracting officer shall insert the clause at 52.249-9, Default

(Fixed-Price Research and Development), in solicitations and contracts for research and

development when a fixed-price contract is contemplated and the contract amount is expected to

exceed the simplified acquisition threshold, except those with educational or nonprofit institutions

on a no-profit basis. The contracting officer may use the clause when the contract amount is at or

below the simplified acquisition threshold;, if appropriate (e.g., if the contracting officer believes

that key personnel essential to the work may be devoted to other programs).

(c)

(1) Construction. The contracting officer shall insert the clause at 52.249-10, Default (Fixed-Price

Construction), in solicitations and contracts for construction, when a fixed-price contract is

contemplated and the contract amount is expected to exceed the simplified acquisition threshold.

The contracting officer may use the clause when the contract amount is at or below the simplified

acquisition threshold, if appropriate (e.g., if completion dates are essential).

(2) Dismantling and demolition. If the contract is for dismantling, demolition, or removal of

improvements, the contracting officer shall use the clause with its AlternateI.

(3) National emergencies. If the contract is to be awarded during a period of national emergency,

the contracting officer may use the clause-

(i) With its AlternateII when a fixed-price contract for construction is contemplated, or

(ii) With its AlternateIII when a contract for dismantling, demolition, or removal of improvements is

contemplated.

49.505 Other termination clauses.

(a) Personal service contracts. The contracting officer shall insert the clause at 52.249-12,

Termination (Personal Services), in solicitations and contracts for personal services (see part 37).

(b) Excusable delays. The contracting officer shall insert the clause at 52.249-14, Excusable Delays,

in solicitations and contracts for supplies, services, construction, and research and development on a

fee basis, when a cost-reimbursement contract is contemplated. The contracting officer shall also

insert the clause in time-and-material contracts, and labor-hour contracts.

(c) Communication service contracts. This regulation does not prescribe a clause for the cancellation

or termination of orders under communication service contracts with common carriers because of

special agency requirements that apply to these services. An appropriate clause, however, shall be

prescribed at agency level, within those agencies contracting for these services.