Code of Maryland Regulations › Title 21 - STATE PROCUREMENT REGULATIONS › Subtitle 07 - CONTRACT TERMS AND CONDITIONS › Chapter 21.07.01 - Mandatory Contract Provisions - All Contracts (except as provided under COMAR 21.05.07, 21.07.02, and 21.07.03) › Section 21.07.01.12 - Termination for Convenience

Current through Register Vol. 51, No. 14, July 12, 2024
A.
				Except as provided in §B of this regulation, mandatory provision for all
				contracts. One of the following clauses is preferred:
(1) Alternate Clause - Termination for
				Convenience (short form).
"The performance of work under this contract may be
				  terminated by the State in accordance with this clause in whole, or from time
				  to time in part, whenever the State shall determine that such termination is in
				  the best interest of the State. The State will pay all reasonable costs
				  associated with this contract that the Contractor has incurred up to the date
				  of termination and all reasonable costs associated with termination of the
				  Contract. However, the Contractor shall not be reimbursed for any anticipatory
				  profits that have not been earned up to the date of termination. Termination
				  hereunder, including the determination of the rights and obligations of the
				  parties, shall be governed by the provisions of COMAR 21.07.01.12A(2)."
(2) Alternate Clause - Termination
				for Convenience (long form).
(1) The
				performance of work under this contract may be terminated by the State in
				accordance with this clause in whole, or from time to time in part, whenever
				the State shall determine that such termination is in the best interest of the
				State. Any such termination shall be effected by delivery to the Contractor of
				a Notice of Termination specifying the extent to which performance of work is
				terminated and the time when such termination becomes effective.
(2) After receipt of a Notice of Termination,
				and except as otherwise directed by the procurement officer, the Contractor
				shall:
(a) stop work as specified in the
				Notice of Termination;
(b) place no
				further orders or subcontracts for materials, services or facilities, except as
				may be necessary for completion of the portion of the work under the contract
				as is not terminated;
(c) terminate
				all orders and subcontracts to the extent that they relate to the performance
				of work terminated by the Notice of Termination;
(d) assign to the State, in the manner, at
				times, and to the extent directed by the procurement officer, all of the right,
				title, and interest of the Contractor under the orders and subcontracts so
				terminated, in which case the State shall have the right, in its discretion, to
				settle or pay any or all claims arising out of the termination of such orders
				and subcontracts;
(e) settle all
				outstanding liabilities and all claims arising out of such termination of
				orders and subcontracts, with the approval or ratification of the procurement
				officer, to the extent the procurement officer may require, which approval or
				ratification shall be final for all the purposes of this clause;
(f) transfer title and deliver to the State,
				in the manner, at the times, and to the extent, if any, directed by the
				procurement officer, (i) the fabricated or unfabricated parts, work in process,
				completed work, supplies, and other material produced as a part of, or acquired
				in connection with the performance of, the work terminated by the Notice of
				Termination, and (ii) the completed or partially completed plans, drawings,
				information, and other property which, if the contract had been completed,
				would have been required to be furnished to the State;
(g) use its best efforts to sell, in the
				manner, at the times, to the extent, and at the price or prices directed or
				authorized by the procurement officer, any property of the types referred to in
				(f) above; provided, however, that the Contractor (i) may not be required to
				extend credit to any purchaser, and (ii) may acquire any such property under
				the conditions prescribed by and at a price or prices approved by the
				procurement officer; and provided further that the proceeds of any such
				transfer or disposition shall be applied in reduction of any payments to be
				made by the State to the Contractor under this contract or shall otherwise be
				credited to the price or cost of the work covered by this contract or paid in
				such other manner as the procurement officer may direct;
(h) complete performance of such part of the
				work as shall not have been terminated by the Notice of Termination;
				and
(i) take any action that may be
				necessary, or as the procurement officer may direct, for the protection and
				preservation of the property related to this contract which is in the
				possession of the Contractor and in which the State has or may acquire an
				interest.
The Contractor shall submit to the procurement officer a
				  list, certified as to quantity and quality, of any or all items of termination
				  inventory not previously disposed of, exclusive of items the disposition of
				  which has been directed or authorized by the procurement officer, and may
				  request the State to remove them or enter into a storage agreement covering
				  them. Not later than fifteen (15) days thereafter, the State shall accept title
				  to these items and remove them or enter into a storage agreement covering the
				  same; provided, that the list submitted shall be subject to verification by the
				  procurement officer upon removal of the items, or if the items are stored,
				  within forty-five (45) days from the date of submission of the list, and any
				  necessary adjustment to correct the list as submitted shall be made before
				  final settlement.
(3) After receipt of a Notice of Termination,
				the Contractor shall submit to the procurement officer the Contractor's
				termination claim, in the form and with certification prescribed by the
				procurement officer. This claim shall be submitted promptly but in no event
				later than one (1) year from the effective date of termination, unless one or
				more extensions in writing are granted by the procurement officer, upon request
				of the Contractor made in writing within the one-year period or authorized
				extension thereof. However, if the procurement officer determines that the
				facts justify such action, the procurement officer may receive and act upon any
				such termination claim at any time after the one-year period or any extension
				thereof. Upon failure of the Contractor to submit the Contractor's termination
				claim within the time allowed, the procurement officer may determine the claim
				at any time after the one-year period or any extension thereof. Upon failure of
				the Contractor to submit the Contractor's termination claim within the time
				allowed, the procurement officer may determine, on the basis of information
				available to the procurement officer, the amount, if any, due to the Contractor
				by reason of the termination and shall thereupon pay to the Contractor the
				amount so determined.
(4) Subject
				to the provisions of paragraph (3), the Contractor and the procurement officer
				may agree upon the whole or any part of the amount or amounts to be paid to the
				Contractor by reason of the total or partial termination of work pursuant to
				this clause, which amount or amounts may include a reasonable allowance for
				profit on work done; provided, that such agreed amount or amounts, exclusive of
				settlement costs, shall not exceed the total contract price as reduced by the
				amount of payments otherwise made and as further reduced by the contract price
				of work not terminated. The contract shall be amended accordingly, and the
				Contractor shall be paid the agreed amount. Nothing in paragraph (5) of this
				clause, prescribing the amount to be paid to the Contractor in the event of
				failure of the Contractor and the procurement officer to agree upon the whole
				amount to be paid to the Contractor by reason of the termination of work
				pursuant to this clause, shall be deemed to limit, restrict, or otherwise
				determine or affect the amount or amounts that may be agreed upon to be paid to
				the Contractor pursuant to this paragraph.
(5) In the event of the failure of the
				Contractor and the procurement officer to agree as provided in paragraph (4)
				upon the whole amount to be paid to the Contractor by reason of the termination
				of work pursuant to this clause, the procurement officer shall pay to the
				Contractor the amounts determined by the procurement officer as follows, but
				without duplication of any amounts agreed upon in accordance with paragraph
				(4):
(a) for completed supplies or services
				accepted by the State (or sold or acquired as provided in paragraph (2)(g)
				above) and for which payment has not theretofore been made, a sum equivalent to
				the aggregate price for the supplies or services computed in accordance with
				the price or prices specified in the contract, appropriately adjusted for any
				saving of freight or other charges;
(b) the total of:
(i) the costs incurred in the performance of
				the work terminated, including initial costs and preparatory expense allocable
				thereto, but exclusive of any costs attributable to supplies or services paid
				or to be paid for under paragraph (5)(a) hereof;
(ii) the cost of settling and paying claims
				arising out of the termination of work under subcontracts or orders, as
				provided in paragraph (2)(e) above, which are properly chargeable to the
				terminated portion of the contract (exclusive of amounts paid or payable on
				account of supplies or materials delivered or services furnished by
				subcontractors or vendors before the effective date of the Notice of
				Termination, which amounts shall be included in the costs payable under (i)
				above); and
(iii) a sum, as profit
				on (i) above, determined by the procurement officer to be fair and reasonable;
				provided, however, that if it appears that the contractor would have sustained
				a loss on the entire contract had it been completed, no profit shall be
				included or allowed under this subdivision (iii) and an appropriate adjustment
				shall be made reducing the amount of the settlement to reflect the indicated
				rate of loss; and
(c)
				the reasonable cost of settlement accounting, legal, clerical, and other
				expenses reasonably necessary for the preparation of settlement claims and
				supporting data with respect to the terminated portion of the contract and for
				the termination and settlement of subcontracts thereunder, together with
				reasonable storage, transportation, and other costs incurred in connection with
				the protection or disposition of property allocable to this contract.
The total sum to be paid to the Contractor under (a) and (b)
				  of this paragraph shall not exceed the total contract price as reduced by the
				  amount of payments otherwise made and as further reduced by the contract price
				  of work not terminated. Except for normal spoilage, and except to the extent
				  that the State shall have otherwise expressly assumed the risk of loss, there
				  shall be excluded from the amounts payable to the Contractor as provided in
				  (5)(a) and (b)(i) above, the fair value, as determined by the procurement
				  officer, of property that is destroyed, lost, stolen, or damaged so as to
				  become undeliverable to the State or to a buyer pursuant to paragraph
				  (2)(g).
(6)
				Costs claimed, agreed to, or determined pursuant to (3), (4), (5) and (11)
				hereof shall be in accordance with COMAR 21.09 (Contract Cost Principles and
				Procedures) as in effect on the date of this contract.
(7) The Contractor shall have the right of
				appeal, under the clause of this contract entitled "Disputes," from any
				determination made by the procurement officer under paragraph (3), (5), or (9)
				hereof, except that if the Contractor has failed to submit the Contractor's
				claim within the time provided in paragraph (3) or (9) hereof, and has failed
				to request extension of the time, the Contractor shall have no right of appeal.
				In any case where the procurement officer has made a determination of the
				amount due under paragraph (3), (5), or (9) hereof, the State shall pay to the
				Contractor the following:
(a) if there is no
				right of appeal hereunder or if no timely appeal has been taken, the amount so
				determined by the procurement officer, or
(b) if an appeal has been taken, the amount
				finally determined on such appeal.
(8) In arriving at the amount due the
				Contractor under this clause there shall be deducted (a) all unliquidated
				advance or other payments on account theretofore made to the Contractor,
				applicable to the terminated portion of this contract, (b) any claim which the
				State may have against the Contractor in connection with this contract, and (c)
				the agreed price for, or the proceeds of sale of, any materials, supplies, or
				other things acquired by the Contractor or sold, pursuant to the provisions of
				this clause, and not otherwise recovered by or credited to the State.
(9) If the termination hereunder be partial,
				the Contractor may file with the procurement officer a claim for an equitable
				adjustment of the price or prices specified in the contract relating to the
				continued portion of the contract (the portion not terminated by the Notice of
				Termination), and such equitable adjustment as may be agreed upon shall be made
				in such price or prices. Any claim by the Contractor for an equitable
				adjustment under this clause shall be asserted within ninety (90) days from the
				effective date of the termination notice, unless an extension is granted in
				writing by the procurement officer.
(10) The State may from time to time, under
				such terms and conditions as it may prescribe, make partial payments and
				payments on account against costs incurred by the Contractor in connection with
				the terminated portion of this contract whenever in the opinion of the
				procurement officer the aggregate of such payments shall be within the amount
				to which the Contractor shall be entitled hereunder. If the total of such
				payments is in excess of the amount finally agreed or determined to be due
				under this clause, such excess shall be payable by the Contractor to the State
				upon demand, together with interest computed at the prime rate established by
				the State Treasurer for the period from the date such excess payment is
				received by the Contractor to the date on which such excess is repaid to the
				State; provided, however, that no interest shall be charged with respect to any
				such excess payment attributable to a reduction in the Contractor's claim by
				reason of retention or other disposition of termination inventory until ten
				days after the date of such retention or disposition, or a later date as
				determined by the procurement officer by reason of the circumstances.
(11) Unless otherwise provided for in this
				contract, or by applicable statute, the Contractor shall-from the effective
				date of termination until the expiration of three years after final settlement
				under this contract-preserve and make available to the State at all reasonable
				times at the office of the Contractor but without direct charge to the State,
				all the Contractor's books, records, documents and other evidence bearing on
				the costs and expenses of the Contractor under this contract and relating to
				the work terminated hereunder, or, to the extent approved by the procurement
				officer, reproductions thereof."