Termination for Convenience

The termination for convenience clause allows the government to terminate the contract in writing when it is in the best interests of the government to do so. It may terminate part or all of the contract, and it may do so at any stage during a performance. An example of the use of this clause involves a situation where a contractor performing rehabilitation of government housing discovers that the buildings are termite-infested. The government determines that repairs would exceed cost limits and, therefore, terminates the contract for its convenience. The contractor can recover its cost and a profit up to the date of termination. It cannot recover any lost profits or lost overhead. Such a termination is not a black mark on the contractor’s record and does not affect his performance evaluation. Contractors should be careful not to prematurely agree to “no cost” terminations for convenience, however, and should insist on an equitable adjustment according to the terms of the termination clause.

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Updated: July 24, 2018