Government Contracting Database
Termination for Default – Clause
This clause permits the government to terminate the contract if the contractor fails to perform on time, fails to perform with the diligence to ensure timely completion, or fails to perform work in accordance with the requirements of the contract. The government has the right to complete the work and charge the contractor for the excess costs incurred following a termination for default. Both the contractor and its surety would then be liable for these costs.
However, this clause also provides for time extensions to the contract if the contractor is delayed by “unforeseeable causes beyond its control and without any negligence or fault by the contractor.” Some examples of such excusable delays are strikes, unusually severe weather, floods, fires, and acts of the government (war, embargo, etc.). A time extension for these delays is granted the contractor, but it does not receive an equitable adjustment, i.e., money, for the delays. As an example, if you are delayed five days by rain, you would receive a five-day time extension without any monetary adjustment if the rain amounted to “unusually severe” weather. It is assumed that the five days were not foreseeable, that is, unusually severe.
In order to justify a termination for default, the FAR requires the contracting officer to consider a number of factors. (See FAR 49.402-3(f)).
Updated: August 9, 2018