Government Contracting Database
Termination
A contractor may be entitled to additional costs if the contract is terminated for the convenience of the government. Although the contractor is not entitled to overhead or profit on the portion of the work which is terminated, the contractor is entitled to the costs it incurred to the point of the termination, plus overhead and profit. If the contract is terminated for default, however, the contractor is not entitled to any additional costs and may, in fact, be responsible for the excess costs which the government incurs to complete the contract. In order for a defaulted contractor to recover additional costs, it must demonstrate that it was wrongfully terminated in which case the termination is converted to a termination for convenience.
Updated: July 24, 2018
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