Allows government to terminate contract for convenience without cause at any time.
Applicability: Included in all government contracts.
Key Requirements
Understand government can terminate your contract without reason
Plan to cease work upon receiving termination notice
Document and preserve all work performed to date
Submit settlement proposal for termination costs and profit
Common Issues & Pitfalls
Not planning financially for potential contract termination
Failing to document costs attributable to terminated work
Not submitting settlement proposal timely after termination
Underestimating allowable termination costs (severance, settlement, restocking)
Contractor Guidance for Your Bid
Termination for convenience is common in federal contracts. Government can terminate anytime, for any reason. Don't sign a fixed-price contract without understanding your termination cost recovery limits. Make sure your pricing includes reasonable profit margin and plan financially for partial performance. Maintain clear documentation of all costs if/when termination occurs.