Proactive responses to termination for convenience or stop-work orders

In today’s environment, many contractors have or will receive a termination for convenience or stop-work-order. Conventional wisdom says to respond to these in one of two ways: (1) challenge the termination through litigation, or (2) document one’s costs and submit a termination settlement proposal. But I suggest a third option to attempt first: make the business case for keeping the project going.  Dale Carnegie would describe it as "talking in terms of the other person's interests." This advice is as true in government contracting as it is in interpersonal relationships.

Consider Renegotiation Following a Notice of Termination

FAR 49.102(d), Reinstatement of Terminated Contracts, provides that if the government terminates a contract, it can subsequently reinstate it if 1) the contractor consents and 2) reinstatement is advantageous to the government. While used sparingly in the past, this clause may see more frequent use as contracting officers face pressure to reduce costs, while also obtaining the goods and services that government customers need.

In fact, President Trump has explicitly directed agencies to modify contracts "through renegotiation." The government is focused on obtaining a better deal for the American taxpayer. While some programs have little chance of remaining viable, in other situations, the underlying project may not be the driving force of the termination. Agencies may simply be seeking cost savings, and in these situations, contractors should consider reaching out to the Contracting Officer or other relevant agency officials to inquire if a renegotiation could save the contract. No company likes to negotiate against itself, but a modified contract is likely better than a terminated one. And the costs to make this offer are negligible. As the adage goes, "you miss 100 percent of the shots you don't take."

Persuasive Methods for Responding to a ..

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