TERMINATION OF CONTRACTS 8.101-27 Terminated portion of the contract means that portion of a terminated contract which relates to work or end terms not already completed and accepted prior to the effective date of termination and which the contractor is not to continue to perform. 8.101-28 Unadjusted contract changes are any contract changes or contract provisions as to which a definitive modification is required but has not been executed. 8.101-50 Termination contracting officer (see 1.206 and 8.201(c)). 8.101-51 Contracting officer as used in this Part means the NASA contracting officer who awarded the contract and is responsible for its administration. Subpart 2-General Principles Applicable to the Settlement of Fixed-Price Type Contracts Terminated for Convenience and to the Settlement of all Terminated Cost-Reimbursement Type Contracts 8.200 Scope of Subpart. This Subpart deals with: (i) the authority of contracting officers to terminate contracts in whole or in part (A) for the convenience of the Government; and (B) in the case of cost-reimbursement type contracts for default; (ii) duties of the contractor and the contracting officer after issuance of the notice of termination; (iii) general procedures for the settlement of terminated contracts; and (iv) settlement agreements. Subpart 3 sets forth additional principles applicable only to fixed-price type contracts. Subpart 4 sets forth additional principles applicable only to costreimbursement type contracts. Subpart 6 sets forth the principles applicable to the termination of fixed-price type contracts for default. 8.201 Authority of Contracting Officers. (a) The authority of contracting officers to terminate contracts for convenience, and for default in the case of cost-reimbursement type contracts, and to enter into settlement agreements under this Regulation is usually found in the termination clause or other provisions of the contract. (b) Contracts shall be terminated, whether for default or convenience, only when such action is in the best interest of the Government, as determined in accordance with this Regulation. Where the contracting officer has ascertained that (i) the contractor will accept a no-cost settlement, (ii) Government property was not furnished, and (iii) there are no outstanding payments, claims, or other contractor obligations, the contracting officer shall effect a no-cost settlement agreement in lieu of issuing a notice of termination. When a no-cost settlement cannot be obtained, a notice of termination should be issued; however, when the price of the undelivered balance of the contract is less than $1,000, a termination for convenience should normally not be effected but the contract be permitted to run to completion. If a notice of termination has been issued, negotiation of the settlement with the contractor, including a no-cost settlement if appropriate, shall be the responsibility of the termination contracting officer (see 8.206 and 8.210-4). (c) Heads of installations shall appoint a termination contracting officer (TCO) (see 1.206) to perform specific duties relating to contract termination as his primary function. Such duties should include: (i) receiving and reviewing the Termination Authority (NASA Form 1412); (ii) reviewing the contract and other related documents, prior to issuing the Notice of Termination, to ensure protection of the Government's rights under the contract; (iii) issuing notices of termination, reinstatement and recission to contractors; (iv) assigning termination docket control numbers; (v) developing, maintaining and managing basic controls relating to contract termination and settlement actions, and (vi) carrying out the duties, functions and responsibilities set forth in this Part 8. TERMINATION OF CONTRACTS 8.202 Prior Clearance of Significant Contract Terminations. (a) Prior clearance by NASA Headquarters is required before any notice or any information concerning a proposed contract termination involving a reduction in employment of 100 or more contractor employees is released to a contractor. Coordination of the timing of the notice to the contractor and release of information to Congress or the public is the responsibility of NASA Headquarters through its liaison point designated in (b) below. In a labor surplus area a lesser number than 100 may be significant, and if so, should be similarly cleared. (b) The following information will be submitted to the Office of Legislative Affairs, NASA Headquarters (Code C) which, in coordination with the Office of Public Affairs (Code F), has been designated the NASA liaison point: (i) contract number, date, type of contract; (ii) name of company; nature of contract or end item; (iv) the reasons for the termination; (v) contract price of items terminated; (vi) total number of contractor employees involved; (vii) statement of anticipated impact on the company and the community (identify); identify area labor category, and whether contractor is large or small business; (viii) total number of subcontractors involved as well as the impact in this area, if known; and (ix) draft (unclassified) of suggested press release of information. Information copies of the above will be furnished the following NASA Headquarters offices: the Office of Public Affairs (Code F), the cognizant Program Office, and the Director of Procurement (Code KDP-3). (c) Clearance will be requested as soon as possible after the decision has been made to terminate a contract. Pending receipt of clearance, information pertinent to the termination will require "For Official Use Only" handling unless a security clearance is required. (d) The liaison office will act promptly on the release and not later than two working days after receipt so as to avoid the accrual of termination costs. 8.203 Notice of Termination. (a) General. Contracts shall be terminated for convenience, or for default in the case of cost-reimbursement type contracts, only by a written notice to the contractor (see 8.801), stating: (i) that the contract is being terminated for the convenience of the the Government (or for default) pursuant to the contract provisions authorizing such termination; (ii) the effective date of termination; (iii) the extent of termination and, if a partial termination, the portion of the contract to be continued; (iv) recommended actions to be taken by the contractor to minimize the impact on his personnel if the termination, together with all other outstanding terminations, will result in a significant reduction in the contractor's work force (see paragraph 7 of the letter notice in 8.801-2); and (v) any special instructions. GENERAL PRINCIPLES APPLICABLE TO THE SETTLEMENT OF FIXED-PRICE TYPE CONTRACTS TERMINATED FOR CONVENIENCE AND TO THE SETTLEMENT OF ALL TERMINATED COST-REIMBURSEMENT TYPE CONTRACTS (b) Distribution of Copies. Simultaneously with issuance of the termination notice to the contractor a copy shall be sent to the office administering the contract and to any known assignee, guarantor, or surety of the contractor. (c) Amendment of Termination Notice. A notice of termination may be amended to provide for: (i) the correction of mistakes in the notice, of a nonsubstantive nature; (ii) addition of supplemental data or instructions; and (iii) rescission of the notice when it has been determined that the items of work terminated had been completed or shipped prior to the contractor's receipt of the notice. (d) Reinstatement of Terminated Contracts. The procurement office may authorize reinstatement of the terminated portion of a contract in whole or in part by an amendment to the notice of termination provided that it has been determined in writing that: (i) circumstances clearly indicate a requirement for the terminated items; and (ii) reinstatement is advantageous to the Government; provided that the written consent of the contractor is obtained to the reinstatement. 8.204 Methods of Settlement. Settlement of terminated cost-reimbursement type contracts and of fixed-price type contracts terminated for convenience may be effected by (i) negotiated agreement, (ii) determination by the TCO, (iii) in the case of cost-reimbursement type contracts, costing-out under vouchers using Standard Form 1034, or (iv) a combination of these methods. Every effort shall be made to reach a fair and prompt settlement with the contractor. The negotiated agreement is the most expeditious and most satisfactory method of settling termination claims and shall be used whenever feasible. Settlement by determination shall be used only when a termination claim cannot be settled by agreement. 8.205 Duties of Prime Contractor After Receipt of Notice of Termination. The contractor, after receipt of the notice of termination and except as otherwise directed by the TCO, must comply with the termination clause of the contract and the notice of termination which generally require, among other things, that the contractor: (i) stop work immediately on the terminated portion of the contract and discontinue placing subcontracts thereunder; (ii) terminate all subcontracts related to the terminated portion of the prime contract; (iii) immediately advise the TCO of any special circumstances precluding the stoppage of work; (iv) if the termination is partial, perform the continued portion of the contract and submit promptly any request for an equitable adjustment of price with respect to the continued portion of the contract, supported by evidence of any increase in the cost thereof; TERMINATION OF CONTRACTS (v) take such action as may be necessary, or as the TCO may direct, (viii) promptly submit his own settlement proposal, supported by ap- (ix) dispose of any termination inventory, as directed or authorized by the TCO. 8.206 Duties of Termination Contracting Officer After Issuance of Notice of Termination. (a) In accordance with the termination clause in the contract and with the notice of termination, the TCO shall, among other things: (i) direct the action required of the prime contractor including the (ii) examine the settlement proposal of the prime contractor and, (iv) to the extent that he is unable to negotiate settlement after due (b) To expedite settlement, the TCO shall seek assistance from specially qualified personnel (such as negotiating, legal, accounting, inspecting, engineering, and property disposal personnel) to: (i) assist the TCO in dealings with the contractor; (ii) render advice on legal and contractual matters; (iii) conduct accounting reviews and render advice and assistance on accounting matters; and (iv) perform the following functions with respect to the termination inventory (A) verify its existence; (B) determine qualitative and quantitative allocability; (C) make recommendations concerning serviceability and un serviceability; (D) undertake necessary screening and redistribution; and (E) assist the contractor in accomplishing other disposition. |