Imagine you’re a Government Contractor under a firm, fixed-price contract and you’ve done nothing wrong. Nevertheless, the Government has decided to unilaterally end its contract with you. Yes, the Government can do this (for almost any reason). No, you cannot get your anticipated profit for unperformed work. You can only recover:
- Costs you actually incurred;
- Profit on the work actually done; and
- Costs of preparing a termination settlement proposal.
Costs actually incurred include preparing to perform (e.g., costs incurred after award and before notice-to-proceed) because “a settlement should compensate the contractor fairly for the work done and preparations made for the terminated portions of the contract…”). FAR 49.201(a); Appeal of Pro-Built Construction Firm, ASBCA No. 59278 (June 1, 2017).
“Cost and accounting data may provide guides, but are not rigid measures, for ascertaining fair compensation.” FAR 49.201(c). But, contract line items (CLINs) regarding price have no meaning in a T4C settlement focused on costs. Appeal of Atlas Sahil Construction Co., ASBCA No. 58951 (November 9, 2017).
If you get a T4C notice, promptly stop incurring further costs and present a reasonable and well-supported termination settlement proposal to the Government.
Roads & Bridges | Written Notice
WRITTEN NOTICE | Beware that strict compliance of the contract might be required.
When an owner replaced a contractor for significant safety violations, […]
Roads & Bridges | Mommie Dearest
MOMMY DEAREST | The story of an ESA without a MOM
Nobody enters this world, or a contract, without a mother: There can […]
IIJA | Does Closing a “Giant Loophole” Cost Contractors?
A recent article published by Roads and Bridges magazine reports that the Office of Management and Budget is working to broaden the scope […]
Roads & Bridges | Buy American Plan Gets an Update
BUY AMERICAN PLAN GETS AN UPDATE
The Office of Management and Budget is developing standards to replace the current Buy […]
Roads & Bridges
Where Does the Buck Stop?
WHERE DOES THE BUCK STOP? | A shallow concrete pour leads to an interesting lawsuit
On the desk of President Harry S. Truman […]
Roads & Bridges | Reshaping Agreements
RESHAPING AGREEMENTS | Oral Agreements Must Be Written in Stone
Reuse, reshaping, and/or reapplication of existing materials was the goal in this roadway […]
Pay-If-Paid Unenforceable in Virginia Starting Jan. 1, 2023
As of Jan. 1, 2023, pay-if-paid clauses are unenforceable, regardless of whether a surety/payment bond claim is involved. This is only for […]
How Short is Too Short
A limitations period is too short when it’s unreasonably short.
Construction Contracting Without Relief Clauses During COVID-19
What to do if your contract lacks the parts to handle COVID-19? Considerations for creating new contracts during COVID-19.

Jonathan J. Straw
Blog Author
Contact Jonathan
Partner | KraftsonCaudle.com
Download Jon’s Bio
