# MP5349 Termination of Contracts

#### Mandatory Procedure

MP5349
Termination of Contracts

March 2009

# SUBPART MP5349.4 — TERMINATION FOR DEFAULT

MP5349.402 Termination of Fixed-Price Contracts for Default. (No Text)

MP5349.402-3 Procedure for Default

(d) For all ACAT I, II, and III Programs, the contracting officer shall, upon issuance of the cure notice, immediately inform SAF/AQCK and forward a copy of the cure notice to SAF/AQCK. In addition to ACAT program notices, contracting officers shall notify SAF/AQCK of any other notices that could result in high-level Air Force interest.

(e)(1) For all ACAT I, II, and III Programs, the contracting officer shall, upon issuance of the show cause notice, immediately inform SAF/AQCK and forward a copy of the show cause notice to SAF/AQCK. In addition to ACAT program notices, contracting officers shall notify SAF/AQCK of any other notices that could result in high-level Air Force interest.

(f) Prior to making a final decision concerning termination for default, the contracting officer shall forward the termination notice and the complete contract file to AFLOA/JAQ and follow the procedures in 5333.291(b).

(h) The contracting officer shall, upon issuance of the termination notice, immediately inform SAF/AQCK and distribute a copy of the termination notice and Report of Termination For Default (as required by DFARS PGI 249.470(1)), within two business days, to SAF/AQCK, safaqck.workflow@pentagon.af.mil. SAF/AQCK will forward the Report of Termination for Default to OUSD(AT&L) DPAP (CPIC) no later than 10 calendar days after the issuance of the termination for default notice In addition to the data required by DFARS PGI 249.470(1), include the following information in the Report of Termination for Default:

(i) Type of acquisition (e.g. ACAT I, ACAT II, Construction, R&D, et al.).

(ii) Total amount of funds expended on this contract.

(ii) Contract type (e.g. FFP, CPAF). Additionally, if an IDIQ contract, indicate singe vs. multiple-award.

MP5349.402-6 Repurchase Against Contractor’s Account.

The contracting officer shall provide copies of assessments of excess reprocurement costs to DFAS/BKRD/CC and AFLOA/JAQ.

MP5349.403 Termination of Cost-Reimbursement Contracts for Default

(a) The contracting officer shall, upon issuance of the termination notice, immediately inform SAF/AQCK and forward a copy of the termination notice along with Report of Termination for Default within two business days to SAF/AQCK, safaqck.workflow@pentagon.af.mil. SAF/AQCK will forward the Report of Termination for Default to OUSD(AT&L)DPAP(CPIC) no later than 10 calendar days after the issuance of the termination for default notice. In addition to the data required by DFARS PGI 249.470(1), include the following information in the Report of Termination for Default:

(i) Type of acquisition (e.g. ACAT I, ACAT II, Construction, R&D, et al)

(ii) Total amount of funds expended on this contract

##### SUBPART MP5349.5 — CONTRACT TERMINATION CLAUSES

MP5349.501-70 Special Termination Costs.

(a) Contracting officers shall refer to Volume 2A, Chapter 1, Section 010213, paragraph C.2 of DoD 7000.14-R, DoD Financial Management Regulation, for Congressional notification and additional approval requirements for Special Termination Cost Clauses (STCCs). Because STCCs require special notification to Congress and entail a long approval process over which the Air Force has little control, the contracting officer should allow SAF/AQCK sufficient time to process requests to use DFARS 252.249-7000, Special Termination Costs (i.e. not less than 90 days prior to contract award). The request shall include the following:

(i) A detailed breakdown of applicable cost categories in the clause at DFARS 252.249-7000 (a)(1) through (5), which includes the reasons for the anticipated incurrence of the costs in each category;

(ii) Information on the financial and program need for the clause including an assessment of the contractor's financial position and the impact of a failure to receive authority to use the clause; and

(iii) Clear evidence that only costs that arise directly from a termination would be compensated under the clause. Costs that would be incurred by the Government, regardless of whether a termination occurs, shall not be covered by a STCC.

(c) The contracting officer shall obtain SAF/FM approval prior to authorizing any increase in the Government's maximum liability under the clause.

SUBPART MP5349.70 — SPECIAL TERMINATION REQUIREMENTS

MP5349.7001 Congressional Notification on Significant Contract Terminations.

(c) The contracting officer shall submit the request for clearance to SAF/AQCK at least five workdays before the proposed termination date. SAF/AQCK will forward the clearance request to SAF/LLP. The contracting officer shall not release the termination notice until SAF/LLP contacts the contracting officer, indicating the date and time that Congress will be notified and the contractor should receive the termination notice.

(d)(5) “Contract price of the items terminated” means the contract price of the supplies or services not yet accepted that are being terminated. The contracting officer shall not adjust this amount downward for progress or advance payments, accepted vouchered costs, or less than full funding and should use estimates when unpriced contract actions are being terminated, or when otherwise necessary.

MP5349.7003 Notification of Anticipated Terminations or Reductions.

(b)(2)(i) The contracting officer shall submit the draft notification to SAF/AQCK as soon as the proposed termination/reduction is known. SAF/AQCK will forward the notification to SAF/AQ for signature. The notification should be addressed to:

Administrator
Office of National Response
U. S. Department of Labor
Employment and Training Administration
200 Constitution Avenue NW
Room N5422
Washington DC 20210

The notice should address the following key elements:

(1) Contract number, date, and type of contract

(2) Name of the Company

(3) Nature of contract or end item

(4) The reason for the termination

(5) Contract price of the items terminated

(6) Total number of contractor employees involved, including the Government’s estimate of the number who may be discharged

(7) Statement of anticipated impact on the company and the community

(8) The area labor category, whether the contractor is a large or small business, and any known impact on hardcore disadvantaged employment programs

(9) Total number of subcontractors involved and the impact in this area, and

(10) An unclassified draft of a suggested press release