Sign In
  • Question

    Can you do a termination on a contract that has already expired.


    1. The FAR reference quoted below in pertinent part is applicable to this response.

    FAR 13.004 -- Legal Effect of Quotations
    (a) …[The] issuance by the Government of an order in response to a supplier’s quotation does not establish a contract. The order is an offer by the Government to the supplier to buy certain supplies or services upon specified terms and conditions. A contract is established when the supplier accepts the offer.

    (b) When appropriate, the contracting officer may ask the supplier to indicate acceptance of an order by notification to the Government, preferably in writing, as defined at 2.101. In other circumstances, the supplier may indicate acceptance by furnishing the supplies or services ordered or by proceeding with the work to the point where substantial performance has occurred.

    (c) If the Government issues an order resulting from a quotation, the Government may (by written notice to the supplier, at any time before acceptance occurs) withdraw, amend, or cancel its offer.

    2. Based on subsequent communication with the author of this inquiry, the following assumptions are also applicable to this response: (a) this acquisition was for construction valued at $39K, (b) the contracting officer issued a unilateral purchase order for the work to the vendor, and (3) there is no record that the vendor had ever signed and returned the purchase order indicating their acceptance.

    3. As set forth in FAR 13.004(a), when issuing a unilateral purchase order under simplified acquisition procedures, the order itself does not constitute a binding contract because it is only an offer by the Government to the vendor to buy certain services upon specified terms and conditions. A binding contract is only established after the vendor accepts the Government’s offer. In accordance with FAR 13.004(b), the vendor’s acceptance of the order can be made either by their signature on the order or by furnishing the services ordered or by proceeding to the point where substantial performance has occurred.
    4. In rulings by the Armed Services Board of Contract Appeals (e.g., Comptech Corp., ASBCA 55526, 2008 WL 4628786 (Oct. 1, 2008)), the Board has reasoned that in cases where a unilateral purchase order was not signed by the vendor, then the vendor “accepts” the Government’s offer by performing in accordance with the purchase order. Therefore, when the vendor does not perform by the delivery date specified in the order, they fail to accept the Government’s offer and, as such, a contract for purchase and sale is never formed. As a result, there is simply no contract between the Government and the vendor which can terminated, either for default or for convenience of the Government under these circumstances.

    5. In this case, it is clear that the vendor did not accomplish the construction services in question, let alone complete substantial performance of this work. Furthermore, it would appear that the vendor did not sign and return the purchase order to the contracting officer expressly indicating their acceptance of the Government’s offer. Based on the above, it is our opinion that a binding contract for this construction effort had never existed because vendor did not accept the Governments offer, and therefore this order cannot be terminated either for default or for convenience of the Government. Consequently, in accordance with FAR 13.004(c), we believe that the contracting officer should send a written notice to the vendor that formally withdraws this order, thereby cancelling the Government’s offer for performance of this work.

    Open full Question Details