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  • Question

    When I issue the Termination for Cause modification, de-obligating funds associated with work not completed, can that modification be unilateral? I see risk associated with trying to get the contractor to sign a bilateral modification.


    Answer

    This response is based on the information provided.  We suggest you discuss with your contracting team, program manager and/or legal department as appropriate.

     

    You may issue a unilateral modification to deobligate funds.  However, removing funds does not relieve the Government of payment of any properly owed payments to the contractor.  We do not know the size of your contract or how the Department of Agriculture processes terminations of default (T for D), but we will assume that your office will be processing the termination.  Before removing funds it would be best to discuss with the contractor what charges, if any, it believes it is entitled to for work performed in accordance with contract terms that it has not already been paid or termination charges; in a T for D you expect few allowable termination charges.

    FAR part 49 goes into detail on the settlement process you would want to follow before issuing your settlement modification, particularly FAR subpart 49.1.  You state you have a commercial contract which would mean the applicable clause is FAR 52,212-4.  Paragraph (m) would then apply.  If this is the clause in effect, you would use FAR part 49 information as guidance rather than as directive.

    The AGAR supplement adds, "AGAR 449.111 Review of proposed settlements.

    Proposed settlement agreements shall be reviewed and approved in accordance with contracting activity procedures."

     

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