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  • Question

    This is an 8(a) contractor who really tried to make the contract work. They are in deep financial difficulties and have provided written confirmation that they can no longer continue the performance of the contract (anticipatory repudiation). I know that I can terminate for cause, however due to the circumstances can the government cancel (rescind) the contract instead of terminating? Is this allowable in government contract law or must the CO terminate?


    Answer

    FAR 3.7 covers "Voiding and Rescinding of Contracts," but it applies to cases where criminal activity has occurred. While the procurement in this situation was made in accordance with FAR Part 12, FAR Part 14.407-4 gives the Government authority to "rescind" a contract when a mistake in a "bid" has been discovered after award. While aspects of FAR Part 14 may not necessarily apply to FAR Part 12, it's worth checking with your organization's legal counsel to see if a contract issued using FAR Part 12 procedures can be likewise rescinded.

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