Default and Dispute

Name: Course: Instructor: Introduction In government contracting, the government as the buyer enters into mutually and legally binding relationships with a second party, which is the seller. The seller is to deliver the supplies while the buyer pays for those services. This includes all written commitments that obligate the government to expend allocated funds in large contracting engagements. In the management of contracts, situations arise where these agreements may require termination between the contracting government agents and contractors in order to settle arising disputes. Generally, the government will terminate a contract either based on a default arising from the contractor or by the convenience of the government(Breger,et al, 2001). Termination for Default Terminating a contract by default is the exercise of the government's right because of the contractor’s actual or anticipated failure to perform the set contractual obligations. The right to terminate a contract where it has been determined that the reasons are not excusable the government acts to terminate the contractors just like for its convenience purposes. The default clause allows the contractor to transfer title of the delivered work to the government after termination of the contract. The government on the other hand pays all goods, services and materials delivered. However, the government must establish that the termination was proper and correct. Though default termination is a drastic action, the government shows that its determination was evidenced based and that it was unlikely for the contract to have been completed in time (David Ricci). The ground of termination according to FAR Part 49 includes:  A Failure to deliver or perform on time Timeliness is a qualitative measure of performance that can lead to termination of government contract. A sense of goodwill also counts in case there is strong evidence proves that extra effort from the contractor would achieve better results based on a time schedule. However, it must rest on sound basis to verify that the cost incurred by terminating a particular contract will be more advantageous to the governments while safeguarding the contractor will. Though the schedule may be delayed in some situations where, and based on evidence it is may not suffice to terminate a contract by default if it is established that the contractor could have completed the work on an extended date. Excusable delays come to influence the time factor in a contractor. It proposes that circumstances beyond the control of the contractor can be demonstrated to affect the delivery of predetermined work deliverables (David Ricci). In an engineering construction in different parts of the country , for instances, differing site conditions in a construction contract may affect the timeliness of as a contract. In this case, to effect a termination by default is improper before such reviews are put into consideration. Accordingly the untimely performance of work in which the critical path is not affected is not a justification for termination and the deviation can be resolved through other means increased contractor liability. Where termination is effected and all the reviews are conducted, the government transfers the default to a termination for convenience in order to effect the termination (David Ricci). Failure to make progress to endanger Performance Failure to make progress to endanger performance either in the objectives, standards or quantity of work may end in as default. The government in this line willingly gives a contractor chances to cure the deviations, while accumulating evidence to appropriate default charges against the appellant. The government ensures clarity of deliverables is availed to the contractor to meet standards and indicator. In case no improvements, the government thus, terminates a contract where it is obviously expected that those specifications would be met. Failure to make progress is a violation of both the qualitative and the quantitative aspect of the job. In case of a procurement order, for example, the government may show terminating a contract and re-tendering for a prompt procurement was reasonably the right option for minimizing the excess cost resulting from a delivery delay (CCH incorporated, 2007). Another reason of default termination is failure to perform any other provision of a contract. This generally caters for provision in particular contracts where the contractor is hired in good faith. Based with the fact that the contractor has the experience required to carry out specific job requirements, the entire responsibility of quality is the contractor's liability. In cases the specifications are not met the government may end the contract on the surety bond. Investigations for the project are justified through a neutral third party to determine whether, termination was the right course. Other contract clauses in the government if justified under transfer this default termination to a transfer termination for convenience (CCH incorporated, 2007). Consequence and Remedies of Default After the termination, all the parties are affected. The government pursues its interest in terminating contracts for convenience purposes. The federal agency, takes responsibility compensates the contractor on any due expenses in the contract by taking liability of the same. A fair allowance for profit is also included in the settlement proposal and in this kind of termination, the contractor is free after the effective date of termination. On the other hand, termination for default, the government provides the reimbursement cost just in for convenience but may later claim any advance expenses on the contractor. In case the alternative solutions are pursued in the termination, the contractor may operate under surety bonds on behalf of the government. Under default, the federal agencies are entitled to claim any due expenses provided by law in recovery of all unintended consequences of a contract. Moreover, the disputes are also common in default cases. This may result in a court of law or arbitration boards and councils to validate the ground contract breaching. Auditing is done to provide accounting data and other information sufficient for governments’ review. In this case, the basis and form of the contractor’s settlement proposal must be acceptable to the prime contractor. Each settlement must be supported by accounting data and other information sufficient for adequate review by the Government. The Government fails to pay the prime contractor any amount for loss of anticipatory profits or consequential damages resulting from the termination. However, amendments in the termination on default notice may ...