SUBJECT FEDERAL CONTRACTING You are a small business that ha

SUBJECT: FEDERAL CONTRACTING

You are a small business that has done some Government contracting so you know about FAR Part 49 regarding terminations. You have been approached by a large business to be a subcontractor to them on a new program. You are ecstatic! The subcontract document that they send you says that the prime contractor can terminate you for their convenience. Should you accept this term or not? Explain.

Solution

As per the guidelines of FAR part 49, clause of “termination for convenience” can be added by the contractor. It can also be accepted by the small business as subcontractor. Though, there should be proper settlement agreement in place to give due consideration to the interest of subcontractor.