Default and Dispute Research Paper Example | Topics and Well Written Essays - 1500 words

Default and Dispute - Research Paper Example Acquisition planning and cost containment strategies of government are two important aspects of the study. Finally, the study will try to recommend some useful strategies to increase the efficiency of procurement process of government.     Termination for default can be described as practice of contractual right of prime contractor or the government to terminate the agreement or contract partially or as a whole for the reason of contractor’s failure to perform contractual obligations (in actual or anticipatory). Termination for default causes the loss for an underperforming contractor in the following way. 1- The contractor will not be able to get reimbursement for undelivered work and they need to repay for any further advancement required in the undelivered product, 2- The contractor is liable to the prime contractor to pay the extra cost incurred due to terminated contract. Termination of default is a harsh monetary penalty in real practice. Every contractor needs to ta ke possible steps to avoid such predicament (James, 1963). Bases for a Termination for Default The Federal Acquisition Regulation has described various bases for termination for default. The bases can be summarized in the following manner. 1- Contractor fails to perform or deliver the work within given time frame, 2- contractor fails to show acceptable performance to accomplish the work. As a result of poor performance the contractor fails to progress in the work, 3- a government can show debarment notice to contractor, 4- a government can repudiate the contract anticipating future loss that would be caused by poor performance of the contractor. 4- Contractor fails to perform any of the contractual provisions. Example Termination for Default is categorized as government specific technical term contracting term described in 49.4 of the FAR. When a supplier fails to supply product within the predetermined time frame the government can terminate a contract for default. Suppose a suppli er did a contractual agreement with the government to supply 60 units of the product after 1 month but managed to deliver only 40 units within given time frame. The government has the right to perform the termination of default due to the failure of the contractor. Termination for Default versus Termination for Convenience Consequences In case of termination for default, the prime contractor is not liable for the cost incurred on undelivered work and contractor is liable to pay advance payments made by a government. The government has the right to claim manufacturing materials and completed supplies after termination of a contract. Contracting officer shall acquire finished material under the default clause on behalf of a government. Government is liable to pay contract price of finished supplies to a contractor. The payment amount is decided by contracting officer after adjustment with a contractor (Acquisition, n.d.). In the termination for convenience, the government may terminat e the contract in whole or in part at any time by giving minimum thirty days notice to the contractor. The contractor will be paid due to payment for completed work by the prime contractor.