A contract containing a term allowing it to be terminated for convenience such as paragraph l of Clause 4-1: General Terms and Conditions, subparagraph a 2 of Clause B-12: Termination for Convenience or Default — Cost-Reimbursement Contracts, or Clause B-71: Termination for Convenience (Transportation), or similar contract term, may be terminated for convenience when it is in the Postal Service’s best interest, for example, when the products or services supplied under the contract are no longer required or the contract becomes unnecessary for some other reason.
When a contract is terminated for convenience, the supplier is entitled to a percentage of the contract price, reflecting the percentage of work performed prior to notice of the termination, as well as any reasonable charges that the supplier can demonstrate directly resulted from the termination, (or, in the case of highway transportation contracts, liquidated damages calculated as provided in the Changes (Transportation) clause of the contract). Therefore, the contracting officer should consider the cost of a termination for convenience when deciding whether to take such action. When a contract has been terminated for convenience, the need to obtain sufficient documentation to support applicable payments to the supplier is required. The extent of the documentation should be balanced while ensuring and protecting the interests of the Postal Service in finalizing an expeditious settlement.
A termination settlement proposal should be obtained from the supplier within 180 days after the effective date of termination, unless the parties mutually agree to a different time limit. If the supplier fails to submit a termination settlement proposal within the time allowed, the contracting officer may determine, on the basis of information available, the amount, if any, due to the supplier by reason of the termination for convenience and pay that amount. If the supplier’s proposal exceeds $100,000 the contracting officer may request that it be certified. The contracting officer should consult with assigned counsel if the parties fail to agree on the amount to be paid. The supplier will have the right to submit a claim under Clause B-9: Claims and Disputes from any determination made by the contracting officer as to the termination settlement amount due. Should the supplier fail to submit the termination settlement proposal within 180 days, the supplier will be deemed to have waived its right to submit a claim for termination costs.
The contracting officer may settle a contract terminated for convenience by:
Termination for convenience may, in some instances, be to the advantage of the supplier. In these instances, the supplier may be willing to waive entitlement to charges or liquidated damages to which it may be entitled, thereby making termination for convenience more attractive to the Postal Service, as well. Any such waiver by the supplier should be the subject of a contract modification signed by the supplier.
