[Code of Federal Regulations]
[Title 48, Volume 1]
[Revised as of October 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR49]

[Page 911-912]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
                CHAPTER 1--FEDERAL ACQUISITION REGULATION
 
PART 49_TERMINATION OF CONTRACTS--Table of Contents
 
                     Subpart 49.1_General Principles
 
Sec.  49.108-2  Prime contractor's rights and obligations.

    (a) Termination for convenience clauses provide that after receipt 
of a termination notice the prime contractor shall, unless directed 
otherwise by the TCO, terminate all subcontracts to the extent that they 
relate to the performance of prime work terminated. Therefore, prime 
contractors should include a termination clause in their subcontracts 
for their own protection. Suggestions regarding use of subcontract 
termination clauses are in subpart 49.5.
    (b) The failure of a prime contractor to include an appropriate 
termination clause in any subcontract, or to exercise the clause rights, 
shall not--

[[Page 912]]

    (1) Affect the Government's right to require the termination of the 
subcontract; or
    (2) Increase the obligation of the Government beyond what it would 
have been if the subcontract had contained an appropriate clause.
    (c) In any case, the reasonableness of the prime contractor's 
settlement with the subcontractor should normally be measured by the 
aggregate amount due under paragraph (f) of the subcontract termination 
clause suggested in 49.502(e). The TCO shall allow reimbursement in 
excess of that amount only in unusual cases and then only to the extent 
that the terms of the subcontract did not unreasonably increase the 
rights of the subcontractor.