[Code of Federal Regulations]

[Title 48, Volume 1]

[Revised as of October 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 48CFR49]



[Page 927]

 

            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM

 

                CHAPTER 1--FEDERAL ACQUISITION REGULATION

 

PART 49_TERMINATION OF CONTRACTS--Table of Contents

 

                     Subpart 49.1_General Principles

 

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--

    (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.