Termination for default is materially different from termination for convenience. Default language can expose a contractor to replacement costs, damages, withholding, and other remedies tied to alleged nonperformance.
A common mistake is assuming the subcontractor automatically receives the same cure process the Government gives the prime. The subcontract is a separate contract and may contain a different cure period, different notice rules, or immediate-default triggers.
What the federal default procedure says
FAR 49.402-3 states that when default is based on failure to make progress or failure to perform certain other contract provisions, the contracting officer generally provides written notice specifying the failure and a 10-day period, or longer when necessary, to cure. The rule also explains that late delivery or failure to perform by the specified time can be treated differently and may not require the same advance cure notice.
FAR 52.249-8 similarly provides a 10-day cure mechanism for specified progress and other-performance failures in the fixed-price supply and service context.
Official source: FAR 49.402-3 — Procedure for Default.
The subcontract may be harsher
- Three-, five-, or seven-day cure periods.
- Immediate default for insolvency, safety issues, schedule failure, loss of required status, or repeated breaches.
- A right for the prime to supplement the subcontractor's workforce and backcharge costs before termination.
- Cross-default provisions tied to other contracts.
- Broad language allowing default whenever the prime believes performance is endangered.
Check consequences as carefully as the trigger
The agreement should be reviewed for reprocurement costs, completion costs, withholding, setoff, equipment or material takeover, assignment of lower-tier agreements, schedule damages, and treatment of work already accepted.
Also check whether a termination later found improper converts to a convenience termination and what recovery is available in that event.
Build the cure process into project administration
- Identify who receives formal notices.
- Escalate cure and show-cause notices immediately.
- Respond in writing with facts, corrective actions, schedule, and any excusable causes.
- Preserve documents showing prime direction, access problems, Government-caused delay, and other contributing events.
- Avoid assuming ongoing discussions suspend a contractual cure deadline unless that is confirmed in writing.