Home Management The cor/cotr answer book
What is a remedy?
Government contract remedies are forms of relief that can be pursued in light of a contractor's nonconformance or noncompliance with the contract terms or conditions. Relief is defined as "the redress or assistance awarded to a complainant, by the court, especially a court of equity, including such remedies as specific performance, injunction, rescission of a contract, etc. The term generally does not comprehend an award of money damages. Thus the term affirmative relief is often used to indicate that the gist of relief is protection from future harm rather than compensation for past injury." Relief can be provided by contract clauses or from basic rights provided by government contract law and, occasionally, by commercial contract law.
What is the COR's role regarding remedies?
The COR is often the individual responsible for recommending a formal contract remedy to the CO. The COR:
Provides remedy notification to the CO that is adequate, timely, and will support the CO's final decision
Suggests a remedy that will minimize the impact of the contractor's performance problems on the requirement, delivery schedule, and cost.
398. What is a breach of contract?
A breach of contract occurs when:
The government or the contractor fails to fulfill the terms and conditions of the contract, and there is no relief available under the terms of the contract
The contractor has committed fraud or made a gross mistake amounting to fraud.
When a breach of contract has been identified, what should the COR provide to the CO?
The COR should provide the CO with:
Sufficient evidence of a breach of contract and suggestions for an appropriate contract remedy
Assistance in evaluating the contractor's response after it is informed that a breach of contract has occurred.
What may the government do when a breach of contract occurs?
When a contractual breach has occurred, the government may:
Issue a forbearance letter deferring termination of the contract
Modify the contract to correct the problem
Use a contractual remedy
Begin proceedings to terminate the contract for the contractor's default.
What is a letter of forbearance? When is it issued?
Forbearance is a term used to describe deferring termination action. Forbearance is appropriate when a contractor has provided a workable solution to a performance deficiency brought to its attention. To ensure preservation of the government's right to future remedial action for deficient contract performance, the government issues a letter of forbearance, which must:
Acknowledge the contractor's stated method for and commitment to "curing" performance problems
Notify the contractor that the government is deferring its right to take future corrective actions only if the contractor fulfills its commitment to remedy deficient performance
Declare the government's intention to pursue corrective contractual remedies, including default, if the contractor fails to fulfill its commitment.
What are delinquency notices?
Delinquency notices are notices that may be sent to the contractor by the CO when it appears a contractual breach has occurred and contract termination is being considered. Delinquency notices are time-sensitive; if the government does not act in a timely manner, it could lose its right to do so, so it is important that the COR notify the CO of any possible breaches of contract as soon as possible. Delinquency notification can take one of two forms: the cure notice or the show cause notice. A cure notice is used when:
The contractor fails to make progress and performance is endangered
The performance problem is not related to contract terms regarding delivery
At least ten days remain for contract performance, and correction of the problem can reasonably be expected to take place within the time remaining.
A cure notice:
Specifically states the failure in performance that is believed to be endangering performance
Allows the contractor at least ten days to "cure" the failure
Is in writing and is legally sufficient (i.e., legally establishes the government's right to proceed) to support a default termination.
A show cause notice is used when:
There is insufficient time remaining in the delivery schedule for the contractor to cure or correct the delinquency
The government is seeking evidence that the delinquency was beyond the control of the contractor.
Usually a show cause notice is issued when there are fewer than ten days remaining in the performance period or when the contractor is delinquent; however, it can be used at any time a COR determines that there is an "insufficient amount of time left" to correct the problem. A show cause notice:
Informs the contractor of its liabilities in the event of the contract being terminated for the contractor's default
Requests that the contractor "show cause" why the contract should not be terminated for default
Informs the contractor that failure to explain the cause of the deficiency may be taken as admission that no valid explanation exists
Invites the contractor to discuss the matter at a conference, if appropriate.
See Chapter 8 for additional information regarding contract termination.
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