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What is a cure notice?

A cure notice is used if the contractor fails to make progress or fails to perform any other provision of the contract. A cure notice should not be sent if delivery is late, because late delivery by itself is cause for a default termination.

The cure notice informs the contractor of the specific failure and gives the contractor an opportunity to cure the defect within 10 days (or any longer period of time the CO may consider reasonably necessary). There must be sufficient time remaining in the contract performance period for the contractor to cure or fix the deficiency within ten days or within the period specified by the CO.

The contract may not be terminated for default until this "cure period" expires.

At a minimum, a cure notice must:

Be in writing

Specifically state the failure the CO believes is endangering performance and

Allow the contractor at least ten days to "cure" the failure.

A cure notice does not require a written reply; rather, it requires action by the contractor to cure the condition. However, the contractor may respond to a cure notice by specifying the progress already made and the steps taken to ensure that contract performance will be on schedule. The contractor may also identify any failures on the government's part and any excusable delays that have contributed to the lack of progress. If the contractor fails to cure the condition endangering contract performance, the CO will ordinarily issue a show cause notice.

What is a show cause notice?

A show cause notice is used when the contractor has failed to deliver the required supplies or to perform services on time, and the government must ascertain whether the delay was excusable. The show cause notice is not required when terminating commercial item contracts. If the contractor fails to deliver the supplies or perform the services within the amount of time specified in the contract or any extension of that time, the CO should send a show cause notice asking the contractor to show why the contract should not be terminated for default. A show cause notice should be sent immediately upon expiration of the delivery period.

The show cause notice ensures that the contractor understands the severity of the situation. The contractor's response to the notice is used to evaluate whether circumstances justify default termination. A show cause notice is generally not mandatory, but it is advisable: Consider what would happen if the government were to terminate a contract for default without giving the contractor a chance to show cause, and an excusable delay actually existed. The default termination could be invalidated and turned into a termination for convenience, and the government would be liable not only for the contractor's costs of performance to date but also its anticipated profit.

At a minimum, a show cause notice must:

Inform the contractor of its liabilities in the event of default termination

Request that the contractor "show cause," in writing, why the contact should not be terminated for default

Inform the contractor that failure to explain the cause of the deficiency may be taken as admission that no valid explanation or excuse exists.

What are excusable delays?

A contract cannot be terminated for default if the contractor has an excusable delay. Examples of excusable delays include:

Acts of God or of the public enemy (e.g., terrorism)

Acts of the government (sovereign or contractual)

Fires

Floods

Epidemics

Quarantine restrictions

Strikes

Freight embargoes

Unusually severe weather.

In each instance the failure to perform must be beyond the control of and without the fault or negligence of the contractor. In most cases, the CO will need to rely on the COR to investigate and gather facts related to the contractor's excuse to determine its validity.

 
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