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1 1 (March 7, 2025)

handle is hein.crs/govesqa0001 and id is 1 raw text is: The Government's Broad Power to Terminate Procurement Contracts March 7, 2025 The scope and limits of the federal government's power to terminate procurement contracts is a topic of recurring interest to Congress, federal contracting officers, and federal contractors. As discussed below, the federal government's authority to terminate contracts for its own convenience is quite broad, but not limitless. Courts have generally upheld the federal government's authority to terminate procurement contracts when it is in the government's best interest, without finding the government liable for breach of contract except when a contractor can meet the very high bar of showing that the government acted in bad faith. This Legal Sidebar provides background on the federal government's authority to terminate procurement contracts for its convenience and then explores the limits of that power. Background on Terminations for Convenience The federal government enters into hundreds of billions of dollars in contracts for the acquisition of goods and services every year. The complexity of these acquisitions runs the gamut, with services ranging from the provision ofhousekeeping services and standard office supplies to the launching ofa satellite to establish a planetary defense system. Evolving federal interests-such as shifting executive priorities brought on by a change in presidential Administrations and unforeseen events like pandemics, natural disasters, acts of war, and cyberattacks-can substantively alter federal acquisition priorities. Federal procurement law is designed to provide agencies with the flexibility necessary to adapt to these and other issues that might arise during the procurement contract life cycle. As discussed in this CRS Legal Sidebar, federal law often requires the incorporation of a number of standard clauses into federal procurement contracts-such as Changes, Stop-Work Order, and Excusable Delays clauses-that the government may exercise to adapt to changed circumstances and evolving needs. Arguably the most considerable of these legal tools is the government's right to terminate contracts unilaterally for its own convenience. Termination for convenience refers to the exercise of the federal government's right to require contractors to halt performance of all or part of the work stipulated by a contract before the contract's expiration when it is in the Government's interest. Congressional Research Service https://crsreports.congress.gov LSB11275 CRS Legal Sidebar Prepared for Members and Committees of Congress

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