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FAR and DFARS › FAR Part 49: Termination of Contracts › Subpart 49.1

FAR 49.104 Duties of prime contractor after receipt of notice of termination.

The codified text (eCFR, as of 2026-10-02). Under the Revolutionary FAR Overhaul ↗, agencies follow class deviations with new text for many parts while the formal rules go through the Federal Register: check the solicitation and your contract's clauses, which rule.

In plain English

This section lists what a prime contractor must do after receiving a notice of termination. It requires the contractor to follow the notice and the contract's termination clause, unless the TCO directs otherwise, and describes the typical steps for a convenience termination. These duties matter because they affect the contractor's ability to stop work, settle subcontracts, protect government property, and submit its own settlement proposal.

Applies to: Prime contractors that have received a notice of termination under a Government contract

What it requires

  • Stop work immediately on the terminated portion of the contract and stop placing subcontracts thereunder
  • Terminate all subcontracts related to the terminated portion of the prime contract
  • Immediately advise the TCO of any special circumstances precluding the stoppage of work
  • Perform the continued portion of the contract and submit promptly any request for an equitable adjustment of price for the continued portion, supported by evidence of any increase in the cost, if the termination is partial

Key terms: notice of termination · termination clause · TCO · convenience terminations · termination inventory

Written by AI from this section's text. A guide, not legal advice: the text below rules.

The text

After receipt of the notice of termination, the contractor shall comply with the notice and the termination clause of the contract, except as otherwise directed by the TCO. The notice and clause applicable to convenience terminations generally require that the contractor—

(a) Stop work immediately on the terminated portion of the contract and stop placing subcontracts thereunder;

(b) Terminate all subcontracts related to the terminated portion of the prime contract;

(c) Immediately advise the TCO of any special circumstances precluding the stoppage of work;

(d) Perform the continued portion of the contract and submit promptly any request for an equitable adjustment of price for the continued portion, supported by evidence of any increase in the cost, if the termination is partial;

(e) Take necessary or directed action to protect and preserve property in the contractor's possession in which the Government has or may acquire an interest and, as directed by the TCO, deliver the property to the Government;

(f) Promptly notify the TCO in writing of any legal proceedings growing out of any subcontract or other commitment related to the terminated portion of the contract;

(g) Settle outstanding liabilities and proposals arising out of termination of subcontracts, obtaining any approvals or ratifications required by the TCO;

(h) Promptly submit the contractor's own settlement proposal, supported by appropriate schedules; and

(i) Dispose of termination inventory, as directed or authorized by the TCO.

← 49.103 Methods of settlement. · 49.105 Duties of termination contracting officer after issuance of notice of termination. →

Rule changes for FAR Part 49

Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.

FAR 49.104 Duties of prime contractor after receipt of notice of termination · SpendQuery