FAR and DFARS › FAR Part 49: Termination of Contracts › Subpart 49.4
FAR 49.402-4 Procedure in lieu of termination for default.
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 options a contracting officer may use instead of terminating a contract for default when it serves the Government's interest. It matters because a contractor facing default may be allowed to keep performing under revised terms rather than losing the contract outright.
Applies to: Contracting officers deciding whether to terminate a contract for default
Key terms: termination for default · revised delivery schedule · subcontract · no-cost termination settlement agreement · surety
Written by AI from this section's text. A guide, not legal advice: the text below rules.
The text
The following courses of action, among others, are available to the contracting officer in lieu of termination for default when in the Government's interest:
(a) Permit the contractor, the surety, or the guarantor, to continue performance of the contract under a revised delivery schedule.
(b) Permit the contractor to continue performance of the contract by means of a subcontract or other business arrangement with an acceptable third party, provided the rights of the Government are adequately preserved.
(c) If the requirement for the supplies and services in the contract no longer exists, and the contractor is not liable to the Government for damages as provided in 49.402-7, execute a no-cost termination settlement agreement using the formats in 49.603-6 and 49.603-7 as a guide.
Sections it refers to
← 49.402-3 Procedure for default. · 49.402-5 Memorandum by the contracting officer. →
Rule changes for FAR Part 49
- Federal Acquisition Regulation: Revolutionary Federal Acquisition Regulation Overhaul Parts 3 and 49 ↗ · proposed 2026-06-23 · comments due 2026-07-23
- Federal Acquisition Regulation; Technical Amendments ↗ · final rule 2024-12-16 · effective 2025-01-03
Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.