FAR and DFARS › FAR Part 49: Termination of Contracts › Subpart 49.5
FAR 49.503 Termination for convenience of the Government and 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 tells contracting officers which termination clauses to include in certain solicitations and contracts. It covers cost-reimbursement contracts, construction, time-and-material and labor-hour contracts, and fixed-price architect-engineer services, and it notes that prime contractors may use the cost-reimbursement termination clause in subcontracts. It matters because the clause placed in your contract determines how termination for convenience or default will be handled.
Applies to: Contracting officers and prime contractors awarding cost-reimbursement, construction, time-and-material, labor-hour, or architect-engineer contracts and subcontracts
What it requires
- Insert the clause at 52.249-6, Termination (Cost-Reimbursement), in solicitations and contracts when a cost-reimbursement contract is contemplated, except contracts for research and development with an educational or nonprofit institution on a no-fee basis
- If the contract is for construction, use the clause with its Alternate I
- If the contract is a time-and-material or labor-hour contract, use the clause with its Alternate IV
- Insert the clause at 52.249-7, Termination (Fixed-Price Architect-Engineer), in solicitations and contracts for architect-engineer services when a fixed-price contract is contemplated
Key terms: cost-reimbursement contract · construction · time-and-material contract · labor-hour contract · architect-engineer services
Written by AI from this section's text. A guide, not legal advice: the text below rules.
The text
(a) Cost-reimbursement contracts—(1) General use. Insert the clause at 52.249-6, Termination (Cost-Reimbursement), in solicitations and contracts when a cost-reimbursement contract is contemplated, except contracts for research and development with an educational or nonprofit institution on a no-fee basis.
(2) Construction. If the contract is for construction, the contracting officer shall use the clause with its Alternate I.
(3) Partial payments. If the contract is with an agency of the U.S. Government or with State, local, or foreign governments or their agencies, and if the contracting officer determines that the requirement to pay interest on excess partial payments is inappropriate, the contracting officer shall use the clause with its Alternate II. In such contracts for construction, the contracting officer shall use the clause with its Alternate III.
(4) Time-and-material and labor-hour contracts. If the contract is a time-and-material or labor-hour contract, the contracting officer shall use the clause with its Alternate IV. If the contract is with an agency of the U.S. Government or with State, local, or foreign governments or their agencies, and if the contracting officer determines that the requirement to pay interest on excess partial payments is inappropriate, the contracting officer shall use the clause with its Alternate V.
(b) Insert the clause at 52.249-7, Termination (Fixed-Price Architect-Engineer), in solicitations and contracts for architect-engineer services, when a fixed-price contract is contemplated.
(c) Subcontracts. The prime contractor may find the clause at 52.249-6, Termination (Cost-Reimbursement), suitable for use in cost-reimbursement subcontracts; provided, that the relationship between the contractor and subcontractor is clearly indicated. Inapplicable conditions (e.g., paragraphs (e), (j) and (n)) should be deleted and the period for submitting the subcontractor's termination settlement proposal should be reduced (e.g., 6 months).
Sections it refers to
← 49.502 Termination for convenience of the Government. · 49.504 Termination of fixed-price contracts for default. →
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.