Termination for Default (T4D)

The grounds are in FAR 49.402-1 and 52.249-8(a): late delivery, failure to make progress that endangers performance, and failure to perform any other provision. For the last two, the clause requires a written cure notice giving at least 10 days to fix the problem. Late delivery needs no cure notice, but 49.402-3 has the contracting officer send a show cause notice when practicable and copy either notice to the SBA area office when the contractor is small.

Under 49.402-2 the government owes nothing for undelivered work, can recover progress payments, can take title to completed supplies and manufacturing materials, and under 49.402-6 repurchases against the contractor's account and bills the difference. The decision is discretionary: 49.402-3(f) has the contracting officer weigh the excuse, the urgency of the need, and whether other sources exist.

The failure mode is the improper default. If the failure was excusable under 52.249-8(c), paragraph (g) converts the action to a termination for convenience and the government pays the settlement it meant to avoid. Under 42.1503(h) the notice, and any withdrawal or conversion, goes into FAPIIS within three calendar days, where the next source selection team will read it.