Friday, July 20, 2012

CURE NOTICE AND SHOW CAUSE: WHAT'S THE DIFFERENCE?

Paragraph (a)(1)(ii) of the default clause addresses failure to deliver or perform on time.  In these circumstances, no notice of failure or of the possibility of termination for default is required.  (However, if the government has done anything which might be construed by the contractor as a waiver of the delivery schedule, the government must  establish a new due date.)

Paragraphs (a)(1)(ii) and (a)(1)(iii) of the default clause involve failure to make progress endangering performance or failure to perform a provision of the contract other than the schedule deadline.  If default termination is based on these types of failures, the contracting officer must provide the contractor a cure notice.  The format is in FAR 49.607(a).


In preparing the cure notice, care should be taken to specify the failures and to suggest the cures.  The 10 days may be extended if the contracting officer considers it reasonably necessary.  The contractor can use the failure to provide the cure notice as an absolute defense in its termination for default appeal.  Failure to provide the required cure notice is fatal.

As a final warning or if the time remaining for delivery is insufficient to permit a realistic cure period of 10 days or more, the show cause letter, set forth in FAR 49.607(b) may be used.  "It should be sent immediately upon expiration of the delivery period."  The letter warns the contractor default is imminent and invites the contractor to show why the contract should not be so terminated.  It refers to the missed delivery date or the failure to cure the defects cited in the cure notice.  One last chance is given the contractor.

It is important to follow FAR 49.402-3 and 49.607 precisely.  These notices are not interchangeable.  They are complementary.  They are to be used under the precise circumstances described in the regulations.


Contractors should take these notices very seriously and prepare complete responses.  They should fully explain any excusable causes of delay or failure to perform.  And, they should remember that any acts or omissions of the government giving rise to constructive changes are recognized excuses.  The contractor must thoroughly address the issues raised in the notices.

bill@spriggslawgroup.com        www.spriggslawgroup.com

No comments:

Post a Comment