FAR 49.402-5—Memorandum by the contracting officer.
Plain-English Summary
FAR 49.402-5 is a documentation requirement tied to default terminations and to any alternative action taken under FAR 49.402-4. It requires the contracting officer to prepare a memorandum for the contract file explaining the reasons for the action taken whenever a contract is terminated for default or when the contracting officer uses a procedure authorized by 49.402-4 instead of immediate default termination. In practice, this section is about creating a clear administrative record that shows why the Government chose the course it did, which supports accountability, review, and later dispute resolution. The memorandum helps preserve the factual and legal basis for the decision, especially because default termination is a serious contractual remedy and often becomes the subject of claims, appeals, or litigation. It also ensures that any deviation from a straightforward default termination under 49.402-4 is documented in the file so the decision can be understood and defended later. For contractors, this means the Government’s decision should be traceable to documented reasons; for contracting officers, it means the file must tell the story of the decision, not just record the outcome.
Key Rules
Memorandum required
The contracting officer must prepare a memorandum for the contract file whenever a contract is terminated for default. The memorandum is not optional; it is a required part of the file documentation for that action.
Document 49.402-4 actions
The same memorandum requirement applies when the contracting officer follows a procedure authorized by FAR 49.402-4 instead of directly terminating for default. Any such alternative action must also be explained in the file.
Explain the reasons
The memorandum must explain the reasons for the action taken. This means the file should show the basis for the decision, not merely state that a default termination or other authorized procedure occurred.
Contract file record
The memorandum is specifically for the contract file, making it part of the official procurement record. This supports later review by auditors, supervisors, boards of contract appeals, courts, and other authorized reviewers.
Responsibilities
Contracting Officer
Prepare and place a memorandum in the contract file whenever a contract is terminated for default or when a procedure authorized by FAR 49.402-4 is used. The memorandum must explain the reasons for the action taken and provide a clear record of the decision.
Agency/Contract File Custodian
Maintain the memorandum as part of the official contract file and ensure the record is preserved for review, oversight, and any later dispute or appeal.
Contractor
No direct duty is imposed by this section, but the contractor should understand that the Government’s decision must be documented and may later be reviewed against the reasons stated in the file.
Practical Implications
This section is a documentation safeguard: if a default termination or alternative action is challenged later, the memorandum becomes a key piece of evidence showing why the contracting officer acted.
A common pitfall is writing a conclusory memo that states the result but not the reasons; the file should contain enough detail to support the decision and show the basis for it.
Contracting officers should ensure the memorandum is prepared promptly while the facts are fresh and the rationale is clear, especially when the decision involves judgment under FAR 49.402-4.
Because default termination is a high-risk remedy, incomplete file documentation can weaken the Government’s position in a dispute even if the underlying decision was substantively correct.
Contractors reviewing the file, when permitted, should expect to see a written explanation of the Government’s action; absence of a meaningful memorandum may signal a recordkeeping weakness or a vulnerability in the decision-making process.
Official Regulatory Text
When a contract is terminated for default or a procedure authorized by 49.402-4 is followed, the contracting officer shall prepare a memorandum for the contract file explaining the reasons for the action taken.