FAR 52.249-4—Termination for Convenience of the Government (Services) (Short Form).
Plain-English Summary
FAR 52.249-4 is the short-form termination for convenience clause for fixed-price service contracts when the contracting officer expects the contractor will not incur substantial startup or performance charges and, if terminated, settlement should be limited to payment for services actually rendered. The clause tells the Government when it may terminate, how it must do so, and what the contractor is entitled to receive if termination occurs. It applies to solicitations and contracts for services regardless of dollar value, but only when the contracting officer makes the required judgment under FAR 49.502(c) that this abbreviated clause is appropriate because the work does not involve significant unamortized costs, inventory, or other termination settlement exposure. In practice, the clause greatly simplifies termination administration compared with the standard termination for convenience clauses by eliminating the broader cost-recovery framework and limiting payment to the contract’s normal payment provisions for work performed before the termination date. This means contractors should understand that they generally cannot recover anticipated profits on unperformed work, settlement expenses, or other termination costs under this clause, and contracting officers should use it only when the contract type and service nature truly justify that limited remedy.
Key Rules
Applies to qualifying service contracts
This clause is used in solicitations and contracts for services, regardless of value, when a fixed-price contract is contemplated and the contracting officer determines the contractor will not incur substantial charges in preparing for or performing the work. It is intended for situations where termination settlement should be limited to payment for services already rendered.
Government may terminate by written notice
The contracting officer may terminate the contract, in whole or in part, when doing so is in the Government’s interest. The termination must be communicated by written notice; oral direction is not enough to invoke the clause.
Payment limited to services rendered
If the contract is terminated, the Government’s liability is limited to payment under the contract’s payment provisions for services rendered before the effective date of termination. The clause does not create a broader right to recover termination settlement costs.
No standard settlement framework
Unlike the more detailed termination for convenience clauses, this short-form clause does not provide for extensive settlement of costs, profit on work not performed, or other termination-related adjustments. The contractor’s recovery is intentionally narrow and tied to completed services only.
Contracting officer must make threshold judgment
Use of the clause depends on the contracting officer’s determination under FAR 49.502(c) that the contractor will not incur substantial charges and that limiting settlement to services rendered is appropriate. If that judgment is wrong, the Government may face disputes over clause selection and payment expectations.
Responsibilities
Contracting Officer
Determine whether the short-form clause is appropriate under FAR 49.502(c); include it in the solicitation and contract when the conditions are met; issue any termination by written notice; and ensure payment is limited to services rendered before the effective termination date.
Contractor
Perform the services required until the effective termination date if the contract is not fully completed; submit invoices or other payment requests only for services actually rendered under the contract’s payment terms; and understand that recovery is limited and does not include broader termination settlement amounts.
Agency
Use the clause only in contracts that fit the regulatory criteria; support contracting officer decisions with sound acquisition planning; and ensure termination actions and payments are consistent with the clause’s limited liability structure.
Practical Implications
This clause is a streamlined termination tool, so it is best suited to routine services with minimal startup costs and little or no special termination exposure.
Contractors should not assume they can recover unabsorbed overhead, settlement expenses, or profit on unperformed work if the Government terminates under this clause.
Contracting officers should be careful not to use this short form for service contracts that involve significant mobilization, materials, subcontract commitments, or other costs that would make limited settlement unfair or inconsistent with the regulation.
Because payment is tied to services rendered, documentation of performance up to the termination date is critical for both invoicing and dispute avoidance.
A common pitfall is treating this clause like the standard termination for convenience clause; it is much narrower, and both parties should understand that the contractor’s remedy is limited to the contract’s normal payment provisions for completed work.
Official Regulatory Text
As prescribed in 49.502 (c) , insert the following clause in solicitations and contracts for services, regardless of value, when a fixed-price contract is contemplated and the Contracting Officer determines that because of the kind of services required, the successful offeror will not incur substantial charges in preparation for and in carrying out the contract, and would, if terminated for the convenience of the Government, limit termination settlement charges to services rendered before the date of termination: Termination for Convenience of the Government (Services) (Short Form) (Apr 1984) The Contracting Officer, by written notice, may terminate this contract, in whole or in part, when it is in the Government’s interest. If this contract is terminated, the Government shall be liable only for payment under the payment provisions of this contract for services rendered before the effective date of termination. (End of clause)