Sequestration means Termination for Convenience

It is becoming more and more obvious that Sequestration will probably go into effect on March 1st.  Both the Republicans and Democrats seem more interested in blaming each other rather than negotiating a solution to help the country.  Everything I have read in the last couple of days indicates that everyone in Washington is bracing for Sequestration to go into effect on March 1st.  The government did not take this threat seriously until just before Christmas.  As we saw in a blog last month, the Defense Department started taking Sequestration seriously at that time and beginning in January they began to announce plans to curtail any new spending, trying to figure out where this was going.  As this becomes reality, the Defense Department will have to cancel some existing programs.  This means contract terminations.  We wrote about the Termination for Convenience clause in a blog last week.  I think that will become a term that many contractors will become familiar with in the coming weeks.  It is not too early to brace yourself and prepare for this possibility.  I would recommend that all contractors evaluate the contracts you have currently with the government, but especially the ones from the Department of Defense.  You should objectively look at the contract, where it fits into the government's plan and evaluate as best you can the risks of it being canceled.  You may want to contact your Contracting Officer or other contact within the government to try and get a read on what they think of the program you are contracting on.  You can't talk to too many people at this point.  Call your customer.

Once you have evaluated the risks, you should formulate a plan on how to prepare for a possible termination.  You may want to use the checklist ReliAscent has created for preparing for a Termination for Convenience.  You can look at the items on this list related to identifying costs and tracking all efforts more carefully.  ReliAscent has some experts on T4C and would be happy to consult with you if you think the risk is relatively high.  Preparation up front can be very valuable in protecting your company and making sure you don't end up losing money in the termination.  When you do get the termination notice, you may want to consider having ReliAscent help you through the process.  It can be intimidating if you have not been through it before.  Give us a call today and don't get left with a big surprise.  Remember, Sequestration does mean Federal Contracts will be terminated.  Don't fool yourself into believing it can't happen to you. Prepare now.  ReliAscent can help.


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