chapter 6 modification and termination of contracts … · provided here because in indefinite...

2 GAR - ADMINISTRATIONDIV. 4 - PROCUREMENT REGULATIONS

CH. 6 - TERMINATION - 1997 - P. 1

CHAPTER 6MODIFICATION AND TERMINATION OF CONTRACTS FOR SUPPLIES AND SERVICES

§6101 Contract Clauses and their Administration. (1)Introduction. The following contract clauses are available foruse in supply and service contracts at the discretion of theChief Procurement Officer, or the head of a PurchasingAgency, or the designee of either officer in accordance with5 GCA §5350 (Contract Clauses and Their Administration) ofthe Guam Procurement Act. Alternative clauses are providedin some instances to permit accommodation of differingcontract situations.

(2) Variations in contract Clauses. If the clauses set forthin this Chapter are utilized, they may be varied for use in aparticular contract when, pursuant to the provisions of 5GCA §5350(d) (Contract Clauses and Their Administration,Modification of Clauses) of the Guam Procurement Act, theChief Procurement Officer or the head of a PurchasingAgency makes a written determination describing thecircumstances justifying the variation or variations.

Any material variation from these clauses shall bedescribed in the solicitation documents in substantially thefollowing form:

“Clause No. _____ , entitled _______________ is nota part of the general terms and conditions of thiscontract and has been replaced by Special ClauseNo. ___________ , entitled _________.”



(3) Changes Clause.

(a) Changes Clause in Fixed Price Contracts. Infixed-price contracts the following clause may beinserted:

”CHANGES

(1) Change Order. By a written order, at anytime, and without notice to surety, the ChiefProcurement Officer or the head of a PurchasingAgency may, subject to all appropriate adjustments,make changes within the general scope of thiscontract in any one or more of the following:

(A) Drawings, designs, or specifications, ifthe supplies to be furnished are to be speciallymanufactured for the territory in accordancetherewith;

(B) method of shipment or packing; or

(C) place of delivery.

(2) Adjustments of Price or Time forPerformance. If any such change order increases ordecreases the contractor's cost of, or the timerequired for performance of any part of the workunder this contract, whether or not changed by theorder, an adjustment shall be made and the contract



modified in writing accordingly. Any adjustment incontract price made pursuant to this clause shall bedetermined in accordance with the PriceAdjustment Clause of this contract.

Failure of the parties to agree to an adjustmentshall not excuse the contractor from proceedingwith the contract as changed, provided that theterritory promptly and duly make such provisionaladjustments in payment or time for performance asmay be reasonable. By proceeding with the work,the contractor shall not be deemed to haveprejudiced any claim for additional compensation,or an extension of time for completion.

(3) Time Period for Claim. Within 30 days afterreceipt of a written change order under Paragraph(1) (Change Order) of this clause, unless such periodis extended by the Procurement Officer in writing,the contractor shall file notice of intent to assert aclaim for an adjustment. Later notification shall notbar the contractor's claim unless the territory isprejudiced by the delay in notification.

(4) Claims Barred After Final Payment. Noclaim by the contractor for an adjustment hereundershall be allowed if notice is not given prior to finalpayment under this contract.

(5) Other Claims not Barred. In the absence ofsuch a change order, nothing in this clause shall be



deemed to restrict the contractor's right to pursue aclaim arising under the contract if pursued inaccordance with the clause entitled, "Claims Basedon a Procurement Officer's Actions or Omissions,Notice of Claim Clause', or for breach of contract.”

(b) Changes Clause in Cost ReimbursementContracts. (RESERVED).

(4) Stop Work Order Clause.

(a) Use of Clause. The clause set forth in Subsection6101(4)(c)of this Section is authorized for use in anyfixed-price contract under which work stoppage may berequired for reasons such as advancements in thestate-of-the-art, production modifications, engineeringchanges, or realignment of programs.

(b) Use of Orders.

(1) Because stop work orders may result inincreased costs by reason of standby costs, suchorders shall be issued only with prior approval ofthe Chief Procurement Officer, or the head of aPurchasing Agency, or designees of either officer.Generally, use of a stop work order will be limitedto situations in which it is advisable to suspendwork pending a decision to proceed by the territoryand a supplemental agreement providing for suchsuspension is not feasible. A stop work order maynot be used in lieu of the issuance of a termination



notice after a decision to terminate has been made.

(2) Stop work orders shall not exceed 90consecutive days and shall include, as appropriate:

(i) a clear description of the work to besuspended;

(ii) instructions as to the issuance of furtherorders by the contractor for material orservices;

(iii) guidance as to action to be taken onsubcontracts; and

(iv) other instructions and suggestions tothe contractor for minimizing costs.

Promptly after issuance, stop work ordersshould be discussed with the contractor andshould be modified, if necessary, in the light ofsuch discussions.

(3) As soon as feasible after a stop work orderis issued:

(i) the contract will be terminated; or

(ii) the stop work order will be cancelled or



extended in writing beyond the periodspecified in the order.

In any event, some such action must be takenbefore the specified stop work period expires. If anextension of the stop work order is necessary, itmust be evidenced by a supplemental agreement.Any cancellation of a stop work order shall besubject to the same approvals as were required forthe issuance of the order.

(c) Clause.

“STOP WORK ORDER

(l) Order to Stop Work. The ProcurementOfficer may, by written order to the contractor, atany time, and without notice to any surety, requirethe contractor to stop all or any part of the workcalled for by this contract. This order shall be for aspecified period not exceeding 90 days after theorder is delivered to the contractor, unless theparties agree to any further period. Any such ordershall be identified specifically as a stop work orderissued pursuant to this clause. Upon receipt of suchan order, the contractor shall forthwith comply withits terms and take all reasonable steps to minimizethe occurrence of costs allocable to the workcovered by the order during the period of workstoppage. Before the stop work order expires, orwithin any further period to which the parties shall



have agreed, the Procurement Officer shall either:

(i)cancel the stop work order; or

(ii) terminate the work covered by suchorder as provided in the "Termination forDefault Clause' or the "Termination forConvenience Clause" of this contract.

(2) Cancellation or Expiration of the Order. Ifa stop work order issued under this clause iscancelled at any time during the period specified inthe order, or if the period of the order or anyextension thereof expires, the contractor shall havethe right to resume work. An appropriateadjustment shall be made in the delivery scheduleor contract price shall be modified in writingaccordingly, if:

(i) the stop work order results in anincrease in the time required for, or in thecontractor's cost properly allocable to, theperformance of any part of this contract; and

(ii) the contractor asserts a claim for suchan adjustment within 30 days after the end ofthe period of work stoppage; provided that, ifthe Procurement Officer decides that the factsjustify such action, any such claim assertedmay be received and acted upon at any timeprior to final payment under this contract.



(3) Termination of Stopped Work. If a stopwork order is not cancelled and the work coveredby such order is terminated for default orconvenience, the reasonable costs resulting from thestop work order shall be allowed by adjustment orotherwise.

(4) Adjustments of Price. Any adjustment incontract price made pursuant to this clause shall bedetermined in accordance with the PriceAdjustment Clause of this contract.”

(5)(a) Definite Quantity contracts. Thefollowing clause is authorized for use in definitequantity supply or service contracts:

”VARIATION IN QUANTITY

Upon the agreement of the parties, the quantityof supplies or services or both specified in thiscontract may be increased by a maximum of tenpercent (10%) provided:

(i) the unit prices will remain the same(except for any price adjustments otherwiseapplicable); and

(ii) the Procurement Officer makes awritten determination that such an increasewill either be more economical than awarding



another contract or that it would not bepractical to award another contract.”

(b) Indefinite Quantity Contracts. No clause isprovided here because in indefinite quantity contractsthe flexibility as the territory's obligation to order andthe contractor's obligation to deliver should bedesignated to meet using agency needs while makingthe contract as attractive as possible to potentialcontractors, thereby attempting to obtain maximumpracticable competition in order to assure the besteconomy for the territory. However, in each case, thecontract should state:

(1) the minimum quantity, if any, the territoryis obligated to order and the contractor to provide;

(2) whether there is a quantity the territoryexpects to order and how this quantity relates toany minimum and maximum quantities that may beordered under the contract;

(3) any maximum quantity the territory mayorder and the contractor must provide; and

(4) whether the territory is obligated to order itsactual requirements under the contract, or in thecase of a multiple award as defined in §3122(Multiple Source Contracting) of these Regulationsthat the territory will order its actual requirementsfrom the contractors under the multiple award



subject to any minimum or maximum quantitystated.

(6) Price Adjustment Clause.

”PRICE ADJUSTMENT

(a) Price Adjustment Methods. Any adjustment incontract price pursuant to a clause in this contract shallbe made in one or more of the following ways:

(i) by agreement on a fixed price adjustmentbefore commencement of the pertinent performanceor as soon thereafter as practicable;

(ii) by unit prices specified in the contract orsubsequently agreed upon;

(iii) by the costs attributable to the event orsituation covered by the clause, plus appropriateprofit or fee, all as specified in the contract orsubsequently agreed upon;

(iv) in such other manner as the parties maymutually agree; or

(v) in the absence of agreement between theparties, by a unilateral determination by theProcurement Officer of the costs attributable to the



event or situation covered by the clause, plusappropriate profit or fee, all as computed by theProcurement Officer in accordance with generallyaccepted accounting princi ples and applicablesections of the regulations promulgated underChapter 7 (Cost Principles), subject to the provisionsof Chapter 9 (Legal and Contractual Remedies) ofthe Guam Procurement Regulations.

(b) Submission of Cost or Pricing Data. Thecontractor shall provide cost or pricing data for any priceadjustments subject to the provisions of §3118 (Cost orPricing Data) of the Guam Procurement Regulations.

(7) Claims Based on a Procurement Officer's Actions orOmissions Clause. The clause set forth in §5106(8) (ClaimsBased on a Procurement Officer's Actions or OmissionsClause) of these Regulations may be used in supply orservice contracts.

(8) Termination for Default Clause.

”TERMINATION FOR DEFAULTS

(a) Default. If the contractor refuses or fails toperform any of the provisions of this contract with suchdiligence as will ensure its completion within the timespecified in this contract, or any extension thereof,otherwise fails to timely satisfy the contract provisions,or commits any other substantial breach of this contract,the Procurement Officer may notify the contractor in



writing of the delay or non-performance and if not curedin ten days or any longer time specified in writing by theProcurement Officer, such officer may terminate thecontractor's right to proceed with the contract or suchpart of the contract as to which there has been delay ora failure to properly perform. In the event of terminationin whole or in part the Procurement Officer may procuresimilar supplies or services in a manner and upon termsdeemed appropriate by the Procurement Officer. Thecontractor shall continue performance of the contract tothe extent it is not terminated and shall be liable forexcess costs incurred in procuring similar goods orservices.

(b) Contractor's Duties. Notwithstandingtermination of the contract and subject to any directionsfrom the Procurement Officer, the contractor shall taketimely, reasonable, and necessary action to protect andpreserve property in the possession of the contractor inwhich the territory has an interest.

(c) Compensation. Payment for completed suppliesdelivered and accepted by the territory shall be at thecontract price. Payment for the protection andpreservation of property shall be in an amount agreedupon by the contractor and the Procurement Officer; ifthe parties fail to agree, the Procurement Officer shall setan amount subject to the contractor's rights underChapter 9 (Legal and Contractual Remedies) of theGuam Procurement Regulations. The territory maywithhold from amounts due the contractor such sums asthe Procurement Officer deems to be necessary to



protect the territory against loss because of outstandingliens or claims of former lien holders and to reimbursethe territory for the excess costs incurred in procuringsimilar goods and services.

(d) Excuse for Nonperformance or DelayedPerformance. Except with respect to defaults ofsubcontractors, the contractor shall not be in default byreason of any failure in performance of this contract inaccordance with its terms (including any failure by thecontractor to make progress in the prosecution of thework hereunder which endangers such performance) ifthe contractor has notified the Procurement Officerwithin 15 days after the cause of the delay and thefailure arises out of causes such as: acts of God; acts ofthe public enemy; acts of the territory and any othergovernmental entity in its sovereign or contractualcapacity; fires; floods; epidemics; quarantine restrictions;strikes or other labor disputes; freight embargoes; orunusually severe weather. If the failure to perform iscaused by the failure of a subcontractor to perform or tomake progress, and if such failure arises out of causessimilar to those set forth above, the contractor shall notbe deemed to be in default, unless the supplies orservices to be furnished by the subcontractor werereasonably obtainable from other sources in sufficienttime to permit the contractor to meet the contractrequirements. Upon request of the contractor, theProcurement Officer shall ascertain the facts and extentof such failure, and, if such officer determines that anyfailure to perform was occasioned by any one or more ofthe excusable causes, and that, but for the excusablecause, the contractor's progress and performance would



have met the terms of the contract, the delivery scheduleshall be revised accordingly, subject to the rights of theterritory under the clause entitled (in fixed-pricecontracts, “Termination” for Convenience incost-reimbursement contracts) “Termination”. (As usedin this Paragraph of this clause the term “subcontractor”means subcontractor at any tier.)

(e) Erroneous Termination for Default. If, afternotice of termination of the contractor's right to proceedunder the provisions of this clause, it is determined forany reason that the contractor was not in default underthe provisions of this clause, or that the delay wasexcusable under the provisions of Paragraph (4) (Excusefor Nonperformance or Delayed Performance) of thisclause, the rights and obligations of the parties shall, ifthe contract contains a clause providing for terminationfor convenience of the territory, be the same as if thenotice of termination had been issued pursuant to suchclause. If, in the foregoing circumstances, this contractdoes not contain a clause providing for termination forconvenience of the territory, the contract shall beadjusted to compensate for such termination and thecontract modified accordingly subject to the contractor'srights under Chapter 9 (Legal and ContractualRemedies) of the Guam Procurement Regulations.

(f) Additional Rights and Remedies. The rights andremedies provided in this clause are in addition to anyother rights and remedies provided by law or under thiscontract.”



(9) Liquidated Damages Clause.

(a) With Termination for Default Clause. Thefollowing clause is authorized for use in supply orservice contracts when it is difficult to determine withreasonable accuracy the amount of damage to theterritory due to delays caused by late contractorperformance or nonperformance and the contractcontains the termination for default clause set forth in§6101(8) of this Chapter.

”LIQUIDATED DAMAGES

When the Contractor is given notice of delay ornonperformance as specified in Paragraph (l)(Default) of the Termination for Default Clause ofthis contract and fails to cure in the time specified,the contractor shall be liable for damages for delayin the amount of one-fourth of one-percent (1%) ofoutstanding order per calendar day from date setfor cure until either the territory reasonably obtainssimilar supplies or services if the contractor isterminated for default, or until the contractorprovides the supplies or services if the contractor isnot terminated for default. To the extent that thecontractor's delay or nonperformance is excusedunder Paragraph (4) (Excuse for Nonperformance orDelayed Performance) of the Termination forDefault Clause of this contract, liquidated damagesshall not be due the territory. The contractorremains liable for damages caused other than bydelay.”



(b) In Other Situations. If the contract will not havea termination for Default Clause or the liquidateddamages are to be assessed for reasons other than delay,the Chief Procurement Officer or the head of aPurchasing Agency may approve the use of anyappropriate liquidated damages clause.

(10) Termination for convenience Clause.

”TERMINATION FOR CONVENIENCE

(a) Termination. The Procurement Officer may,when the interest of the territory so require, terminatethis contract in whole or in part, for the convenience ofthe territory. The Procurement Officer shall give writtennotice of the termination to the contractor specifying thepart of the contract terminated and when terminationbecomes effective.

(b) Contractor's Obligations. The contractor shallincur no further obligations in connection with theterminated work and on the date set in the notice oftermination the contractor will stop work to the extentspecified. The contractor shall also terminateoutstanding orders and subcontracts as they relate to theterminated work. The contractor shall settle the liabilitiesand claims arising out of the termination of subcontractsand orders connected with the terminated work. TheProcurement Officer may direct the contractor to assignthe contractor's right, title, and interest under terminatedorders or subcontracts to the territory. The contractor



must still complete the work not terminated by thenotice of termination and may incur obligations as arenecessary to do so.

(c) Right to Supplies. The Procurement Officer mayrequire the contractor to transfer title and deliver to theterritory in the manner and to the extent directed by theProcurement Officer:

(1) any completed supplies; and

(2) such partially completed supplies andmaterials, parts, tools, dies, jigs, fixtures, plans,drawings, information, and contract rights(hereinafter called “manufacturing material”) as thecontractor has specifically produced or speciallyacquired for the performance of the terminated partof this contract.

The contractor shall, upon direction of theProcurement Officer, protect and preserve propertyin the possession of the contractor in which theterritory has an interest. If the Procurement Officerdoes not exercise this right, the contractor shall usebest efforts to sell such supplies and manufacturingmaterials in accordance with the standards ofUniform Commercial Code of Guam, §2706(U.S.C.G. §2706 is quoted at the end of this§6101(10)(d) Utilization of this Section in no wayimplies that the territory has breached the contractby exercise of the Termination for Convenience



Clause.

(d) Compensation.

(1) The contractor shall submit a terminationclaim specifying the amounts due because of thetermination for convenience together with cost orpricing data to the extent required by §3118 (Cost orPricing Data) of the Guam Procurement Regulationsbearing on such claim. If the contractor fails to filea termination claim within one year from theeffective date of termination, the ProcurementOfficer may pay the contractor, if at all, an amountset in accordance with Subparagraph (c) of thisParagraph.

(2) The Procurement Officer and the contractormay agree to a settlement provided the contractorhas filed a termination claim supported by cost orpricing data to the extent required by §3118 (Cost orPricing Data) of the Guam Procurement Regulationsand that the settlement does not exceed the totalcontract price plus settlement costs reduced bypayments previously made by the territory, theproceeds of any sales of supplies andmanufacturing materials under Paragraph (3) of thisclause, and the contract price of the work notterminated.

(3) Absent complete agreement underSubparagraph (b) of this Paragraph, the



Procurement Officer shall pay the contractor thefollowing amounts, provided payments agreed tounder Subparagraph (b) shall not duplicatepayments under this Subparagraph:

(i) contract prices for supplies or servicesaccepted under the contract;

(ii) costs incurred in preparing to performand performing the terminated portion of thework plus a fair and reasonable profit on suchportion of the work (such profit shall notinclude anticipatory profit or consequentialdamages) less amounts paid or to be paid foraccepted supplies or services; provided,however, that if it appears that the contractorwould have sustained a loss if the entirecontract would have been completed, no profitshall be allowed or included and the amount ofcompensation shall be reduced to reflect theanticipated rate of loss;

(iii) costs of settling and paying claimsarising out of the termination of subcontracts ororders pursuant to Paragraph (2) of this clause.These costs must not include costs paid inaccordance with Subparagraph (c) (ii) of thisParagraph;

(iv) the reasonable settlement costs of thecontractor including accounting, legal, clerical,



and other expenses reasonably necessary forthe preparation of settlement claims andsupporting data with respect to the terminatedportion of the contract for the termination andsettlement of subcontracts thereunder, togetherwith reasonable storage, transportation, andother costs incurred in connection with theprotection or disposition of property allocableto the terminated portion of this contract. Thetotal sum to be paid the contractor under thisSubparagraph shall not exceed the totalcontract price plus the reasonable settlementcosts of the contractor reduced by the amountof payments otherwise made, the proceeds ofany sales of supplies and manufacturingmaterials under Subparagraph (b) of thisParagraph, and the contract price of work notterminated.

(4) Cost claimed, agreed to, or establishedunder Subparagraph (b) and (c) of this Paragraphshall be in accordance with Chapter 7 (CostPrinciples) of the Guam Procurement Regulations.”

14 GCA §2796 (UCC) states:

”§2076. Seller's Resale Including Contractfor Resale.

(1) Under the conditions stated in §2703 onseller's remedies, the seller may resell the goods



concerned or the undelivered balance thereof.Where the resale is made in good faith and in acommercially reasonable manner the seller mayrecover the difference between the resale priceand the contract price together with anincidental damages allowed under theprovisions of this division (§2710), but lessexpenses saved in consequence of the buyer'sbreach.

(2) Except as otherwise provided inSubsection (3) or unless otherwise agreed resalemay be at public or private sale including saleby way of one or more contracts to sell or ofidentification to an existing contract of theseller. Sale may be as a unit or in parcels and atany time and place and on any terms, but everyaspect of the sale including the method,manner, time, place and terms must becommercially reasonable. The resale must bereasonably identified as referring to the brokencontract, but it is not necessary that the goodsbe in existence or that any or all of them havebeen identified to the contract before thebreach.

(3) Where the resale is at private sale theseller must give the buyer reasonablenotification of his intention to resell.

(4) Where the resale is at public sale:



(a) Only identified goods can be soldexcept where there is a recognized marketfor a public sale of futures in goods of thekind; and

(b) It must be made at a usual place ormarket for public sale if one is reasonablyavailable and except in the case of goodswhich are perishable or threaten to declinein value speedily the seller must give thebuyer reasonable notice of the time andplace of the resale; and

(c) If the goods are not to be within theview of those attending the sale, thenotification of sale must state the placewhere the goods are located and providefor their reasonable inspection byprospective bidders; and

(d) The seller may buy.

(5) A purchaser who buys in good faith ata resale takes the goods free of any rights of theoriginal buyer even though the seller fails tocomply with one or more of the requirementsof this section.

(6) The seller is not accountable to thebuyer for any profit made on any resale. Aperson in the position of a seller (§2707) or a



buyer who has rightfully rejected or justifiablyrevoked acceptance must account for anyexcess over the amount of his security interest,as hereinafter defined (Subsection 3) of §2711).”

(11) Termination Clause for Cost ReimbursementContracts.

(12) Remedies Clause. The clause set forth in §5106(12)(Remedies Clause) of these Regulations may be used insupply or service contracts.

chapter 6 modification and termination of contracts … · provided here because in indefinite...

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