Once a Termination Settlement Proposal (TSP) is submitted, the government contracting officer will review it and determine the amount the contractor is entitled to recover. However, the initial government calculation may not always reflect a fair settlement. Contractors must be prepared to negotiate to ensure they receive full compensation for recoverable costs.
The first step in negotiations is understanding what costs are allowable under FAR. The government may challenge certain expenses, such as indirect costs, settlement fees, or claimed profit on completed work. Contractors should be ready to justify these costs with clear documentation and references to applicable FAR provisions.
Contractors should also consider alternative dispute resolution (ADR) techniques such as mediation or settlement conferences. These can be valuable tools in resolving disputes without the need for formal litigation. If negotiations reach a standstill, contractors may need to escalate the dispute to the Boards of Contract Appeals (ASBCA/CBCA) or the U.S. Court of Federal Claims.
Common government tactics include delaying responses, requesting excessive documentation, or attempting to limit recoverable costs. Contractors should remain firm in asserting their rights and ensure they have legal guidance to push back against unjustified reductions.
Having a skilled negotiator familiar with the process and how the government negotiators will operate can make a significant difference in the outcome. By staying informed, maintaining thorough records, and using strategic negotiation techniques, contractors can improve their chances of securing a fair termination settlement. Remember, a T4C is not the result of poor performance. The contractor has rights that it is entitled to enforce.
Martin & Jones’s professionals have experience assisting and advising clients who have had their federal contracts terminated. We can assist clients preparing and negotiating a termination settlement proposal. If your organization’s contract has been terminated, contact Martin & Jones immediately and one of our attorneys will discuss with you how we can be of assistance to your organization.
Have you had your government contract terminated for convenience? Our experienced legal team can help you recover what you’re owed. Contact us today for a consultation.