Termination For Convenience (Podcast Transcript)

                         [01:12] Richard C. Howard: Hey, thanks for listening to the government sales momentum podcast. This is Richard Howard with Richard C. Howard and Associates. There we are going to pivot from how do you obtain a government contract and all the strategies and influencing tactics that we've talked about too. If you're on contract, what are some of the problems that might arise and how do you handle those? Contract management is an extremely important part of working with the federal government, understanding the fire clauses that are involved, understanding what you're actually obligated to provide and then providing that. Because look, if your government contract fails, for some reason, that might be something that you never recover from. So all this is very important. But today we're going to talk about something called Termination for Convenience. What do you do if the government terminates your contract with them, which they can do pretty much whenever they want, right? Are you left holding the bag? And I'm talking about this because one of our clients recently went through this. They were hired to do a project for the government into exactly what that was. But look, whether you're providing It services or you're doing research or maybe you got hired to put a training class together or even if you more of a manual labor, whether it's mowing the lawns on a military base or something along those lines, the government can terminate those contracts basically at any point. And it's usually called termination for convenience.

                        Now let's say that you got hired to put maybe a training class together and finally you get there. It's the day of and the government says, hey, we're terminating the contract. What do we do? Now, this could be applied to just about anything that you're on contract with the government for. What I want you to know is you are not left holding the bag in fact, for our client and for yourself, you could probably obtain almost the entire price of the contract. It's the funding that the government owes you. And by the way, they're expecting some type of response on the government side. So we're going to walk through a little bit of what you should be thinking about as far as steps you can take after the government terminates the contract like this. So the first thing is you're going to want to put an official response together. And in there you're going to want to cite the different fire clauses. And this is something that you can either work with an expert within your own company for, you can reach out to a consultant like myself. You can do some online research, but under the Federal Acquisition Regulation, there's going to be a termination for the government's convenience clause at 52.21 24. And essentially what you're going to do, you'll cite that, you'll say, hey, look, this is our total contract value. This is what we're hired to do. But you're now thinking about all of the work that you put into. And again, I'm using a training class as an example, but all the work that you put into it up until the point where you're delivering the goods, teaching the class, cutting the lawn, providing the cyber security support, did you put a program plan together? Of course you did, right? You put a plan together on how you're going to execute the government strategy, and you can charge for that. Did you hire people that had to show up? Were you training them before showing up?

                        There's a lot of different things that are going to go into the costs that you're going to now charge the government with, or at least request. So first and foremost, you're the CEO of the company. How much are you as the CEO worth, right? How many hours did you put in? So you need to put that up front. So my recommendation is you're going to put it a spreadsheet together that's going to insert into your formal response. Starting at the top, you're the CEO, how many hours did you put in? And you can look at GSA labor rates, but most government contract officers, if you are charging somewhere between 200 $250 to the CEO, you can charge that. This is the work you put in total amount, actual costs. How about a project manager? Did you pay them? How many hours did they put in? And again, check the labor rates so you know what's reasonable to charge the government per hour. Now of course you put all this time into the project plan, but did you have to hire people that were going to show up? Were you working with people, training or recruiting? You can put those actual costs down and you're going to itemize those. So every project is a little bit different, but you may have had to, if you're doing a training course, you may have had to purchase materials that you're going to be showing during the course. That is an itemized cost that you are absolutely going to charge the government. Is there any other equipment that you had to invest in or purchase rent? All of these things you're going to put down there.

                        And then something else to consider is termination costs, right? Just terminating the contract in and of itself. Let's say that you had to hire someone like myself to put the response together for you. Well, that is absolutely something that you can charge for. And there are fire clauses that actually show, hey, what is fair and reasonable for you to charge the government for something like that. When you add all of those costs up, you're probably going to get pretty close to what the actual contract was for, maybe a little less. But one thing that you don't want to do is do not just accept, hey, we're terminating and you're not going to get paid. Or maybe take the initial what the government thinks you're owed, make sure you itemize it all out, cite the fire clauses and return that to them, and you're going to come to some agreement with the contracting officer and it's probably going to be a lot higher than what you were thinking. So again, that's a little bit about termination for convenience. Hope that helps. If you have any questions about termination feel free to reach out to us.

                        If you did enjoy the episode, please subscribe to the podcast and leave a review. It's very much appreciated. If you're interested in selling products and services to the Department of Defense, I have something for you that you're not going to find anywhere else in the world. The team and I created a program that takes everything you need to win defense contracts and put it into one place. Up until now, only large defense companies and a small amount of people in the know have had access to how products and services are really sold to the Department of Defense. I've taken all of that information and put it in a step-by-step training module that shows you how to consistently sell to the US. Military. If you join our membership, not only do you get the model, but also you get weekly sessions with former DOD acquisitions officers for training and guidance to answer your questions in a community of like minded business owners that want to partner on different opportunities to bid for subcontracting and teaming, or just to discuss general strategy on how to sell to the DOD, you'll have access to every course I've created, every coaching session I've ever recorded in every interview with an acquisitions professional that I've ever conducted, and we cover topics that range from defense sales planning and competitor analysis, to SBIR and STTR foreign military sales to lists goes on. Go to Dodcontract.com if you are interested, and I would love to see you in the membership. Thanks.

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