Haw. Code R. § 3-125-21 - Termination for convenience of goods and services contracts
The following paragraphs, or similar statements expressing the intent of these paragraphs, shall be included in all goods and services contracts:
(1)
"Termination for convenience. The procurement officer
may, when the interests of the State so require, terminate this contract in
whole or in part, for the convenience of the State. The procurement officer
shall give written notice of the termination to the contractor, specifying the
part of the contract terminated and when termination becomes
effective."
(2)
"Contractors obligations. The contractor shall incur
no further obligations in connection with the terminated work, and on the dates
set in the notice of termination the contractor will stop work to the extent
specified. The contractor shall also terminate outstanding orders and
subcontracts as they relate to the terminated work. The contractor shall settle
the liabilities and claims arising out of the termination of subcontracts and
orders connected with the terminated work subject to the State's approval. The
procurement officer may direct the contractor to assign the contractor's right,
title, and interest under terminated orders or subcontracts to the State. The
contractor must still complete the work not terminated by the notice of
termination and may incur obligations as are necessary to do so."
(3) "Right to goods.
The procurement officer may require the contractor to transfer title and
deliver to the State in the manner and to the extent directed by the
procurement officer:
(A) Any completed goods;
and
(B) The partially completed
goods and materials, parts, tools, dies, jigs, fixtures, plans, drawings,
information, and contract rights, hereinafter called "manufacturing material,"
as the contractor has specifically produced or specially acquired for the
performance of the terminated part of this contract. The contractor shall, upon
direction of the procurement officer, protect and preserve property in the
possession of the contractor in which the State has an interest. If the
procurement officer does not exercise this right, the contractor shall use the
contractor's best efforts to sell the goods and manufacturing materials. Use of
this section in no way implies that the State has breached the contract by
exercise of the termination for convenience clause."
(4) "Compensation:
(A) The contractor shall submit a termination
claim specifying the amounts due because of the termination for convenience
together with cost or pricing data to the extent required by subchapter
15, chapter 3-122, bearing on the
claim. If the contractor fails to file a termination claim within one year from
the effective date of termination, the procurement officer may pay the
contractor, if at all, an amount set in accordance with subparagraph
(C).
(B) The procurement officer
and the contractor may agree to settlement provided the contractor has filed a
termination claim supported by cost or pricing data to the extent required by
subchapter
15, chapter 3-122, and that the
settlement does not exceed the total contract price plus settlement costs
reduced by payments previously made by the State, the proceeds of any sales of
goods and manufacturing materials under subparagraph (3) of this clause, and
the contract price of the work not terminated.
(C) Absent complete agreement under
subparagraph (B), the procurement officer shall pay the contractor the
following amounts, provided payments agreed to under subparagraph (B) shall not
duplicate payments under this subparagraph for the following:
(i) Contract prices for goods or services
accepted under the contract;
(ii)
Costs incurred in preparing to perform and performing the terminated portion of
the work plus a five per cent markup on actual direct costs on the portion of
the work, the markup shall not include anticipatory profit or consequential
damages, less amounts paid or to be paid for accepted goods or services;
provided that if it appears that the contractor would have sustained a loss if
the entire contract would have been completed, no markup shall be allowed or
included and the amount of compensation shall be reduced to reflect the
anticipated rate of loss;
(iii)
Subject to the prior approval of the procurement office the costs of settling
and paying claims arising out of the termination of subcontracts or orders
pursuant to paragraph (2). Subcontractors shall be entitled to a markup of no
more than ten per cent on direct costs incurred to the date of termination.
These costs must not include costs paid in accordance with clause (ii) of
subparagraph (C).
(iv) The total
sum to be paid the contractor under this subparagraph shall not exceed the
total contract price reduced by the amount of payments otherwise made, the
proceeds of any sales of supplies and manufacturing materials under
subparagraph (B), and the contract price of work not terminated.
(D) Cost claimed, agreed to, or
established under subparagraphs (B) and (C) shall be in accordance with chapter
3-123."
Notes
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