Haw. Code R. § 3-125-22 - Termination for convenience of construction contracts

The following paragraphs, or similar statements expressing the intent of these paragraphs, shall be included in all construction contracts:

(1) "Terminations. The procurement officer may, when the interests of this 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) "Contractor's obligations. The contractor shall incur no further obligations in connection with the terminated work, and on the date 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 necessary to do so."

(3) "Right to construction and 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 constructions; and

(B) The partially completed construction, goods, materials, parts, tools, dies, jigs, fixtures, plans, drawings, information, and contract rights (hereinafter called "construction material") as the contractor has specifically produced or specially acquired for the performance of the terminated part of this contract.

The contractor shall 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 construction, goods, and construction materials in accordance with the standards of section 490:2-706, HRS. This 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, submitted to the extent required by subchapter 15, chapter 3-122, bearing on such 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 clause (ii) of subparagraph (C).

(B) The procurement officer and the contractor may agree to a settlement provided the contractor has filed a termination claim supported by cost or pricing data submitted as required 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 construction, goods, and construction materials under clause (iii) of subparagraph (C), 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 under subparagraph (B) shall not duplicate payments under this paragraph, for the total (without duplication of any items) of:

(i) The cost of all contract work performed prior to the effective date of the notice of termination 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 completed portions of the work; provided, however, 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;

(ii) Subject to the prior approval of the procurement officer, the costs of settling and paying claims arising out of the termination of subcontracts or orders pursuant to the "contractor's obligations" provisions of this contract. 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 (i);

(iii) The total sum to be paid the contractor under this paragraph shall not exceed the total contract price reduced by the amount of any sales of construction, goods, and construction materials under paragraph (3), 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

Haw. Code R. § 3-125-22

[Eff 12/15/95; am and comp NOV 17 1997] (Auth: HRS §§ 103D-202, 103D-501) (Imp: HRS §§ 103D-312, 103D-501, 103D-601, 490:2-706)