What is the difference between T4C and T4D?

Termination for Convenience (T4C) and Termination for Default (T4D) are fundamentally different actions with different legal and financial consequences.

Termination for Convenience (T4C): The government terminates because its needs or priorities have changed — not because the contractor did anything wrong. Exercised under FAR 52.249-2 (fixed-price) or FAR 52.249-6 (cost-type). No past performance implications. Full FAR Part 49 settlement rights apply.

Termination for Default (T4D): The government terminates because it believes the contractor failed to perform — missed deliverables, failed to maintain progress, or violated contract terms. Exercised under FAR 52.249-8 (fixed-price) or FAR 52.249-7 (cost-type). A T4D is a negative past performance event, reported in CPARS, and the government can pursue excess reprocurement costs — charging you for the difference between your contract cost and the replacement contract.

FAR Part 49 settlement rights do not apply to T4D contracts in the same way. A contractor terminated for default generally cannot file a standard settlement proposal to recover costs.

The T4D-to-T4C conversion: A T4D can be challenged and converted to a T4C if the contractor demonstrates the default was excusable — caused by government action, unforeseeable circumstances, or issues outside the contractor's control (including supply chain failures, agency direction changes, and government-caused delays). If you received a T4D and believe it was wrongful, consult a government contracts attorney immediately. A successful challenge restores all FAR Part 49 settlement rights.

How to tell which you have: Your termination notice will cite specific FAR clauses. FAR 52.249-2 or FAR 52.249-6 means T4C. FAR 52.249-8 or FAR 52.249-7 means T4D. If the notice is ambiguous, contact your contracting officer in writing and ask them to confirm the termination type.

RELATED GUIDES

• → What is a T4C?
• → Your right to file a T4C claim
• → DOGE terminations and T4C rights