What is a termination for convenience?

A termination for convenience (T4C) is a contract clause that allows the federal government to end a contract at any time, for any reason — without the contractor having done anything wrong. It is not a penalty. It is a recognition that the government's needs or priorities have changed.

The clause is codified in FAR 52.249-2 (negotiated fixed-price contracts), FAR 52.249-6 (cost-reimbursement contracts), and FAR 12.403 (commercial item contracts). When a contracting officer issues a T4C notice, they are exercising a right that was agreed to when the contract was awarded.

Unlike a termination for default, a T4C carries no negative past performance implications and does not affect your ability to bid on future federal contracts.

The critical fact: a T4C termination triggers settlement rights. Under FAR Part 49, you are entitled to submit a settlement proposal to recover allowable costs incurred before the termination date, earned profit on work performed, and reasonable settlement expenses. The government cannot terminate your contract and walk away from unpaid costs.

Most small contractors either do not know this right exists or do not know how to exercise it. That is money left on the table.

RELATED GUIDES

• → T4C vs T4D — termination types
• → FAR Part 49 explained
• → Your right to file a T4C claim