ARCHIVED Termination for Convenience

Policies and procedures for issuing Notices of Termination for Convenience have been revised to allow contracting officers to issue an initial Notice of Termination on the basis of written instruction from client departments, prior to receipt of the formalized amendment to the requisition and without seeking legal advice. The initial Notice of Termination which directs the contractor to stop all work and incur no further expense affects a legally binding termination. Following issuance of the initial Notice of Termination a confirming Notice of Termination must be issued; the confirming Notice cannot be issued until the formal requisition amendment is received, and a legal opinion has been sought.

Policies and procedures for Terminations by Mutual Consent and Terminations for Default have also been revised to reflect housekeeping changes.

Related changes to the Supply Manual, attached as Annex A, will be included in amendment 98-2.

Related changes to the Standard Acquisition Clauses and Conditions Manual, attached as Annex B, will be included in amendment 98-2.

ANNEX A

Chapter 11 - Contract Management

Procedures 11.131, 11.132, 11.140, 11.141, 11.145, 11.146, 11.148, 11.150 - 11.152, 11.154 - 11.157, and 11.195 have been revised to reflect the new Termination for Convenience policies;

Procedures 11.160, and 11.166 - 11.168 have been revised to reflect housekeeping changes.

Chapter 6 - Developing the Procurement Strategy, Section 6E - Process

Procedure 6.507 (n) has been revised to reflect the involvement of Legal Services in the new Termination for Convenience procedures.

ANNEX B

SACC Manual clauses J0001C, J0002C, J0003C, J0004D, J0005D, J0200C, J0205C, J0500C, and/or the related introductory remarks, have been introduced/modified to reflect the changes to the Termination for Convenience policies:

SACC Manual clauses J1000C, J1001C, J1003C, J1004C, J1005C, and J2000C have been revised to reflect housekeeping changes and to ensure that termination clauses make reference to services as well as supplies.

These changes take effect immediately.

For your information, copies of only the SACC Manual clauses that have been revised, and updated versions of the Terminations and Legal Services Sections of the Supply Manual are attached.

For more information, please contact Jean McCadden (956-0889).

ANNEX A

CHANGES TO THE SUPPLY MANUAL

CHAPTER 11 - CONTRACT MANAGEMENT

Terminations

11.130 (23/06/94) These procedures do not apply to CCC contracts or contracts for the U.S. or other foreign governments.

To determine which type of termination might be involved, see 11.131 (Termination for Convenience of the Crown), see 11.133 (Termination for Default) and see 11.135 (Termination by Mutual Consent). Refer to Standard Acquisition Clauses and Conditions (SACC) Manual subsection 5J for termination clauses.

Termination for Convenience of the Crown

11.131 (__/__/97) Occasionally the Crown may wish to terminate a contract for convenience. (See 11.146.) This may be due to curtailment of funds, discontinuation of a government program, or other circumstances which make the acquisition of the product or service unnecessary. The General Conditions contain a section titled "Termination for Convenience" which becomes applicable as soon as the "Notice of Termination" is received by the contractor.

11.132 (__/__/97) Termination for Convenience is to be applied where:

1. the client has requested termination;
2. a Termination for Default cannot be considered because the contractor is not in default; and,
3. a Termination by Mutual Consent would not be more advantageous to the Crown.

Termination for Default

11.133 (23/06/94) Termination for Default applies when the contractor breaches the contract, usually through non-performance or delayed delivery. "Default by Contractor" in the General Conditions provides the basis for Termination for Default. (See 11.180.)

11.134 (23/06/94) Termination for Default is to be applied where:

1. the contractor has breached the contract; and
2. in the Crown's opinion, the contractor would have no valid defence, should the Crown claim loss or damages. Any opinion regarding a contractor's valid defence shall be rendered only by Legal Services.

A valid defence usually exists if failure to perform arises out of causes beyond the control and without the fault or negligence of the contractor, for example:

• faulty or incomplete specifications were provided by the Crown;
• government-supplied materiel was faulty or substandard, or supplied after the time agreed to in the contract;
• samples were not provided on time; or
• no action was taken by the Crown after the first default by the contractor.

Termination by Mutual Consent

11.135 (23/06/94) On rare occasions both parties may agree to termination without claims or penalties, usually where the client has requested full or partial termination of a contract, the contractor has incurred minor or no expenses and is willing to forego a claim, and the matter may be settled at no cost to the Crown. (See 11.195.)

11.136 (23/06/94) Termination by Mutual Consent will not be actioned where it is in the interest of the Crown to issue a default termination or when additional costs are claimed by the contractor following the reduction or cancellation of all or a portion of the contract.

Contractor's Request for Termination

11.137 (23/06/94) When a contractor requests termination because of anticipated losses in performing the contract, consent will not be granted. Instead, the contractor should be instructed that the obligations in the contract must be fulfilled. The contractor may, on completion of the contract, request an "extra payment" for additional costs incurred or losses suffered, if some responsibility for the additional cost or for the loss can be ascribed to the Crown. (See 11.031.)

If the contractor refuses to carry out the contractual obligations, termination for default should be instituted.

Financial Security Issues

11.138 (15/09/97) If the contract is secured by a security deposit (government guaranteed bonds, bills of exchange, irrevocable standby letters of credit) it should not be terminated without the prior advice of Legal Services.

11.139 (23/06/94) If the contract is secured by surety bonds, it is not to be terminated as this would also terminate the existing contractual relationship with the bonding company. When a contractor fails to perform a contract, or when a claim is received for non-payment of labour or material, and a payment bond is in place, contracting officers must immediately inform the surety company in writing, requesting that corrective action be taken. Contracting officers must not enter into negotiations with the contractor or claimant.

Involvement of Legal Services

11.140 (__/__/97) The following terminations shall not be issued without a written legal opinion: all Terminations for Default, Terminations by Mutual Consent, and confirming Notices of Terminations for Convenience.

In seeking the opinion of Legal Services, the contracting officer must submit the contract file with a chronological, typed index of the documents forming the basis for the termination request, together with a short note outlining the events leading to termination. Based on this information, Legal Services will render an opinion and advise as to the appropriate method of termination.

Note: A legal opinion is not required for initial Notices of Termination for Convenience. The issuance of an initial Notice of Termination for Convenience may only be taken in response to the client's written instructions.

While a legal opinion prior to the issuance of any termination is desirable, in the interest of limiting costs incurred by the Crown the initial Notices of Termination for Convenience (SACC Manual Clauses J0200C and J0205C) do not require a legal opinion and may be issued by the Contracting Officer in accordance with 11.145.

Involvement of the Contract Claims Resolution Board

11.141 (__/__/97) The Senior Claims Officer (SCO), CCRB must be involved immediately in the claim settlement process resulting from contracts that are partially or completely terminated for convenience. Accordingly, the contracting officer must contact the SCO as soon as the initial Notice of Termination (SACC Manual Clauses J0200C and J0205C) is issued, and is to provide the SCO with a copy of each initial and confirming Notice of Termination. CCRB's facsimile number is 819-956-6705.

Adjustment to Source Lists

11.142 (23/06/94) Terminations for Convenience of the Crown should not result in any adjustment of the source lists, while Terminations by Mutual Consent may require correction of source lists. Terminations for Default usually are cause for the deletion or suspension of the contractor from the source list.

Standing Offers

11.143 (23/06/94) Standing Offers are not contracts in the legal sense, and either party may withdraw from a Standing Offer by simple notification to the other party. However, call-ups received by a supplier prior to the date of its formal withdrawal must be fulfilled in accordance with the terms of the Standing Offer.

PWGSC Offices Outside Canada

11.144 (23/06/94) Termination procedures for contracts awarded by PWGSC offices outside Canada may differ from those for contracts issued in Canada, and the termination procedures serve only as a general guide.

For example, if problems arise in such cases, the Director, PWGSC Washington, will obtain guidance from the SCO and, if necessary, obtain legal advice for the outside offices from Legal Services.

Signing Authority

11.145 (__/__/97) Initial and confirming Notices of Termination shall be approved and signed by a contracting officer with the signing authority (as indicated in Annex 6.1.3) for the total contract value at the time of the termination.

Termination for Convenience

11.146 (__/__/97) The contracting officer and the SCO are responsible for the following termination activities:

1.147 (23/06/94) Occasionally the client will require a status report before making a decision to cancel. In this event, the client will inform PWGSC of its intention to reduce or cancel a contract by: issuing a "Notice of Intent to Cancel" telephone; or, a written message to that effect. The client will usually request all or part of the following contract status information before making a final decision to terminate:

1. quantity of stores produced against the contract;
2. quantity of stores in production;
3. value of raw materials and/or components acquired by the contractor to carry out the specific contract;
4. the position with respect to tooling and capital equipment, especially where the contractor had to tool-up to carry out the contract;
5. status of subcontracts;
6. the most economical point at which to effect termination; and,
7. the approximate amount of termination claims if known.

11.148 (__/__/97) The contracting officer will immediately request the information from the contractor and closely follow up to ensure that it is received as soon as possible.

When the information is received, the contracting officer will forward it, together with any recommendations, to the client.

Normally, the client's first request will be to cancel all or a portion of a contract, in which case the contracting officer must immediately issue an initial Notice of Termination in accordance with 11.150 if the termination is due to curtailment of funds, discontinuance of a government program or circumstances that make the acquisition of the product or service unnecessary.

An initial Notice of Termination must be followed by the issuance of a confirming Notice of Termination.

Notice of Termination

11.150 (__/__/97) On receiving the client's initial written instructions to cancel all or part of a contract for the convenience of the Crown (see 11.131) the contracting officer must immediately issue an initial Notice of Termination for Convenience to advise the contractor to "stop work" (see SACC Manual clause J0200C for a complete termination or clause J0205C for a partial termination). Following the issuance of the initial Notice of Termination for Convenience a confirming Notice of Termination must be issued (see SACC Manual Clauses J0001C or J0002C). The confirming Notice of Termination cannot be issued until the formal requisition amendment is received, and a legal opinion has been sought. The contracting officer must also contact and provide the Senior Claims Officer with a copy of the initial Notice of Termination.

To expedite the termination action and minimize potential costs to the Crown the contracting officer is authorized to issue an initial Notice of Termination for Convenience prior to receipt of the formalized amendment to the requisition, and without seeking legal advice (see 11.140).

Suspension of the Work - Stop Work Order

11.151 (__/__/97) When a client wishes to suspend the work of a contract rather than cancel it, SACC Manual clause J0500C titled "Suspension of the Work - Stop Work Order" is to be used. The suspension of the work of a contract allows the Client to obtain a review of the contract status before deciding the type and extent of termination (including a termination for default). Should a client wish to reinstate a contract after a Suspension of the Work - Stop Work Order has been issued, the Stop Work Order must be rescinded. (See SACC Manual clause J0501C "Stop Work Order, Rescission of"). In this event, it may be necessary to adjust the delivery terms and/or contract price. It is the responsibility of the contracting officer to determine the reasonableness of all claims for additional costs which the contractor may make. Amendments to cover payment of such costs shall be approved in accordance with the contract amendment approval and signing authorities (Annex 6.1.5).

No Claim is Involved

11.152 (__/__/97) When a contractor advises the contracting officer that a claim will not be submitted following the receipt of an initial Notice of Termination, the contracting officer is to prepare a confirming Notice of Termination, for approval by Legal Services, which includes SACC Manual clause J0003C and eliminates the funding for the terminated items. (See SACC Manual clause J0003C) This Notice of Termination is then forwarded to the contractor for acceptance. Since no claim is made, the SCO is not involved in this process.

Client's Decision

11.153 (23/06/94) It is the client's responsibility to decide at what stage a full or partial termination should take place. Formal amendments to the requisition confirming the decision to terminate must be provided as quickly as possible.

11.154 (__/__/97) The contracting officer must not issue a confirming Notice of Termination for Convenience until an amendment to the client's requisition has been received.

The contracting officer should ensure that sufficient funds remain in the amended requisition to cover the estimated claim costs and costs resulting from post-termination activity carried out by the contractor. This includes the cost of producing the claim, segregation, packing, secured storage or residual inventory of material, parts assemblies, tools, equipment, etc., prior to disposal procedure.

Confirming Notice of Termination

11.155 (__/__/97) As soon as the requisition amendment is received, the contracting officer will prepare and on advice from Legal Services send the contractor the confirming Notice of Termination or the confirming Notice of Partial Termination, using the standard clauses provided in Subsection 5J of the SACC Manual.

11.156 (__/__/97) After the confirming Notice of Termination or Partial Termination is issued, the contracting officer will immediately send one copy of the notice to the SCO.

In order to avoid further costs to the Crown and hardship to the contractor, a confirming Notice of Termination must be issued as promptly as possible to finalize the implications of an initial Notice of Termination.

Adjustment of Funds

11.157 (__/__/97) The funds in the contract should not be adjusted when the confirming Notice of Termination is issued. The contract funds are adjusted only after a settlement offer has been made to a contractor.

The funding will be adjusted by the SCO at the time that the Settlement and Release document is prepared for the approval and signature of the, Director, CCRB.

Adjustment to the Price of the Non-Terminated Portion of the Contract

11.158 (23/06/94) Whenever a contractor requests an upward adjustment to the cost or unit price of the non-terminated portion of a contract, the resulting claim for adjustment is to be referred to the SCO for review prior to reaching any agreement with the contractor concerning such upward cost or price adjustment.

Termination File

11.159 (23/06/94) For non-complex, fully terminated contracts, the contracting officer is to transfer the complete procurement file to the SCO, if a claim is involved.

For complex procurements or partial terminations where the non-terminated portion of the file is still active, the contracting officer will prepare a termination case file including copies of the contract, amendments, specifications, pricing details, documents, correspondence and any other information relevant to the termination, and send it to the SCO.

Informing the Contractor

11.160 (__/__/97) If a claim is involved, the contracting officer is to forward three sets of PWGSC Prime Contractor termination claim forms and the "Procedures Manual on Termination of Contracts," to the contractor.

These may be obtained from the SCO: each set of claim forms includes the following.

CCRB-1 - Settlement Proposal for Fixed Price Contracts

CCRB-1A - Inventory Schedule A for Inventory of Metals in Mill Product Form

CCRB-1B - Inventory Schedule B for Inventory of Raw Materials, Finished Product, Purchased Parts, Plant Equipment, Finished Components, etc.

CCRB-1C - Inventory Schedule C for Inventory of Work in Process

CCRB-1D - Inventory Schedule D for Inventory of Special Tooling and Test Equipment

CCRB-2 - Schedule of Accounting Information

CCRB-3 - Application for Partial Payment

11.161 (03/06/96) The accompanying letter to the contractor should contain the following instructions:

"In the event subcontractors are involved with this termination, please advise of the number of subcontractors who will require termination claim forms. Please arrange to complete all sections of the claim in as much detail as possible and, after signature by your executive authority, return the original and one (1) copy to this office.

You are hereby requested to forward your completed claim within a two month period from the date of this letter. In order to assist you in meeting that date, we would be pleased to provide guidance and explanations necessary to ensure proper action is taken by your company and that the correct information is included in the forms.

Please note that all communications and documents with respect to your claim should be directed to (give appropriate name and address of the responsible contracting officer)."

11.162 (23/06/94) After the termination claim forms are forwarded, the contractor must be contacted by telephone to ensure that the forms have been received and that the necessary action is being taken on the contractor's part to submit a claim. If the contractor has any questions concerning the presentation of the claim, or the details of the termination settlement procedures, the contracting officer may advise the contractor to contact the SCO directly. When the contractor has completed the forms, the signed original and one copy are returned to the contracting officer. On receipt of the contractor's claim, one copy is to be forwarded promptly to the SCO, who shall then become responsible for the resolution of the claim.

Audit of Claims

11.163 (03/06/96) Upon receipt of a claim, the SCO will determine the need for an audit. If the SCO concludes that an audit is required, the SCO will prepare the terms of reference for the audit and arrange for its completion by Consulting and Audit Canada.

When an audit is performed, the SCO reviews the cost factors reported by the auditor and reconciles the contractor's claim with the auditor's report and the Inventory Verification Report form (CCRB-50). The cost implications of any inventory adjustments must be discussed with the auditor as well as with the contractor.

Inventories

11.164 (23/06/94) If the claim from a termination for convenience involves inventory that is rendered surplus by the termination, the contracting officer must send copies of the termination inventory schedules to the client in order to obtain instructions as to disposition, which will be either: 

1. arranging for the verification and shipment of all, or any part, of the inventories to a recipient designated by the client. The costs associated with packaging, routing, shipping, etc., are a proper post termination charge to be added to the contractor's claim;

   Inventory verification is to be arranged by the contracting officer with the Inspection Authority of the client and a copy of the Inventory Verification Report must be provided to the SCO so that the settlement offer may be adjusted to reflect any inventory discrepancies.

2. arranging for the disposal of the residual inventory by the Crown Assets Distribution Centre (CADC). In this case, the contracting officer must prepare a "Report of Surplus" on form CADC-1 (1971).

The Report of Surplus must be signed by the director general or director concerned, to certify that: the inventories are reasonable in relation to the requirements of the terminated portion of the relevant contract; that their use is not required for other existing PWGSC contracts, due to the nature of the goods; and consequently, that disposal is recommended. The contracting officer will forward the signed Report of Surplus to CADC.

In due course, the contracting officer receives a Final Inventory Certificate (FIC) from CADC, signed by the CADC inspector or assessor and the contractor.

By signing the FIC, the contractor agrees to the final quantities for disposal and, at the same time, agrees to retain and be responsible for the residual inventories for 90 days, at no cost, on behalf of CADC. At the time of receipt of the FIC, the contracting officer is relieved of the responsibility for the residual inventory. Any proceeds realized from the sale of the surplus inventory are credited, on behalf of the client, to the Consolidated Revenue Fund or to the revolving fund, as applicable.

Settlement Offer

11.166 (__/__/97) Upon receipt of the audit report, the SCO will prepare a proposed settlement offer. This offer informs the contractor of the amount of settlement the SCO is prepared to recommend to the Director, CCRB, for approval.

11.167 (__/__/97) If the contractor accepts the proposed settlement offer, the SCO will prepare a Settlement and Release, form DSS-MAS 9223-1, and submit it to Legal Services for review, the Director, CCRB, for approval and signature, and then to the contractor for acceptance. When the contractor's written acknowledgement is received, the original is placed on the CCRB file and a copy forwarded to the contracting officer, for the contract file.

11.168 (__/__/97) If the contractor rejects the proposed settlement, the SCO will advise the contractor to submit the case directly, in writing, to the Director, CCRB so that the case may be handled in accordance with CCRB's procedures for handling disputes (see 11.201).

Termination for Default

11.180 (23/06/94) The decision to terminate a contract for default should be made only after all other possible solutions have been explored. In all cases, the advice of Legal Services must be obtained at an early stage to ensure that any proposed action will not prejudice the Crown's legal position and that the termination is legally enforceable.

Failure to take action may prejudice Crown interests.

If a contract is secured by surety bonds, termination of the contract may change the existing contractual relationship with the bonding company.

11.181 (23/06/94) The Crown has the right to terminate all or any part of the contract for default if:  

1. the contractor fails to make progress so as to endanger performance of the contract.

   The contracting officer may provide the contractor in writing with a reasonable period of time, normally 10 days, to rectify the situation. If this period must be longer, the contracting officer may require the contractor, within 10 days, to show evidence of corrective action.

   If the contractor does not rectify the situation, the contracting officer may, subject to the limitations in the Default Clause, initiate action to terminate the contract for default.

2. the contractor fails to perform any other provision of the contract.

   If the contractor does not rectify such a defect within 10 days of receipt of a notice from the contracting officer, the contracting officer may, within the limitations set forth in the Default Clause, initiate action to terminate the contract in whole or in part for default.

3. the contractor fails to deliver the goods or perform the services within the time specified in the contract.

   In the absence of excusable delays, the Crown has the right to terminate the contract immediately, regardless of how slight the delay may be. This includes the right to accept or reject goods shipped but not yet delivered. In addition, if the contractor does make timely delivery, but delivers defective goods or improperly performs services, and is unable to take corrective action within the unexpired delivery schedule period, the Crown also has the right to terminate for default.

   Whenever a contracting officer contemplates termination of a contract for failure to deliver on time, the contractor must be so advised as soon as possible after the default occurs. Failure to take such action may prejudice the Crown's position.

   When there is reasonable assurance that delivery will be made even though late, it may be desirable to discuss extension of the delivery time with the client. If the delivery date is extended, a reduction in the contract price may be appropriate.

   This situation would arise when delivery would be further delayed by terminating and placing the contract elsewhere.

4. the contractor becomes bankrupt or insolvent.

   Upon receipt of a notice of bankruptcy or insolvency, the settlement procedure outlined in 11.112 is to be followed.

Action to Terminate

11.182 (23/06/94) The procedures for termination are the same as for Termination for Convenience, (see 11.146)

Action to Recover Loss or Damage

11.183 (23/06/94) After termination, the contracting officer will determine the actual amount or best estimate of loss or damage suffered by the Crown, and the distribution of the damages to be recovered from the contractor.

Estimates of loss or damage should include any amount in excess of the contract price which the Crown may be obliged to pay in procuring the goods or services elsewhere.

11.184 (15/09/97) The contracting officer must refer claims to Legal Services when a contract is secured by a security deposit (government guaranteed bonds, bills of exchange, irrevocable standby letters of credit) or when the Crown has a claim against a contractor that is related to a work package for which the contractor has a claim against the Crown.

In all other cases the contracting officer will attempt to negotiate a settlement. When a satisfactory settlement cannot be reached, the claim will be referred to Legal Services for action.

11.185 (23/06/94) When a contractor agrees with the proposed settlement, the recommendation to recover monies will be submitted to CCSD, or, in the case of a CCC contract, the Director, Finance and Resources Administration (FRA). CCSD or the Director, FRA, will issue an invoice to the contractor for the monetary recovery.

If payment is not received within 60 days of date of issue of the invoice, CCSD or the Director, FRA, will advise the contracting officer to take appropriate follow-up action with the contractor. When normal follow-up procedures have not been successful, the matter must be referred to Legal Services.

11.186 (23/06/94) Claims must not be removed from departmental records until satisfied by payment or a properly authorized deletion action.

Contract Payment under Surety Bond

11.187 (23/06/94) When a surety bond is being enforced, payments will be issued as follows:

1. Performance bond - upon completion of the contract to the satisfaction of the Crown, the bonding company may be paid all amounts to which the contractor would be entitled under the terms of the contract.
2. Payment bond - the bonding company shall not be reimbursed for the payment of creditors from any funds held by the Crown until the work is complete and the surety company has fully discharged its obligations under the bond.

Termination by Mutual Consent

11.195 (__/__/97) On receiving the client's request for termination by Mutual Consent, the contracting officer shall request the contractor to confirm that no claim is involved and shall refer the matter to Legal Services in accordance with 11.140.

Since no claim is made, the SCO is not involved in this process.

SECTION 6E: PROCESS

Legal Services

6.506 (23/06/94) Contracting officers must be aware that solicitor/client privilege exists for the legal opinions given by Legal Services, and that such opinions should not be disclosed without knowledge and recommendation of counsel.

6.507 (__/__/97) Contracting officers must seek advice from Legal Services in the following circumstances:

1. where Director General, Assistant Deputy Minister, Deputy Minister (DM), Minister or Treasury Board (TB) approval is required to enter into or modify a contract (see Annex 6.1(c));
2. all contracts containing special terms or deviations from Public Works and Government Services Canada (PWGSC) or Canadian Commercial Corporation (CCC) general and supplemental general terms and conditions;
3. if a supplier proposes to prepare the contract or significantly amend a proposed contract;
4. all situations in which work has been commenced pursuant to an informal request from a representative of a client or on the contrator's own initiative, and a confirming order or contract with Acknowledgement and Release, is being sought (see 7.690 and see 7.691);
5. all agency, licence and loan agreements (except standard Department of National Defense (DND) loan agreements - form DSS-MAS 7118, Loan Agreement - DND Equipment), and contracts where royalties are to be paid to a contractor or where licences are to be obtained from third parties (such as third party software licences);
6. all contracts under which payment is secured by means of a letter of credit;
7. all letters of intent, and go-ahead letters;
8. all letters of comfort;
9. all contracts with foreign corporations where the contract value exceeds $1 million;
10. all CCC domestic purchase contracts over $1 million and all CCC representative agreements;
11. all contracts where questions may arise regarding "conflict of interest" issues or the post-employment code for former public servants;
12. all defence contracts where the provisions of section 20 of the "Defence Production Act," respecting title to any government issue or building, may be applicable;
13. any proposed assignment of a contract to a third party;
14. all Terminations for Default, Terminations by Mutual Consent, and confirming Notices of Terminations for Convenience. Note: The initial Notices of Termination for Convenience, (SACC Manual clauses J0200C and J0205C), do not require a legal opinion and may be issued by the contracting officer in accordance with 11.140;
15. every case of receivership or impending or actual bankruptcy of a contractor;
16. every situation where security is to be taken to ensure repayment of a debt or satisfaction of an obligation to the Crown;
17. all memoranda of understanding;
18. all formal agreements;

19. when there is a request for information or documentation from, or contact is required with, outside lawyers.

    Legal Services must be involved before any binding action that is included in these mandatory items (such as the entry into, the termination of, or a modification to, a contract) is taken by the contracting officer. Normally, consultation is most appropriate before issuing a bid solicitation.

ANNEX B

CHANGES TO THE SACC MANUAL

J0001C (__/__/97) Termination for Convenience - Confirming Notice

Remarks: Use the following text to confirm a telegraphic, facsimile or other written initial Notice of Termination for Convenience (see J0200C) where the entire contract is terminated and when a claim may be expected.

A confirming Notice of Termination for Convenience shall be prepared by the Contracting Officer and shall be submitted to the Legal Advisor for review. Such Notice shall not be issued to the contractor until the Legal Advisor has applied and signed the "Reviewed by Legal Services" stamp on the confirming notice.

Note:The initial Notice of Termination, (J0200C or J0205C), does not require a legal opinion and may be approved and signed by the contracting officer in accordance with 11.145 of the Supply Manual.

Text:

This Notice confirms the Minister's Termination
Notice to you dated _____ in respect of the above-referenced Contract.
The termination is subject to section ____ ("Termination for Convenience"
provision) of the General Conditions of the Contract and it became effective
on the date of receipt by you of the said Termination Notice.

You are requested to submit to the Contracting Authority, Department of Public Works and Government Services, for consideration, any claim which you may have as a result of this termination. Such claim and those of your subcontractors and/or suppliers, if any, are to be submitted on the prescribed departmental termination claim forms. On receipt of this Notice, you should apply in writing to the Contracting Authority for the required set of forms.

In preparing such claim, your attention is drawn to the above-referenced section in the General Conditions of the Contract and to the "Instructions - Termination for Convenience", DSS-MAS 9403-2, in Section 1 of the Standard Acquisition Clauses and Conditions Manual. Your claim and all related correspondence are to be addressed to the Contracting Authority.

Please confirm your receipt of this Notice by signing and returning a copy of this Notice to the Contracting Authority.

J0002C (__/__/97) Termination for Convenience (Partial)-Confirming Notice

Remarks: Use the following text to confirm a telegraphic, facsimile or other written initial Notice of Partial Termination for Convenience (See J0205C) where a claim may be expected.

A confirming Notice of Termination for Convenience shall be prepared by the Contracting Officer and shall be submitted to the Legal Advisor for review. Such Notice shall not be issued to the contractor until the Legal Advisor has applied and signed the "Reviewed by Legal Services" stamp on the confirming notice.

Note:The initial Notice of Termination (J0200C or J0205C), does not require a legal opinion and may be issued by the contracting officer in accordance with 11.145 of the Supply Manual.

Text:

This Notice confirms the Minister's Termination Notice to you dated _____, in respect only of Item _____ (part number, Federal Stock Number, description, quantity) of the above-referenced Contract. The termination became effective on the date of receipt by you of the said Termination Notice and it is subject to section ____ ("Termination for Convenience" provision) of the General Conditions of the Contract. You shall continue with the rest of the Work in accordance with the terms, conditions and specifications of the Contract.

You are requested to submit to the Contracting Authority, Department of Public Works and Government Services, for consideration, any claim which you may have as a result of this termination. Such claim and those of your subcontractors and/or suppliers, if any, are to be submitted on the prescribed departmental termination claim forms. On receipt of this Notice, you should apply in writing to the Contracting Authority for the required set of forms.

In preparing such claim, your attention is drawn to the above-referenced section in the General Conditions of the Contract and to the "Instructions - Termination for Convenience", DSS-MAS 9403-2, in Section 1 of the Standard Acquisition Clauses and Conditions Manual. Your claim and all related correspondence are to be addressed to the Contracting Authority.

Please confirm your receipt of this Notice by signing and returning a copy of this Notice to the Contracting Authority.

J0003C (__/__/97) Termination for Convenience (No Cost)-Confirming Notice

Remarks: See the following text to confirm the appropriate telegraphic, facsimile or other written initial Notice of Termination for Convenience (See J0200C or J0205C) for the complete or partial termination of the contract where the contractor has indicated that no claim will be filed.

A confirming Notice of Termination for Convenience shall be prepared by the Contracting Officer and shall be submitted to the Legal Advisor for review. Such Notice shall not be issued to the contractor until the Legal Advisor has applied and signed the "Reviewed by Legal Services" stamp on the confirming notice.

Note:The initial Notice of Termination(J0200C or J0205C), does not require a legal opinion and may be issued by the contracting officer in accordance with 11.145 of the Supply Manual.

Text:

This Notice confirms the Minister's Termination Notice to you dated _____ in respect of the above-referenced Contract. The termination is subject to section ____ ("Termination for Convenience" provision) of the General Conditions of the Contract and it became effective on the date of receipt by you of the said Termination Notice.

You have advised that you do not propose to make any claim against Her Majesty the Queen in right of Canada or the Minister by reason of this termination. You hereby agree to release Her Majesty, the Minister and all their servants and agents from all claims and demands arising out of this termination or out of anything done or omitted to be done under the Contract.

Please confirm your agreement with this termination on the above terms by signing and returning a copy of this Notice to the Contracting Authority.

J0004D (30/10/96) Termination for Convenience

The following clause is applicable to maintenance service contracts....

NOTE: The text of clause J0004D remains unchanged.

J0005D (30/10/96) Termination for Convenience

Remarks: The following clause is applicable to _____service contracts.

NOTE: The text of clause J0005D remains unchanged.

J0200C (__/__/97) Notice of Termination for Convenience

Remarks: Use the following text to stop the work using a telegraphic, facsimile or other written initial Notice of Termination for Convenience when the client has requested (in writing) the cancellation or termination of the entire contract.

Note:Your legal advisor need not be consulted at this stage if the termination is due to curtailment of funds, the discontinuance of a government program or circumstances that make the acquisition of the product or service unnecessary; however, your legal advisor must be consulted to review the confirming Notice of Termination.

Text:

The Minister of Public Works and Government Services hereby terminates Contract No. ______ in its entirety pursuant to the Termination for Convenience provisions of the Contract.

You are directed by the Minister of Public Works and Government Services to stop immediately all Work related to this Contract, including the work of your subcontractors. You are to provide the Contracting Authority with current detailed status information and your estimate of termination claim, if any. You are to place no further orders and incur no further expense. A confirming Notice of Termination with additional information will follow.

J0205C (__/__/97) Notice of Partial Termination for Convenience

Remarks: Use the following text to stop the work using a telegraphic, facsimile or other written initial Notice of Termination for Convenience when the client has requested (in writing) the cancellation or termination of a portion of the contract.

Note:Your legal advisor need not be consulted at this stage if the termination is due to curtailment of funds, the discontinuance of a government program or circumstances that make the acquisition of the product or service unnecessary; however, your legal advisor must be consulted to review the confirming Notice of Partial Termination.

Text:

The Minister of Public Works and Government Services hereby partially terminates Contract No._____ , in respect of Item No. _____ (part number, FSN, description, quantity) only, pursuant to the Termination for Convenience provisions of the Contract.

You are directed by the Minister of Public Works and Government Services to stop immediately all Work related to this Contract on the said Item, including the work of your subcontractors. You are to place no further orders and incur no further expense with respect to said Item. You are to provide the Contracting Authority with current detailed status information and your estimate of termination claim, if any. A confirming Notice of Partial Termination with additional information will follow.

J0500C (__/__/97) Stop Work Order - Suspension of the Contract

Remarks: Use the following text when preparing a telegraphic or facsimile Stop Work Order when the client has requested (in writing) a suspension of the contract in order to investigate the Crown's alternatives and/or a review of the contract status is required before deciding whether termination is appropriate and, if so, the type and extent of termination (including a Termination for Default).

Text:

This Stop Work Order is issued pursuant to section _____ ("Suspension of Work" provision) of the General Conditions, if any, in respect of Contract File No. _____.

You are directed by the Minister of Public Works and Government Services to stop immediately all Work related to this Contract, including the work of your subcontractors, until further notice by the Contracting Authority. You are to place no further orders and incur no further expense. You are also to provide the Contracting Authority with current detailed Contract status information.

J1000C (__/__/97) Termination for Default

Remarks: Use the following text when preparing a complete Termination for Default, only after a supporting legal opinion or approval from a Legal Advisor has been obtained, when the contractor fails to make deliveries in accordance with the terms, conditions or specifications of the contract.

Text:

This is further to the Minister's Stop Work Order dated _____. [Include this sentence only if a Stop Work Order was sent by the Contracting Officer.]

As you are in default under the above-referenced Contract in that you have not delivered the supplies or services specified therein in accordance with the specifications, terms, and conditions of the Contract, the Minister of Public Works and Government Services hereby terminates the Contract pursuant to the Default provisions of the General Conditions forming part of the Contract.

The Minister reserves Her Majesty's right under the Contract to charge you for all loss and damage which may be suffered by Her Majesty by reason of your default, including any amount in excess of the Contract Price which Her Majesty may be obliged to pay in procuring the said supplies and services elsewhere.

J1001C (__/__/97) Termination for Default (Partial)

This is further to the Minister's Stop Work Order dated _____. [Include this sentence only if a Stop Work Order was sent by the Contracting Officer.]

As you are in default under the above-referenced Contract in that you have not delivered certain items specified therein, in accordance with the specifications, terms, and conditions of the Contract, the Minister of Public Works and Government Services hereby partially terminates the Contract pursuant to the Default provisions of the General Conditions forming part of the Contract in respect of the following item(s) only:

Description of items

________________

________________

________________

You shall continue with the rest of the work in accordance with the terms, conditions, and specifications of the Contract.

The Minister reserves Her Majesty's right under the Contract to charge you for all loss and damage which may be suffered by Her Majesty by reason of your default, including any amount in excess of the Contract Price of the terminated item(s) which Her Majesty may be obliged to pay in procuring the said items elsewhere.

J1003C (__/__/97) Termination for Default

This is further to our Stop Work Order dated _____. [Include this sentence only if a Stop Work Order was sent by the Contracting Officer.]

As a direct result of your [bankruptcy, receivership, or insolvency] you are in default under the above-referenced Contract and, pursuant to the Default provisions of the General Conditions forming part of the Contract, the Minister of Public Works and Government Services hereby terminates the Contract in respect to all supplies and services described therein.

The Minister reserves Her Majesty's right under the Contract to charge you for all loss and damage which may be suffered by Her Majesty by reason of your default, including any amount in excess of the Contract Price which Her Majesty may be obliged to pay in procuring the said supplies and services elsewhere.

J1004C (__/__/97)Termination for Default

This is further to your facsimile/letter of _____ addressed to _____.

As you have indicated that you are unwilling or unable to deliver the supplies or services described in the above-referenced Contract in accordance with the specifications, terms and conditions of the Contract, the Minister of Public Works and Government Services hereby terminates the said Contract pursuant to the Default provisions of the General Conditions forming part of the Contract.

The Minister reserves Her Majesty's right under the Contract to charge you for all loss and damage which may be suffered by Her Majesty by reason of your default, including any amount in excess of the Contract Price which Her Majesty may be obliged to pay in procuring the said supplies and services elsewhere.

J1005C (__/__/97) Termination for Default - Partial

This is further to your facsimile/letter of _____ addressed to _____ .

As you have indicated that you are unwilling or unable to deliver certain items specified in the above-referenced Contract in accordance with the specifications, terms and conditions of the Contract, the Minister of Public Works and Government Services hereby partially terminates the said Contract pursuant to the Default provisions of the General Conditions forming part of the Contract in respect of the following items(s) only:

Description of Items

_____________

_____________

_____________

You shall continue with the rest of the work in accordance with the terms, conditions and specifications of the Contract.

The Minister reserves Her Majesty's right under the Contract to charge you for all loss and damage which may be suffered by Her Majesty by reason of your default, including any amount in excess of the Contract Price of the terminated item(s) which Her Majesty may be obliged to pay in procuring the items elsewhere.

J2000C (__/__/97) Termination by Mutual Consent

The above-referenced Contract is hereby terminated by mutual consent of the parties with respect to the supplies and services mentioned therein. The parties mutually agree to release each other, their servants and agents from all claims and demands arising out of this termination or out of anything done or omitted to be done under the Contract.

Please confirm your agreement with termination on the above terms by signing and returning a copy of this document to the Contracting Authority.