FAR Default Termination Notices: The Cure Notice, the Show Cause Notice, and the 49.402-3 Steps a Contractor's File Must Answer

FAR 49.402-3 Notice Sequence

FAR 49.402-3 establishes a sequence for considering and issuing a termination for default. The sequence distinguishes late delivery or performance from other failures, identifies when cure and show-cause notices are used, and sets requirements for a final termination notice.

The official Acquisition.gov text of FAR 49.402-3 displays FAC 2026-01, effective March 13, 2026. The related FAR 49.607 notice formats state that delinquency notices in that section are sent with proof of delivery requested. FAR 49.402-3 itself does not specify Certified Mail as the required delivery method.

For contractors, the notice chain is also an evidence sequence. A contracting officer's decision to issue, combine, or not issue a notice can matter in a later appeal under the contract's Disputes clause. The contractor's records should preserve what arrived, when it arrived, how it arrived, and what response followed.

Review and Approval Before Notice

Before selecting default, convenience, or no-cost cancellation, the Government must review the proposed action with contracting and technical personnel and counsel. The review is intended to ensure the propriety of the proposed action.

An administrative contracting officer must obtain prior contracting-office approval before issuing a cure notice or show-cause notice. The FAR states that approval should be obtained by the most expeditious means.

These provisions make internal decision records relevant to understanding the notice path. Contractors should retain the notices received and related correspondence, while avoiding assumptions about internal Government review that is not disclosed in the contract file or communications.

Late Delivery or Performance

Under FAR 49.402-3(c), a failure to deliver supplies or perform services within the specified time does not, by itself, require a preliminary notice of failure or possible termination before the actual notice of termination.

There is an important qualification. If Government action might be construed as waiving the delivery or performance date, the contracting officer must send a notice that sets a new date and reserves the Government's rights under the Default clause.

The contractor's file should therefore preserve the delivery schedule, any extensions, communications about revised dates, Government direction, and evidence of performance or attempted performance. These records help establish the sequence of events and the date the parties treated as operative.

Cure Notice for Other Failures

FAR 49.402-3(d) addresses failures under Default clause subdivisions (a)(1)(ii) and (a)(1)(iii). Examples include failing to provide a required performance bond or failing to make progress in a way that endangers performance.

For these failures, the contracting officer must provide written notice identifying the failure and a period of 10 days, or longer as necessary, to cure it. After the cure period expires, the contracting officer may issue a termination notice unless the failure has been cured. When appropriate, the cure notice may be included in a show-cause notice.

The format in FAR 49.607(a) adds timing guidance. A cure notice should not be used if the remaining delivery schedule does not allow a realistic cure period of at least 10 days. The format provides for the cure period to run after receipt of the notice.

A contractor's response file should identify the stated failure, the date and time the notice arrived, the cure deadline calculated from receipt, the actions taken, and the evidence showing whether the condition was corrected. Preserve the exact notice version and any attachments, not only a summary in an internal tracker.

Show-Cause Notice and Response Period

FAR 49.402-3(e)(1) says that, if termination for default appears appropriate, the contracting officer should, if practicable, notify the contractor in writing of the possibility of termination. The notice must call attention to contractual liabilities and request that the contractor show cause why the contract should not be terminated. It may state that a failure to provide an explanation may be treated as an admission that no valid explanation exists. When appropriate, it may invite the contractor to a conference.

The show-cause notice format in FAR 49.607(b) is intended for situations where the remaining delivery schedule does not permit a realistic 10-day cure period. It should be sent immediately after expiration of the delivery period. The format gives the contractor an opportunity to present relevant facts in writing within 10 days after receipt.

The format also notes that Government assistance or acceptance of delinquent goods or services is for damage mitigation and does not, by itself, indicate waiver of rights. Contractors should record such events alongside the notice and response history rather than treating them as a substitute for a written schedule change.

A timely response record should include the submitted explanation, supporting schedule and performance records, delivery confirmation for the response, and any conference invitation or follow-up. Confirm the applicable response deadline from the notice and contract documents. The FAR's format uses 10 days after receipt; the record should show how the organization calculated and met the stated period.

Surety and Small-Business Notifications

When termination for default appears imminent, the contracting officer must provide written notification to the surety. If the contract is subsequently terminated for default, a copy of the termination notice must also be sent to the surety.

For a small business contractor, the contracting officer must immediately provide copies of any cure or show-cause notice to the contracting office's small-business specialist and the nearest SBA Area Office. The contracting officer should consult the small-business specialist when practicable before proceeding with termination.

These duties describe Government-side notifications. The contractor should retain notices and correspondence received by the contractor, surety, or other authorized parties, with dates and channels recorded separately. That creates a clear account without presuming that an internal or third-party transmission was received by the contractor.

Factors Considered Before Default Termination

FAR 49.402-3(f) directs the contracting officer to consider seven factors:

1. Contract terms and applicable laws and regulations.
2. The specific failure and the contractor's excuses.
3. Availability of the supplies or services from other sources.
4. Urgency, and the time required to obtain performance elsewhere compared with the time the contractor could deliver.
5. The contractor's essentiality to the Government acquisition program and effects on its ability to perform other contracts.
6. Effects on liquidation of guaranteed loans, progress payments, or advance payments.
7. Other pertinent facts and circumstances.

Contractors can organize their records around these issues. Relevant records may include the contract and modifications, schedules, progress reports, communications about dependencies, supporting explanations for delay, mitigation steps, and evidence of available recovery plans. Preserve the source and date of each record so that the file remains reviewable.

Required Content and Distribution of the Termination Notice

If the contracting officer determines that default termination is proper after following the procedures in paragraphs (a) through (f), FAR 49.402-3(g) requires a termination notice stating:

1. The contract number and date.
2. The acts or omissions constituting default.
3. That the contractor's right to proceed is terminated, in whole or in a specified part.
4. That terminated supplies or services may be purchased against the contractor's account and the contractor may be held liable for excess costs.
5. If the contracting officer determined the failure is not excusable, that the notice states that decision and identifies the right to appeal under the Disputes clause.
6. That the Government reserves all rights and remedies under law or contract, in addition to charging excess costs.
7. That the notice is a decision that the contractor is in default as specified and that the contractor has the right to appeal under the Disputes clause.

The contracting officer must distribute the termination notice as the contract was distributed, furnish a copy to the surety if any, and notify the disbursing officer to withhold further payments pending further advice.

If the contracting officer determines before issuing the notice that the failure is excusable, the contract must not be terminated for default. It may instead be terminated for convenience if that is in the Government's interest. If excusability cannot be determined before issuance, the contracting officer must make a written decision as soon as practicable afterward and promptly deliver it with notice of the appeal right.

Contractor Notice Delivery and Record Retention

FAR 49.402-3 does not state that a cure, show-cause, or default notice must be sent by Certified Mail. FAR 49.607 says that notices in that section will be sent with proof of delivery requested, but does not name Certified Mail as the required method.

Receipt still matters operationally. A cure notice received late or not received can affect the contractor's ability to act within the cure period. A show-cause notice received late can affect the response timeline. Contractors should record the arrival date, channel, recipient, and any tracking information. Preserve the envelope, delivery receipt, electronic transmission record, and attachments when available.

For mailed notices, Certified Mail can support a documented delivery workflow. The applicable contract, notice, and legal requirements determine the method and response obligations. A mailing record and proof of notice are distinct evidence points; neither should be treated as a substitute for preserving the notice itself. See the guidance on proof of mailing versus proof of notice and returned, refused, or unclaimed Certified Mail.

A complete notice record connects the contract requirement, triggering event, notice version, delivery evidence, response, corrective action, and appeal-related correspondence. A structured audit trail for legal notices and defined notice record retention support retrieval during contract administration and oversight reviews.

Contractor File Checklist

• Contract, Default clause, modifications, and applicable schedule.
• Government notices, including attachments and envelopes where available.
• Date, time, channel, and recipient for each notice received.
• Tracking details or electronic delivery records.
• Internal deadline calculation and assigned response owner.
• Cure actions, progress records, explanations, and supporting evidence.
• Copy of each response and evidence of its delivery.
• Conference records and follow-up communications.
• Termination notice, excusability decision, and Disputes-clause appeal information.
• Retention and access controls for the complete file.

Organized retention and retrieval clarify the notice sequence, preserve compliance evidence, and support a defensible contract record. For related registration and record-management services, see National Compliance Registry.

General compliance information, not legal advice.