The Armed Services Board of Contract Appeals has held that termination-for-convenience costs incurred after a stop-work order — including subcontractor termination fees and operating costs reasonably continuing during the stop-work period — are recoverable under FAR 52.249-2.
On January 22, 2026, the Armed Services Board of Contract Appeals issued its decision in Wolverine Tube, Inc., ASBCA No. 63877. The appeal arose from the Air Force’s denial of approximately $1.24 million in convenience-termination costs that the contractor incurred after receiving a stop-work order on a fixed-price pallet contract, including operating costs over two distinct periods and a subcontractor termination fee.
Applying the Termination for Convenience of the Government (Fixed-Price) clause at FAR 52.249-2(g)(2), the Board confirmed that, where the parties do not reach a settlement, the contractor may recover costs reasonably incurred in performance of the work, costs of settling and paying terminated subcontracts, and a reasonable profit on those costs. The Board’s analysis turned on the allowability framework of FAR 31.201-2 and the contract’s controlling termination clause, rather than on a categorical bar tied to the stop-work order date.
The decision is a useful reference for contractors framing convenience-termination settlement proposals. Prime contractors should ensure that subcontractor termination settlements are documented, that operating costs during a stop-work period are tied to the contract, and that the proposal is structured to map cleanly onto the FAR cost principles and the applicable termination clause.
Source: Wolverine Tube, Inc., ASBCA No. 63877 (Jan. 22, 2026) Read the decision.