# Termination for Convenience **Termination for convenience** is the government's power to end an award at will, without any finding that the other party did anything wrong. It is the most important legal fact about the 2025–26 grant and contract cancellations. The administration did not have to prove the work was wasteful, fraudulent or failing. It only had to decide it no longer wanted it. ## In contracts: a power with a price The doctrine began in wartime procurement. The Army's 1863 regulations allowed termination when the government no longer needed what it had ordered, and the Dent Act (1919) and the **Contract Settlement Act of 1944** built the settlement machinery for demobilization after each World War. Today the Federal Acquisition Regulation puts a termination clause in essentially every contract: FAR 52.249-2 for fixed-price contracts, 52.249-6 for cost-type contracts, and 52.212-4(l) for commercial items. The power comes with a **price**: - **What the contractor recovers:** costs incurred, a reasonable profit on the work actually done, and settlement expenses. - **What it does not recover:** anticipatory profit on the work that will now never be done. - **Its remedy:** disputes go to a contracting officer and then to a board of contract appeals or the [[Court of Federal Claims]]. The courts have barely limited the power itself. *Torncello v. United States* (1982) suggested that a termination needed changed circumstances, but *Krygoski* (Fed. Cir. 1996) narrowed that to cases where the government contracted never intending to perform. Proving bad faith requires "well-nigh irrefragable proof." The 2025 FAR overhaul (EO 14275) left the Part 49 clauses unchanged. A proposed rule, **FAR Case 2026-007**, would shorten the contractor's deadline for a settlement proposal from one year to **90 days**. Its comment period closed July 23, 2026, and it is not final. ## In grants: the doctrine without the price Grants and cooperative agreements historically had no such power. Then: - **2020.** OMB's [[Uniform Guidance]] revision added a ground for ending an award that "no longer effectuates the program goals or agency priorities" (2 CFR 200.340). - **2024 revision (effective Oct 1, 2024).** The ground moved to 200.340(a)(4) and became usable only "pursuant to the terms and conditions of the Federal award." In other words, it works only if it is written into the award. - **[[Executive Order 14332]] (Aug 7, 2025).** Ordered OMB to "require all discretionary grants to permit termination for convenience, including when the award no longer advances agency priorities or the national interest." - **The proposed rewrite of 2 CFR Part 200 (91 FR 32198, May 29, 2026).** Would let agencies terminate any award that "does not effectuate program goals, federal agency priorities or the national interest." OMB aimed for Oct 1, 2026, but **§ 157 of the Sept 2, 2026 [[Continuing Resolution]] bars OMB from finalizing it, or anything substantially similar, through Dec 11, 2026.** **The key point is what does not carry over.** Grant recipients get the power without the price. They have no profit to recover and no settlement process with appeal rights. The Supreme Court then made sure they also have no quick court. [[Department of Education v. California]] (Apr 4, 2025) and [[NIH v. American Public Health Association]] (Aug 21, 2025) routed grant-termination money claims to the Court of Federal Claims under the [[Tucker Act]]. That court can award damages but cannot order a grant reinstated. ## The 2025 numbers No single verified count of terminated grants exists. Single-source tallies put **NSF** at about 1,379 grants by May 2025 and **NIH** at more than 2,500 grants worth over $3.2 billion. On contracts, GAO reported in August 2026 that [[DOGE]] claimed 13,476 terminations. GAO could not corroborate about **$34.6 billion** of the roughly $61 billion in contract savings DOGE claimed. ## See also - [[Federal Grant Lifecycle]] (stage 8) · [[Uniform Guidance]] · [[Executive Order 14332]] - [[Court of Federal Claims]] · [[Tucker Act]] · [[Bid Protest]] - [[Department of Education v. California]] · [[NIH v. American Public Health Association]] - [[DOGE]] · [[DOGE and Government Dismantling Timeline]] · [[Rescission and Impoundment]]