Performance : Consultant Relationships : Contract Terminations

Contract Terminations

Termination is a cancellation of project work or the contract by Caltrans. Complete and accurate documentation is required to justify contract termination. All issues regarding consultant performance should be documented in the contract records. Standard contract language includes instructions for terminating the contract.

The contract manager (CM) does not have the authority to terminate a contract. Although DPAC manages contract terminations, the CM may need to perform some duties to finalize the consultant relationship. For example:

  • providing 30-day notice to the consultant when required
  • instructing the consultant on submitting cost proposals that capture termination costs
  • informing the consultant about final responsibilities, including notifying sub-consultants, accounting for allowable expenses, and submitting invoices

The two basic types of early contract terminations are:

Termination Not for Cause

If Caltrans determines that a project is no longer viable (e.g., the available budget is shifted to a higher priority project), Caltrans may terminate the contract with 30 days' written notice to the consultant. DPAC will instruct the CM on how to notify all impacted consultants and sub-consultants, what final expenses the consultant may charge, and how the consultant should submit final invoices.

Reasons for termination "not for cause" based on the best interests of state include:

  • lack of funds
  • changes in priority
  • changes in scheduling
  • ordered by a court
Termination for Cause  

If a consultant's work is unsatisfactory, or the consultant fails to perform on a contract, you may decide to terminate the contract "for cause." This type of termination does not require 30-day notice, but does involve formally notifying the consultant of the problems and giving the consultant sufficient time to correct them.

A few reasons for termination for cause are:

  • failure to perform work
  • breach of contract
  • failure to meet the terms and conditions of the contract