If You Receive a Cure Notice on a Government Contract, It's Time To Panic and Get Help

 Photo by  Jamie Street  on  Unsplash

Photo by Jamie Street on Unsplash

In most emergencies we may encounter in life, the experts tell us: “Don’t panic. Stay calm.”

However, if you receive a “Cure Notice” letter from the Government, the time to stay calm is long gone.  The Government is panicking and you should as well. Panic - but with a purpose.

A cure notice is the Government’s warning that it intends to completely or partially terminate your contract because of your actual or anticipated failure to meet the obligations of the contract. You are facing Termination for Default (T for D) and have ten days to get your problems “cured” and the project back on track.  

Being Terminated for Default will shut down this contract, and worse, your performance record with the Government may be gravely tarnished, potentially disqualifying you from future contract opportunities.

I was recently called into two Government projects for two separate contractors, both of which had Cure Notices issued to the contractors. Both had received these notices for excessive schedule delays. The Government wasn’t seeing the performance and wanted to terminate the contractors for default.  

After I got on site and assessed what problems to address first (think: panicking with a purpose!) it became clear the Government didn’t issue the cure notices by surprise. The delays and problems were occurring for months. The problems on the jobsite had been minor which meant that the impacts to the schedule were minor, but over time, the small problems and delays compounded into major delays and the apparent failure of the contractor to maintain control of the job. To be clear, the contractors weren’t solely responsible for the problems on the job, but they were certainly the party at greatest financial risk if terminated and the party being held accountable to correct those problems. It’s not that my contractors weren’t trying to keep the job on the right path. The problem was they weren’t communicating with the Government often enough to demonstrate two things: 1. they were taking swift action to address their own problems and 2. to prove why a particular problem on site was something that needed to be addressed by the Government and not the responsibility of my client. 

When a cure notice arrives, debating over who’s at fault isn’t going to avoid your T for D.  Remember, you only have ten days! You’ve got to take immediate, effective action to demonstrate you are working hard to “cure” the problems and recover the schedule. Along the way, document all your actions, including detailing the root causes of each problem you cure. You’ll need these to present to the Contracting Officer so you can debate fault later.  What’s most important is the Government sees you taking visible action.

In taking action, and among other efforts, I recommend establishing a new front with the help of new leadership. A new person on the ground is the strongest, most visible, positive change a contractor can make to show the Government that the contractor will cure its problems and get back on track. Rarely, can any one person turn around a job in ten days. But a new person won’t be bogged down by the old baggage on the job and can be objective and act quickly with a clear mind. They have the least to lose and all to gain in showing they can recover the project.  

For my two projects that had received cure notices, we needed months to address the problems, not ten days. However, my presence alone during those first couple days, was enough to show the Government that these contractors were serious and deserved a chance to recover the job. Just listening to both the contractor and Government vent their frustrations began to ease the tension on the jobsite. In addition, I was able to come up with concrete solutions to quickly get hold of problems and deploy improvements on the ground. Within a couple days, a response to the cure notice was issued and the Government rescinded their threat of T for D.  

Assuming you’ve recovered the job, the Government has calmed down, and you get to work another day, the long-term lessons here are obvious: address the small problems quickly and effectively before they become big problems, communicate often, in enough detail and effectively to deliver on your obligations on the job. Put the Government on notice to do the same for their obligations. The best case scenario is to stay clear of a being in a position to receive a cure notice, but if you find yourself in a possession of a cure notice, remember to panic with a purpose and take quick action. If you need to, bring in a third party to help you sort it out. Mission Critical Operations is ready to help.

This article is not intended to provide legal advice of any kind.  The reader is advised to review and understand all clauses, terms and conditions that govern its contracts and to consult with an attorney for assistance with contractual matters.

Mission Critical Operations (MC-Ops) helps small contractors and owners recover from schedule delays, financial loss and poor quality control on projects throughout the nation.  We step-in to get control of and improve both field and administrative operations. We respond quickly to recover projects and then implement systems to prevent problems from recurring.  Our customers are self-performing heavy/civil contractors, specialty trade contractors, government contractors and institutional owners.