It could happen. And it is best to be prepared, advises Marsha Lindquist, president of Granite Leadership Strategies Inc. in Prescott, AZ.

#1 Set up your contract and cost accounting policies and procedures.

The contracting policies and procedures ought to deal with notices to subcontractors and actions related to responding to the exercise of a termination or stop-work clause. The cost accounting policies and procedures must address what you do to set up proper accounts and prepare the claims.

#2 Know your contracts and what clauses they contain.

Clauses can range from FAR 52.249-1 through FAR 52.249-4. If you have a short-form termination for convenience clause, you are limited to collecting for just services rendered. If you don’t have a short form, then you have latitude in claiming reasonable costs for settlement of the work.

#3 Immediately create direct and indirect cost accounts for the stop-work action and document your activities.

You must identify and collect all direct costs for the stop work or termination effort separately from your normal contract direct costs.

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