2010-05-25

NPM 016-2010

Requesting Entity: First United Constructors Corporation

Issues Concern: Single Largest Contract

 

Details

Whether the accomplished portion of a contract which was terminated for convenience (without the contractor's fault) may be considered as part of the contractor's "completed contracts" for the purpose of determining compliance with the single largest contract requirement.

[T]ermination for convenience is an option solely granted to the government, as procuring entity, and may only be exercised if contractor is not at fault. It recognizes that work has been done or successfully accomplished by the contractor by requiring the procuring entity to pay for such works.

From the foregoing, it is our considered opinion that accomplished works of a contract terminated by convenience may be considered in determining whether the bidder has complied with the single largest contract rule. Works accomplished, despite termination of the contract for convenience, illustrates the competence of the contractor to perform a specific undertaking. These works, therefore, should be properly considered as part of the contractor's track record.

It bears stressing, however, that only the value of works done, and not the total cost of the contract, should be considered in determining whether the terminated contract meets the prescribed 50% of the ABC of the contract to be bid. Furthermore, the procuring entity must carefully scrutinize whether (i) the contract was indeed terminated by convenience as defined under the PBDs and (ii) the Constructors Performance Evaluation System rating of the contractor and/or submitted certificate of completion and owner's acceptance of the contract is satisfactory as prescribed under Section 23.5.2.4 of the IRR.