A. Terminating a contract is normally the last alternative after all other administrative means have been sought to resolve a problem between the city and a contractor. There are two reasons for terminating or canceling a city contract: for convenience, and for cause (default).
1. Terminating for convenience. There are two types of terminations for convenience used by the city: for the mutual convenience of the contractor and the city; and for the unilateral convenience of the city.
a. Mutual convenience. An example of this type is where both parties agree that the contractor is no longer able to provide the service or product to the city under an existing contract. The Finance Director is responsible for negotiating the final settlement formula regarding costs and date of termination, and to prepare the recommended termination in accordance with the terms of the existing contract, if applicable.
b. City convenience. Depending upon the terms of the written contract, this type of termination may occur whenever the city determines that termination is in the best interests of the city or that funds are not available.
2. Terminating for cause.
a. This type of termination is employed when the contractor is in default or breach of contract. Depending upon the situation and the terms of the written contract, it is the city's standard practice that a cure notice be sent via certified mail by the Purchasing Office to the contractor.
b. This notice shall set forth the details regarding the deficiencies, with the dates and background information supporting non-performance or substandard performance. The Finance Director establishes a firm cure deadline date. The period must be of a reasonable length of time to cure the deficiencies; normally the time period varies from ten to 30 days, depending upon the individual circumstances of each case. Assuming the contractor does not cure the deficiencies to the satisfaction of the city, the Finance Director will then send a show cause letter by certified mail to the contractor, wherein the contractor is requested to show cause why his or her contract should not be terminated. The Finance Director will then establish another deadline date for an answer to the show cause letter, usually five to ten days. Unless the contractor shows sufficient cause why the contract should not be terminated for cause, the Finance Director will initiate the necessary steps to terminate the agreement and document the final action accordingly.
B. In all termination actions, the Administrative Services Director must rely on the user department to provide the necessary documentation to justify contractual decisions that are made. The using department personnel are the "eyes and ears" of the city, expressing satisfaction or dissatisfaction with contractor performance. The Administrative Services Director either resolves the problem or recommends termination of the appropriate contract to the City Council.
C. The usual procedure for terminating a contract is by no means the exclusive method. The action taken will always depend upon the written terms of the contract, and the actual, factual situation presented. The city reserves the right to employ all other available mechanisms and remedies to deal with a breach of contract.
(Res. 2008-011, passed 2-19-2008)