Show Cause Notice

A show cause notice is a formal written demand issued by the contracting officer under FAR 49.607(b) requiring the contractor to present its case for why the government should not terminate the contract for default, representing the government's final notice before the most severe contract remedy.

What is a Show Cause Notice?

A show cause notice is issued when the contracting officer has determined that a contract default appears imminent, typically after a cure notice failed to produce adequate corrective action, or when a delivery deadline has passed and the contractor has not delivered. The show cause notice states the specific grounds for considering termination and demands that the contractor respond with written reasons why the contract should not be terminated for default.

Unlike a cure notice, which focuses on giving the contractor time to fix a problem, a show cause notice is focused on giving the contractor the opportunity to present legal or factual defenses to termination, primarily: excusable delay, government-caused failure, force majeure, or other circumstances that would make the termination improper.

FAR 49.607(b) provides the template language for a show cause notice. The contractor's response should address: whether performance can still be completed and by when; any excusable causes for the delay or failure (acts of God, government interference, unreasonable government requirements); and any defenses to the government's right to terminate for default. A strong show cause response can lead the contracting officer to issue a T4C instead of a T4D, convert to a modified delivery schedule, or abandon the termination action entirely.

Show cause notices are also issued contemporaneously with or following cure notices in egregious cases, and they often precede Unsatisfactory CPARS ratings on the relevant performance categories.

Why Show Cause Notices matter for government contractors

A show cause notice is the government's penultimate step before termination for default, arguably the most serious document a contractor can receive. Contractors must treat it as a crisis event: engage legal counsel immediately; gather all documentary evidence of performance, government-caused delays, and excusable conditions; and prepare a comprehensive, legally grounded written response within the stated timeframe. An inadequate or untimely response forfeits the opportunity to present defenses that might prevent or convert a T4D.

Example

An IT services contractor receives a show cause notice after missing a critical software deployment milestone and then failing to present an adequate corrective action plan in response to a prior cure notice. The show cause notice states: "The contractor has failed to deliver the Phase 2 software module due October 1, 2025, as required by contract CDRL A003. The contractor's cure response of November 5 does not provide a credible recovery schedule. You are hereby directed to show cause in writing within 10 days why this contract should not be terminated for default." The contractor's legal team prepares a response documenting that a key government-furnished API specification was delivered 6 weeks late, causing cascading delays, and citing FAR 52.249-14 (Excusable Delays). The contracting officer reviews the evidence and issues a T4C rather than a T4D, citing the government's contribution to the delay.

Frequently Asked Questions

What is the required response time for a show cause notice?

FAR 49.607(b) specifies that contractors be given a "reasonable opportunity, not less than 10 days (unless a longer period is appropriate), to show cause why the contract should not be terminated for default." In practice, contractors should respond as quickly as possible while making the response as comprehensive as possible.

What happens if a contractor ignores a show cause notice?

Failure to respond to a show cause notice will almost certainly result in a termination for default notice. The contractor's opportunity to present excusable delay defenses and other arguments is in the show cause response; silence effectively waives those arguments.

Can the show cause response prevent the T4D entirely?

Yes. If the contractor presents compelling evidence of excusable delay, government-caused failures, or other valid defenses, and if the contracting officer finds the evidence credible, the termination for default action may be withdrawn, converted to a termination for convenience, or resolved through a new performance schedule. This makes the quality of the show cause response critically important.

Is a show cause notice the same as a cure notice?

No. A cure notice is issued when the deficiency can still be corrected, it gives the contractor time to fix the problem. A show cause notice is issued when the government believes default termination is appropriate and is requiring the contractor to justify why it should not proceed. Show cause notices are typically more serious and closer to actual termination than cure notices.