FAR Stop Work Order: A Complete Guide to Responding and Claiming Costs

Table of Contents#

What is a FAR Stop Work Order?
Common Reasons for Issuing a FAR Stop Work Order
Legal Framework: Key FAR Provisions
Step-by-Step Guide to Responding to a Stop Work Order
How to Claim Costs and Damages Under FAR
Best Practices to Mitigate Risks
Conclusion
References

1. What is a FAR Stop Work Order?#

A FAR Stop Work Order is a formal directive issued by a contracting officer (CO) to temporarily halt performance on a federal contract. It is governed by FAR 52.242-15, titled “Stop-Work Order,” which outlines the rights and obligations of both the government and the contractor during the stoppage.

Key Characteristics:#

Temporary: An SWO is not a termination; work is expected to resume once the issue is resolved.
Written Notice: The CO must issue the order in writing, specifying the scope (e.g., which tasks to stop), duration, and reason for the stoppage.
Contractor Obligations: Upon receipt, the contractor must immediately cease work as directed, unless the order is invalid (e.g., violates the contract terms).

2. Common Reasons for Issuing a FAR Stop Work Order#

SWOs are rarely arbitrary. The government typically issues them to address specific concerns. Common triggers include:

a. Contract Non-Compliance#

If the contractor fails to meet performance standards (e.g., deliverables are late, quality is subpar) or violates contract terms (e.g., safety protocols, labor laws), the CO may issue an SWO to address the breach.

b. Safety or Security Risks#

Immediate hazards—such as unsafe worksites, non-compliance with OSHA regulations, or cybersecurity vulnerabilities—can prompt an SWO to protect workers, the public, or government assets.

c. Funding Shortfalls#

Congressional budget delays or unexpected funding cuts may force the government to pause work until funds are secured. This is common in long-term contracts.

d. Scope Changes or Reassessment#

If the government needs to revise project requirements (e.g., new technical specifications, reduced scope), an SWO may be issued to allow time for renegotiation.

e. Legal or Regulatory Disputes#

Pending litigation, protests, or investigations (e.g., fraud allegations, bid protests) can lead to an SWO to avoid exacerbating the issue during resolution.

3. Legal Framework: Key FAR Provisions#

Understanding the legal basis of a FAR Stop Work Order is critical to responding effectively. The primary contract clause governing these orders is FAR 52.242-15, which establishes clear rules:

Issuance and Duration: The CO may issue a written SWO requiring the contractor to stop all or any part of the work for a period of up to 90 days (or any further period to which the parties agree in writing).
Contractor Duties: The contractor must immediately comply with the order, cease the specified performance, flow down the stoppage to subcontractors/suppliers, and take all reasonable steps to minimize the incurrence of allocable costs.
Resolution: Within the 90-day period (or agreed extension), the CO must either cancel the SWO or terminate the work (either for default or convenience). If canceled, the contractor must resume performance.
Equitable Adjustment: Unlike a Suspension of Work under FAR 52.242-14, an equitable adjustment under FAR 52.242-15 allows the recovery of profit on the increased performance costs. Crucially, the contractor must assert its right to an adjustment in writing within 30 days after the end of the work stoppage.

4. Step-by-Step Guide to Responding to a Stop Work Order#

A prompt, organized response can mitigate losses and set the stage for cost recovery. Follow these steps:

Step 1: Acknowledge Receipt in Writing#

Upon receiving the SWO, send a written acknowledgment to the CO within 24–48 hours. Confirm receipt, restate the order’s key terms (scope, duration), and clarify any ambiguities (e.g., “Please confirm if Task X is included in the stoppage”). This documents your compliance and prevents misunderstandings.

Step 2: Cease Work Immediately (as Directed)#

Stop all work specified in the SWO. Do not continue tasks “to stay ahead”—this could result in denied costs or accusations of non-compliance. If the SWO is overly broad (e.g., halts unrelated tasks), document the discrepancy and seek clarification from the CO. Ensure that you immediately flow down the stoppage to subcontractors and suppliers, instructing them to stop work and mitigate their own costs.

Step 3: Document Everything#

Detailed records are the foundation of cost claims. Track:

Work Status: Log tasks in progress, completed work, and pending deliverables at the time of the SWO.
Resources Idled: Labor hours (by employee/role), equipment on-site, and materials purchased but unused.
Communications: Emails, meetings, and phone calls with the CO or government representatives (save all written correspondence).
Costs Incurred: Daily expenses during the stoppage (e.g., storage fees, labor for securing the worksite).
Dedicated Charge Code: Establish a separate, unique charge code or cost accounting number specifically to isolate and track all stop-work and delay-related costs. This prevents cost-commingling and makes audit verification much easier.

Step 4: Notify Stakeholders#

Inform your team, subcontractors, and suppliers about the SWO. Coordinate with subcontractors to halt their work and document their costs (these may be recoverable). Update insurance providers if the stoppage affects coverage.

Step 5: Review the SWO for Validity#

Not all SWOs are lawful. Check if the order:

Follows FAR 52.242-15 (e.g., written notice, specific scope).
Is within the CO’s authority (e.g., not issued by a lower-level employee).
Has a legitimate purpose (e.g., not retaliatory or arbitrary).
If invalid, consult legal counsel to challenge it—do not ignore the order without legal guidance.

Step 6: Prepare a Response Plan#

Develop a plan to resume work once the SWO is lifted. Include:

A timeline to restart tasks.
Resource reallocation (e.g., reassigning idled workers to other projects temporarily).
Contingency measures for extended stoppages (e.g., renegotiating supplier contracts).

Step 7: Communicate Proactively with the CO#

Maintain regular contact with the CO to:

Request updates on the SWO’s duration.
Discuss potential contract adjustments (e.g., time extensions).
Address concerns (e.g., “The stoppage has delayed material deliveries—can we secure a grace period?”).

Step 8: Monitor for Resumption Notice#

Once the CO issues a “Notice to Resume Work,” confirm the terms (e.g., start date, revised deadlines) in writing. Resume work promptly and document the restart to avoid disputes over delays.

5. How to Claim Costs and Damages Under FAR#

Recovering costs from an SWO requires strict adherence to FAR procedures. Here’s how to navigate the process:

Types of Recoverable Costs#

Under FAR 52.242-15, contractors may seek recovery for:

Direct Costs: Idle labor (if retained to resume work quickly), demobilization and remobilization expenses, subcontractor settlement costs, and storage/protection of materials.
Unabsorbed Home Office Overhead (Eichleay Formula): If the contractor is placed on "standby" for an uncertain duration, is required to resume work immediately, and is unable to secure replacement contracts to absorb its home office overhead, it may recover these costs. Under federal contracting law, the Eichleay Formula is the exclusive method recognized by courts and boards to calculate unabsorbed overhead damages.
Profit: Unlike suspension clauses under FAR 52.242-14, adjustments under the Stop-Work Order clause (FAR 52.242-15) allow the recovery of profit on the increased costs, provided the contract is not terminated.
REA Preparation Costs: Reasonable legal, accounting, and consulting fees incurred to prepare and negotiate a Request for Equitable Adjustment (REA) are generally allowable under FAR 31.205-47, whereas costs to prepare a formal Contract Disputes Act (CDA) claim or litigate are not.

The Adjustment and Claim Process#

Submit a Request for Equitable Adjustment (REA) within 30 Days: As mandated by FAR 52.242-15(b)(2), you must assert your right to an adjustment within 30 days after the work stoppage ends. Waiting to submit a claim under the standard 6-year Contract Disputes Act (CDA) statute of limitations without first asserting your rights within the 30-day window can result in forfeiture.
Differentiate Between an REA and a CDA Claim:
- REA: A non-adversarial proposal to negotiate a contract modification. It does not require formal certification (unless it exceeds agency thresholds, such as the DoD's $150,000 DFARS certification limit).
- CDA Claim: A formal, written demand submitted to the CO seeking a final decision. Under the CDA, claims over $100,000 must be formally certified.
Negotiate with the Contracting Officer: The CO will review your REA/claim and may propose a settlement. Be ready to justify costs with detailed timesheets, invoices, and DCAA-compliant records.
Obtain a Contracting Officer’s Final Decision (COFD): If the REA negotiations fail, or if a formal claim is denied or ignored, request a COFD.
Appeal the Decision if Denied: Under FAR Subpart 33.2, you can appeal a COFD within 90 days to the Armed Services Board of Contract Appeals (ASBCA) or the Civilian Board of Contract Appeals (CBCA), or within 12 months to the U.S. Court of Federal Claims (COFC).

6. Best Practices to Mitigate Risks#

Proactive measures can reduce the impact of an SWO:

Understand Your Contract: Familiarize yourself with FAR 52.242-15 and other relevant clauses (e.g., termination, disputes) before starting work.
Maintain Detailed Records: Use project management software to track daily work, costs, and communications. This simplifies claim preparation.
Build Relationships with the CO: Regular check-ins can help resolve issues before they escalate to an SWO.
Negotiate Subcontractor Terms: Ensure subcontracts have clear, structured flow-down terms for stop-work scenarios. Prime contractors should require subcontractors to submit their cost claims within 10 to 15 days of the order ending, so they can be bundled into the prime's package before the 30-day FAR deadline.
Train Your Team: Ensure project managers and staff know how to respond to an SWO (e.g., who to notify, how to document costs).

Conclusion#

A FAR Stop Work Order can disrupt even the most well-planned projects, but a strategic response—rooted in documentation, compliance, and proactive communication—can minimize losses and maximize cost recovery. By understanding the legal framework, following the steps outlined above, and adopting best practices, contractors can turn a challenging situation into an opportunity to protect their business and maintain government trust.

References#

FAR Subpart 42.13: Suspension of Work, Stop-Work Orders, and Government Delay of Work
FAR 52.242-15: Stop-Work Order (and Alternate I for cost-reimbursement contracts)
FAR Subpart 33.2: Disputes and Appeals
Contract Disputes Act (CDA): 41 U.S.C. §§ 7101–7109
Civilian Board of Contract Appeals (CBCA): Rules of Procedure, 48 C.F.R. Parts 6101–6105
Armed Services Board of Contract Appeals (ASBCA): Appeals Process and Guides
Defense Contract Audit Agency (DCAA): DCAA Contract Audit Manual (CAM), Chapter 12: Audits of Requests for Equitable Adjustment and Claims