guaranteed Minimum value

We currently have a service contract that has Two Clins one for the Total Award Amount of $3,xxx,xxx.00 and a separate clin that states" The guaranteed Min. value of this contract is $1,500,000.00 This is not a separately priced item." The Agency now says that they do not have the funds for the guarantee and would like for us to agree to a $500,000.00 guarantee of services to perform or they may have to terminate contract (we have not yet started actual performance other than mobilization and paying our Manager.

My question is why should we have to agree to less without being compensated and if they terminate would they not be obligated to pay the $1,500,000.00 since it state a guaranteed min value and not work. Thanks

They don't have to pay the $1,500,000 if they terminate for convenience before the expiration of the ordering period. They only have to compensate you in accordance with the terms of the Termination for Convenience clause. If the government knows this you might be wise to accept the reduction to $500,000 in order to avoid a T for C. If they don't know, you might be able to bluff them.

They don't have to pay the $1,500,000 if they terminate for convenience before the expiration of the ordering period. They only have to compensate you in accordance with the terms of the Termination for Convenience clause. If the government knows this you might be wise to accept the reduction to $500,000 in order to avoid a T for C. If they don't know, you might be able to bluff them.