NASA HQ On Termination Liability

Keith's note: The following was circulated by NASA Orion Management recently: "Today, a contracts letter was sent to Lockheed Martin relative to termination liability (TL). This letter, directed through NASA Headquarters, interprets the contract language to require the contractor to account for termination liability in its planning for each year of execution. Termination liability is the estimated value of contractor work required to close out the contract if terminated. This is not a notification of termination, but an interpretation of how the contractor should account for TL projections in the current year. The effect of the interpretation may have implications in how we execute the project. However, there are options available within NASA and Lockheed Martin that will be considered in the coming days to assure that we operate within the law while we attempt to execute the program. It is important that everyone keep in mind the President, the Congress, and the NASA Administrator have all publicly expressed their clear expectation that an Orion vehicle will continue to play a central role in the overall emerging space exploration policy and strategy. We are working closely with Lockheed Martin and NASA management to identify acceptable resolutions to this issue that have the least disruption to our integrated government/industry team and our collective ability to perform our mission."

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