Mandatory provision for all construction contracts:

“Termination for Default — Damages for Delay — Time Extensions

“(1) If the Contractor refuses or fails to prosecute the work, or any separable part thereof, with such diligence as shall insure its completion within the time specified in this contract, or any extension thereof, fails to complete said work within this time, or fails to provide any required annual and renewable bond 30 days prior to expiration of the current bond then in effect, the State may, by written notice to the Contractor, terminate the Contractor’s right to proceed with the work or the part of the work as to which there has been delay. In this event the State may take over the work and prosecute the same to completion, by contract or otherwise, and may take possession of and utilize in completing the work the materials, appliances, and plant as may be on the site of the work and necessary therefor. Whether or not the Contractor’s right to proceed with the work is terminated, the Contractor and its sureties shall be liable for any damage to the State resulting from the Contractor’s refusal or failure to complete the work within the specified time.

“(2) If fixed and agreed liquidated damages are provided in the contract and if the State so terminates the Contractor's right to proceed, the resulting damage shall consist of such liquidated damages until a reasonable time as may be required for final completion of the work together with any increased costs occasioned the State in completing the work.

“(3) If fixed and agreed liquidated damages are provided in the contract and if the State does not so terminate the Contractor's right to proceed, the resulting damage shall consist of these liquidated damages until the work is completed or accepted.

“(4) The Contractor's right to proceed may not be so terminated nor the contractor charged with resulting damages if:

1. (a) The delay in the completion of the work arises from unforeseeable causes beyond the control and without the fault or negligence of the Contractor, including but not restricted to, acts of God, acts of the public enemy, acts of the State in either its sovereign or contractual capacity, acts of another Contractor in the performance of a contract with the State, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, unusually severe weather, or delays of subcontractors or suppliers arising from unforeseeable causes beyond the control and without the fault or negligence of either the Contractor or the subcontractors or suppliers; and
2. (b) The Contractor, within 10 days from the beginning of any such delay (unless the procurement officer grants a further period of time before the date of final payment under the contract), notifies the procurement officer in writing of the causes of delay. The procurement officer shall ascertain the facts and the extent of the delay and extend the time for completing the work when, in the procurement officer’s judgement, the findings of fact justify such an extension, and the procurement officer’s findings of fact shall be final and conclusive on the parties, subject only to appeal as provided in the “Disputes” clause of this contract.

“(5) If, after notice of termination of the Contractor's right to proceed under the provisions of this clause, it is determined for any reason that the Contractor was not in default under the provisions of this clause, or that the delay was excusable under the provisions of this clause, the rights and obligations of the parties shall, if the contract contains a clause providing for termination for convenience of the State, be the same as if the notice of termination had been issued pursuant to the clause. If, in the foregoing circumstances, this contract does not contain a clause providing for termination for convenience of the State, the contract shall be equitably adjusted to compensate for the termination and the contract modified accordingly; failure to agree to any such adjustment shall be a dispute concerning a question of fact within the meaning of the clause of this contract entitled “Disputes”.

“(6) The rights and remedies of the State provided in this clause are in addition to any other rights and remedies provided by law or under this contract.

“(7) As used in paragraph (4)(a) of this clause, the term “subcontractors or suppliers” means subcontractors or suppliers at any tier.”

Authority: State Finance and Procurement Article, §§12-101, 13-216, 13-218, 13-225, 15-226, and 17-801—17-804, Annotated Code of Maryland

Effective date: July 1, 1981 (8:13 Md. R. II-5)

Regulation .09 amended effective May 6, 1985 (12:9 Md. R. 816)

Chapter revised effective January 9, 1989 (15:27 Md. R. 3138)

Regulation .02 amended effective July 15, 2019 (46:14 Md. R. 623)

Regulation .03 amended effective July 15, 2019 (46:14 Md. R. 623)

Regulation .04 amended effective January 2, 2017 (43:26 Md. R. 1449); July 15, 2019 (46:14 Md. R. 623)

Regulation .05 amended effective July 15, 2019 (46:14 Md. R. 623)

Regulation .05-1 adopted effective October 6, 1997 (24:20 Md. R. 1405)

Regulation .05-1E amended effective January 24, 2000 (27:1 Md. R. 78)

Regulation .05-2 adopted effective October 2, 2000 (27:19 Md. R. 1730)

Regulation .05-2 amended effective July 9, 2001 (28:13 Md. R. 1216); September 18, 2023 (50:18 Md. R. 800); March 3, 2025 (52:4 Md. R. 221)

Regulation .05-3 adopted effective July 9, 2001 (28:13 Md. R. 1216)

Regulation .06 amended effective July 15, 2019 (46:14 Md. R. 623)

Regulation .07 amended effective July 15, 2019 (46:14 Md. R. 623); June 29, 2020 (47:13 Md. R. 643)

Regulation .08 amended effective July 15, 2019 (46:14 Md. R. 623)

Regulation .09 amended effective July 15, 2019 (46:14 Md. R. 623)

Regulation .10 amended effective May 20, 1996 (23:10 Md. R. 733); February 23, 2009 (36:4 Md. R. 355); March 16, 2015 (42:5 Md. R. 488)

Regulation .10A amended effective March 11, 2019 (46:5 Md. R. 310); March 3, 2025 (52:4 Md. R. 221)

Regulation .11 adopted effective July 15, 2019 (46:14 Md. R. 623)

Regulation .12 adopted effective May 17, 2021 (48:10 Md. R. 401)