Most teams never think about termination until a notice arrives. This article explains the ways a federal award can end under 2 CFR Part 200, which costs remain allowable afterward, and what to set up now so you can respond calmly.
Few grant teams plan for an award to end early. The work is underway, the budget is set, and the end date feels far away. Still, termination is a defined part of the Uniform Guidance, and knowing how it works ahead of time makes a hard day much easier to manage.
Under 2 CFR 200.340(a), an award can end in part or in its entirety in four ways. The agency or pass-through entity can terminate it if you fail to comply with its terms and conditions. The two sides can agree to end it, and they have to agree on the conditions, including the effective date and, for a partial termination, which portion is ending. You can end it yourself by sending written notice with your reasons and the effective date. Or the agency can end it under the terms of the award itself, including, to the extent authorized by law, if the award no longer effectuates program goals or agency priorities.
That last path is the one worth a second look. Whether it's available depends on what your award says, because 2 CFR 200.340(b) requires the agency to clearly and unambiguously specify all termination provisions in the terms and conditions. If you haven't read that part of your award, it's worth doing before anything happens.
Under 2 CFR 200.341, the agency or pass-through entity must give you written notice of termination. The notice should state the reasons, the effective date, and, when only part of the award is ending, which part.
If the termination is due to material noncompliance, the notice has more to say. It tells you that the decision will be reported in SAM.gov, that the information stays available there for five years, and that agencies considering you for new awards during that time must take it into account when the expected federal share is above the simplified acquisition threshold. It also tells you that you may submit comments about the information, and agencies are expected to consider them.
Yes. Under 2 CFR 200.342, an agency starting a remedy for noncompliance, whether that's disallowing costs, requiring a corrective action plan, or terminating the award, has to give you an opportunity to object and submit information supporting your position. Agencies are also required to maintain written procedures for handling objections, hearings, and appeals, and to follow any hearing or appeal requirements that a statute or regulation gives you.
If you receive a termination notice for noncompliance, look at what deadline it sets for objecting and calendar it right away. Don't assume you can sort it out later.
This is the question that keeps finance teams up at night, and 2 CFR 200.343 answers it. As a general rule, costs from obligations incurred after the effective date of termination aren't allowable unless the agency or pass-through entity expressly authorizes them, either in the notice or afterward.
There's an exception, though. Costs are allowable if the obligations were properly incurred before the effective date and weren't incurred in anticipation of the termination, and if the costs would have been allowable had the award continued through the end of the performance period in which the termination takes effect.
In practical terms, a signed lease or a purchase order placed in good faith before the notice usually looks different from a bulk purchase made the week after you heard rumors. What matters is the date of the obligation and the reason for it. The agency may look at both.
You can't predict termination, but you can make your files ready for it:
- Keep a current list of open commitments on each award, such as purchase orders, leases, subawards, and contracts
- Record the date each commitment was made and what authorized it
- Know the notice and termination provisions in your award and in your subawards
- Decide who gets the notice first and who's responsible for responding
- Keep your drawdown requests and reports current, so the final accounting isn't a scramble
Subawards deserve special attention. If you're a pass-through entity, your subrecipients have the same rights and the same exposure, and your own subaward terms should say how termination works for them.
After an award ends, closeout still applies. Under 2 CFR 200.344, a recipient has 120 calendar days after the end of the period of performance to submit required reports and liquidate its obligations, and the agency can extend that when it's justified. Check your termination notice for the specific timing that applies to you.
Nobody expects a termination notice, which is exactly why a short bit of preparation pays off. A clear list of commitments and a named person who knows what to do with the notice will serve you well in a hard moment, and they'll serve you well in an ordinary closeout too.
This week, choose one active award and write down every open commitment against it, along with the date each was made. It takes less than an hour and it's the first thing anyone would ask you for.
MyFedTrainer offers free resources to help you organize grant files and build practical compliance habits. Take a look when it is useful to you. 
