48 CFR 49.406 : Federal Acquisition Regulations System (Section 1.000 To Parts 9906-9999) — Federal Acquisition Regulation (Parts 1 - 99) (Section 1.000 To Parts 54-99) — Contract Management (Parts 42 - 51) (Section 42.000 To Section 51.205) — Termination Of Contracts (Section 49.000 To Section 49.607) — Termination For Default (Section 49.401 To Section 49.406) — Liquidation of liability.

The contract provides that the contractor and the surety are liable to the Government for resultant damages. The contracting officer shall use all retained percentages of progress payments previously made to the contractor and any progress payments due for work completed before the termination to liquidate the contractor's and the surety's liability to the Government. If the retained and unpaid amounts are insufficient, the contracting officer shall take steps to recover the additional sum from the contractor and the surety.