As a general rule, federal law requires agencies to buy through “full and open competition.” The Competition in Contracting Act of 1984 made this the rule for government contracts, with some exceptions.
A standard clause in federal contracts also allows the government to end the work whenever the contracting officer decides it is in the government’s interest. “The Government may terminate performance of work under this contract in whole or, from time to time, in part” if the contracting officer “determines that a termination is in the Government’s interest.” The clause rests on the government’s interest alone. It does not require any fault by the contractor.