11.502
Procedures
Always include the appropriate liquidated damages clause and clearly defined rates in solicitations and contracts when such provisions apply, especially for construction projects.
Overview
FAR 11.502 outlines the required procedures for including liquidated damages provisions in government contracts, particularly construction contracts. It mandates that solicitations must include the appropriate liquidated damages clause and specify the applicable rates when such provisions are used. For construction contracts, the regulation requires a detailed description of the daily rate(s) of liquidated damages, which should account for the estimated daily cost of government inspection, superintendence, and other anticipated expenses due to delayed completion, such as renting substitute property or paying additional living allowances.
Key Rules
- Inclusion of Liquidated Damages Clause
- Solicitations must include the relevant liquidated damages clause and specify the rates if the contract will have such provisions.
- Calculation and Description of Rates in Construction Contracts
- Construction contracts must detail the daily rate(s) of liquidated damages, factoring in government oversight costs and other expected expenses from delays.
Responsibilities
- Contracting Officers: Ensure solicitations and contracts include the correct liquidated damages clause and clearly state the applicable rates, especially for construction contracts.
- Contractors: Review and understand the liquidated damages provisions and rates included in solicitations and contracts.
- Agencies: Oversee compliance with these requirements and ensure rates are properly calculated and justified.
Practical Implications
- This section ensures that both parties understand the financial consequences of contract delays, promoting timely performance.
- Accurate calculation and clear communication of liquidated damages rates help prevent disputes and ensure fairness.
- Common pitfalls include failing to include all relevant costs in the rate calculation or omitting the clause from the solicitation.