36.206
Liquidated damages
Contracting officers must carefully evaluate and justify the inclusion of liquidated damages in construction contracts, following FAR 11.502 and agency rules.
Overview
FAR 36.206 requires contracting officers to assess whether liquidated damages provisions should be included in construction contracts. This evaluation must be conducted in accordance with FAR 11.502 and any applicable agency-specific regulations. The purpose is to ensure that the contract adequately addresses potential delays or failures in performance by establishing predetermined damages, which can streamline enforcement and provide clarity for both parties.
Key Rules
- Evaluation Requirement
- Contracting officers must determine if liquidated damages are appropriate for each construction contract.
- Reference to FAR 11.502 and Agency Regulations
- The evaluation must follow the procedures and criteria outlined in FAR 11.502 and any additional agency-specific rules.
Responsibilities
- Contracting Officers: Must assess the necessity of liquidated damages clauses and document their decision in accordance with FAR 11.502 and agency policies.
- Contractors: Should be aware that liquidated damages may be included and understand the implications for contract performance.
- Agencies: Must provide guidance and oversight to ensure proper evaluation and application of liquidated damages provisions.
Practical Implications
- This section ensures that the inclusion of liquidated damages in construction contracts is a deliberate, justified decision rather than a default action.
- It impacts contract drafting and negotiation, as well as risk management for both parties.
- Common pitfalls include failing to properly document the evaluation or misapplying agency-specific requirements.