49.402-7
Other damages
Contracting officers must promptly assess and demand all applicable damages, including liquidated and other ascertainable damages, when a contract is terminated for default.
Overview
FAR 49.402-7 addresses the procedures for assessing and demanding damages when a contract is terminated for default or when an alternative action is taken instead of termination. The regulation requires contracting officers to promptly assess and demand any liquidated damages specified in the contract, in addition to any excess costs incurred by the Government for repurchasing goods or services. Furthermore, if the Government incurs other ascertainable damages, such as administrative costs resulting from the contractor’s default, the contracting officer must seek legal advice and take appropriate action to assert the Government’s claim for these damages, following the procedures in FAR subpart 32.6.
Key Rules
- Assessment of Liquidated Damages
- Contracting officers must promptly assess and demand liquidated damages as specified in the contract when terminating for default or taking alternative actions.
- Assertion of Other Damages
- If the Government suffers additional ascertainable damages (including administrative costs), the contracting officer must, with legal counsel, take action to recover these damages as outlined in FAR subpart 32.6.
Responsibilities
- Contracting Officers: Must promptly assess and demand liquidated damages, and pursue other damages with legal advice as appropriate.
- Contractors: Must be aware that liability for damages may extend beyond liquidated damages to include other costs incurred by the Government due to default.
- Agencies: Must provide legal support and ensure proper procedures are followed for asserting claims for damages.
Practical Implications
- This section ensures the Government recovers all damages resulting from contractor default, not just those specified as liquidated damages.
- Contractors should understand the full scope of potential liabilities in the event of default.
- Failure to follow proper procedures may result in uncollected damages or legal challenges.