NEC Additional Projects Cost Estimates - Baghdad Embassy (Taken Question)

QUESTION: Is there a penalty clause in the original new embassy compound construction contract for late delivery? Will it now apply because the embassy has not opened on schedule? If so, what is the cost of the penalty?

ANSWER: There is a standard Federal Acquisitions Regulation Liquidated Damages clause included in every construction contract. This is not a penalty but allows the Government to recover costs it suffers as a result of delayed completion beyond the stated contract completion date. Given the size and scope of the Embassy Baghdad NEC, there are four separate contracts for its construction: site infrastructure, housing, support facilities, and diplomatic facilities. Each of these four contracts allows for a maximum of $50,000 in liquidated damages per day. The Department is in the process of determining whether to assess liquidated damages and/or an appropriate amount to be assessed. These decisions will be based on circumstances affecting the performance of the contract, including those outside of the contractor’s control such as acts of war.