Assessing liquidated damages against delayed interim milestones

[longhornjoe]

I'd like to understand the FAR authority for assessing liquidated damages against delayed interim completion milestones in a construction contract. Has anyone had much experience with this? Any suggestions or best practices? Thanks.

[redryder]

Joe, what does your contract say about liquidated damages? Does it specifically inform the contractor that LDs will be assessed for failure to meet interim milestones? I suspect not, from your question. In our experience, where interim completion milestones were important to the Government, and it was otherwise appropriate to do so (we anticipated suffering economic losses if they weren't met), the contract language informed the contractor that liquidated damages would be assessed for failure to meet the interim completion milestones. The contractor did miss a milestone, we did assess liquidated damages, and the contractor did not dispute the assessment.

[longhornjoe]

Joe, what does your contract say about liquidated damages? Does it specifically inform the contractor that LDs will be assessed for failure to meet interim milestones? I suspect not, from your question. In our experience, where interim completion milestones were important to the Government, and it was otherwise appropriate to do so (we anticipated suffering economic losses if they weren't met), the contract language informed the contractor that liquidated damages would be assessed for failure to meet the interim completion milestones. The contractor did miss a milestone, we did assess liquidated damages, and the contractor did not dispute the assessment.

Thanks red. The main IDIQ K includes 52.211-12 and the task order contains conflicting info. on LDs and milestones. I think it really boils down to a poorly drafted TO. I couldn't find anything in the FAR other than general provisions concerning use of LDs and the need for the CO to clearly describe the performance period.

[redryder]

Joe, I'm suspecting that you inherited this contract and task order, and that either the contractor has already missed an interim milestone, or is about to do so. From what you've said, it sounds like it could be a loser for the Government if we tried to enforce the LD assessment, since -- following the doctrine of contra proferentem --an ambiguity is construed against the drafter (we did draft the TO, right?). However, unless you believe that doing so would clearly not be equitable, you might consider notifying the contractor that you're contemplating assessing LDs for failure to meet one of the interim milestones. See how the contractor reacts; nothing ventured, nothing gained.

[longhornjoe]

Joe, I'm suspecting that you inherited this contract and task order, and that either the contractor has already missed an interim milestone, or is about to do so. From what you've said, it sounds like it could be a loser for the Government if we tried to enforce the LD assessment, since -- following the doctrine of contra proferentem --an ambiguity is construed against the drafter (we did draft the TO, right?). However, unless you believe that doing so would clearly not be equitable, you might consider notifying the contractor that you're contemplating assessing LDs for failure to meet one of the interim milestones. See how the contractor reacts; nothing ventured, nothing gained.

The Government did draft the task order. Also, it appears the LD per diem amounts were added to the task order after the contractor submitted its offer to the task order RFP.

[redryder]

Bummer.... but timing is important, so were the LD per diem amounts added before the task order was awarded (so that the contractor could have objected to them, or tried to negotiate them down/out)? If so, you may be able to enforce them, depending on how confusing/conflicting the language is; if they were added upon award, after receipt of the Kr's proposal and without any opportunity for it to object/negotiate, then I'd say you're out of luck.