11.500 48 CFR Ch. 1 (10–1–03 Edition)
proceed by a certain day, the con- the probable damage to the Govern-
tracting officer may use the clause ment to change over the contract pe-
with its Alternate I. riod of performance.
[48 FR 42159, Sept. 19, 1983, as amended at 56 (c) The contracting officer must take
FR 41732, Aug. 22, 1991. Redesignated and all reasonable steps to mitigate liq-
amended at 60 FR 48241, Sept. 18, 1995] uidated damages. If the contract con-
tains a liquidated damages clause and
Subpart 11.5—Liquidated the contracting officer is considering
Damages terminating the contract for default,
the contracting officer should seek ex-
peditiously to obtain performance by
SOURCE: 65 FR 46064, July 26, 2000, unless
the contractor or terminate the con-
tract and repurchase (see subpart 49.4).
11.500 Scope. Prompt contracting officer action will
prevent excessive loss to defaulting
This subpart prescribes policies and
procedures for using liquidated dam- contractors and protect the interests of
ages clauses in solicitations and con- the Government.
tracts for supplies, services, research (d) The head of the agency may re-
and development, and construction. duce or waive the amount of liquidated
This subpart does not apply to liq- damages assessed under a contract, if
uidated damages for subcontracting the Commissioner, Financial Manage-
plans (see 19.705–7) or liquidated dam- ment Service, or designee approves (see
ages related to the Contract Work Treasury Order 145–10).
Hours and Safety Standards Act (see
subpart 22.3). 11.502 Procedures.
(a) Include the applicable liquidated
11.501 Policy. damages clause and liquidated damages
(a) The contracting officer must con- rates in solicitations when the con-
sider the potential impact on pricing, tract will contain liquidated damages
competition, and contract administra- provisions.
tion before using a liquidated damages (b) Construction contracts with liq-
clause. Use liquidated damages clauses uidated damages provisions must de-
only when— scribe the rate(s) of liquidated damages
(1) The time of delivery or timely assessed per day of delay. The rate(s)
performance is so important that the should include the estimated daily cost
Government may reasonably expect to of Government inspection and super-
suffer damage if the delivery or per- intendence. The rate(s) should also in-
formance is delinquent; and clude an amount for other expected ex-
(2) The extent or amount of such penses associated with delayed comple-
damage would be difficult or impos- tion such as—
sible to estimate accurately or prove. (1) Renting substitute property; or
(b) Liquidated damages are not puni-
(2) Paying additional allowance for
tive and are not negative performance
incentives (see 16.402–2). Liquidated
damages are used to compensate the 11.503 Contract clauses.
Government for probable damages.
Therefore, the liquidated damages rate (a) Use the clause at 52.211–11, Liq-
must be a reasonable forecast of just uidated Damages—Supplies, Services,
compensation for the harm that is or Research and Development, in fixed-
caused by late delivery or untimely price solicitations and contracts for
performance of the particular contract. supplies, services, or research and de-
Use a maximum amount or a maximum velopment when the contracting officer
period for assessing liquidated damages determines that liquidated damages
if these limits reflect the maximum are appropriate (see 11.501(a)).
probable damage to the Government. (b) Use the clause at 52.211–12, Liq-
Also, the contracting officer may use uidated Damages—Construction, in so-
more than one liquidated damages rate licitations and contracts for construc-
when the contracting officer expects tion, other than cost-plus-fixed-fee,
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