Should liquidated damages be assessed at all?
It is up to the contracting officer to determine whether or not to assess liquidated damages. See FAR 11.501. It would be inappropriate in this forum to advise otherwise. In this dispute with the 8(a) company, you must notify the cognizant SBA Area Office. FAR 19.812 (c), states, "To the extent consistent with the contracting activity’s capability and resources, 8(a) contractors furnishing requirements shall be afforded production and technical assistance, including, when appropriate, identification of causes of deficiencies in their products and suggested corrective action to make such products acceptable." I don't know if you are at the liquidated damages stage. Some questions to think about is: Was the contractor's request unreasonable due to the government's change order. Is the contractor schedule appropriate in light of the change order? Will you have to terminate the contract? Please discuss this with your counsel and contracting officer.
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Also, you should have FAR clauses 52,211-12, Liquidated Damages-Construction and 52.211-13, Time Extensions, in the contract if you are going to assess liquidated damages.