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    Is there a formula to calculate or liquidated damages for a supply procurement that is not for ship repair?


    The liquidated damages clause is not punitive and should not be used as a negative incentive.  FAR 11.501(b) Liquidated damages are used to compensate the Government for probable damages. Therefore, the liquidated damages rate must be a reasonable forecast of just compensation for the harm that is caused by late delivery or untimely performance of the particular contact.

    A standard equation should not be used because damages would not be the same on all contracts. I remember a contracting office being written up during an IG inspection because they used a standard formula on all of their construction contacts.  The formula was provided by the civil engineering squadron. The IG told them the clause was not used properly and the daily amount would not be the same on every construction contract.

    You stated failure to deliver on time will result in a loss of production.  Will it be a loss of production or late production?  If it is late production the acquisition team needs to look at what the probable damages would be to the Government if production is late.

    The link I have provided is for a liquidated damages worksheet.

    If you decide to include a liquidated damages clause I recommend you speak with legal about how you arrived at the amount you included in the clause.

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