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 contractor, a deduction is made to the contract price based on the actual
cost incurred by the Government. The actual costs are the amounts paid to
any Government personnel (wage, retirement and fringe benefits) plus
materials or the actual costs of other means by which the work was
accomplished. If the rework is performed by another contractor, this other
contractor's invoice will be used as representing the actual cost. If
actual actual costs cannot be readily determined, the schedule of deductions will
be used to establish a deduction amount.
6-650 Deductions for Liquidated Damages. When work is nonperformed or
unsatisfactorily performed, additional deductions, called liquidated
damages, are made to the contract price in accordance with the clause
"Consequences of Contractor's Failure to Perform Required Services." These
liquidated damages are to compensate the Government for administrative
costs. Liquidated damages are assessed for observed defects within and
outside the sample. When RSED is used, liquidated damages are not assessed
for the extrapolated portion of defects.
In the case of nonperformmzd or unsatisfactory work, which is either reworked
by the contractor or not reworked at all, the contractor is assessed 10% of
the costs associated with the work.
When nonperformed or unsatisfactory work is reworked by Government personnel
or by another contractor, the contractor is assessed 20% of the actual cost
of the rework as liquidated damages.
On occasion, a special provision is included in facility support contracts
involving "change of occupancy maintenance of Government housing in
accordance with the Contracting Manual P-68, Subpart 12.2. In this case the
liquidated damages are calculated on the basis of the number of days the
occupancy of each unit was delayed due to the contractor's nonperformance.
When the Construction Specifications Institute (CSI) format is used for a
facility support contract, the "Consequences of Contractor's Failure to
Perform Required Services" clause is not used in assessingliquidated
damges. Instead, liquidated damages are computed on the basis of a daily
amount based on the project costs in accordance with the Contracting Manual
P-68, subpart 12.2. These liquidated damages are considered as representing
both the cost of the delay to the Government and the Government's additional
administrative costs.
6-660 Deductions for Partially Completed Work Requirements. Partial
completion of a work requirement which has not been reworked by the
contractor or by the Government or by another contractor, is one of the most
difficult issues with which a QAE deals. The policy on partial completion
of a work requirement is as follows:
(a) First, if the PRS does not sufficiently break out that portion of
the required service which was not performed the contract requirement
should be reviewed and a determination made, exercising good business
judgment, whether the value of the nonperformed or unsatisfactory work will
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