Liquidated damages calculator

How the GeM LD rule works

Liquidated damages (LD) are what a government buyer deducts when you deliver late. Clause 15 of the GeM General Terms and Conditions sets the rate at 0.5% of the contract value of the delayed quantity for each week or part of a week, until actual delivery. The total can't go past 5% of the total contract value, or 10% when the delay is inordinate.

LD runs on the delayed quantity only. If 60% of the order arrived on time, only the late 40% counts. Part of a week is charged as a full week, so eight days late is two weeks. The cap, though, is worked out on the whole contract.

What counts as inordinate delay

An inexcusable delay of more than a quarter of the completion period is inordinate. On a 60-day order that's anything past 15 days, and on a 30-day order anything past 7.5 days. Enter the delivery period above and the calculator runs this test for you. Short orders cross it quickly.

Delays you shouldn't pay for

Where the delay comes from force majeure, or from the buyer or consignee (a late sample approval, say), the buyer can re-fix the delivery period without LD. Force majeure only helps if you give documented notice within 10 days of the event. Ask for any extension in writing before the delivery date passes. The Manual for Procurement of Goods applies the rate to the delivered price, GST and freight included, so enter the GST-inclusive value of the late goods.

Checking a deduction

On GeM, LD comes out of your payment after the CRAC. Before you accept a deduction, check four things: that it was charged on the delayed quantity and not the whole order, that the weeks run from the original or re-fixed delivery date, that 10% wasn't used without a delay past the 25% mark, and whether the bid's ATC changed the rate or cap.