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[MMS Use of Funds Received as Liquidated Damages]

B-242274 Aug 27, 1991
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Highlights

The Minerals Management Service (MMS) requested a decision regarding whether it could use liquidated damages recovered from a previous contract to cover increased costs it incurred on two subsequent contracts as a result of the contractors' failure to timely supply the desired product. GAO held that MMS could not use such funds to cover costs on subsequent contracts, since the contracts did not satisfy a continuing need for the goods and services provided under the original contract. Accordingly, funds recovered from a previous contract may not be used on subsequent contracts for other services.

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