Inclusion of Liquidated Damages Clause for Nonperformance or Inadequate Performance in Solicitation for Custodial Services

The protester objected to the inclusion of the clause "Monetary Adjustment for Inadequate Performance" in an invitation for bids, alleging that the clause was punitive and unconscionable. The liquidated damages clause for nonperformance or inadequate performance of custodial services did not constitute a penalty since the damage assessment was reasonable in relation to the losses contemplated. There was adequate justification to provide for the application of the clause to instances of inadequate performance, even though under prior contracts the clause had applied only to nonperformance, since both situations were undesirable and the cost of correction of inadequate performance could be just as expensive as for nonperformance.