(a) In this section, "liquidated damages" means damages in an amount designated by the parties to a contract that the injured party is eligible to collect as compensation for a specific breach of the contract. (b) (1) On or before January 1, 2024, the Board, in consultation with the Procurement Improvement Council, shall publish a model policy concerning the inclusion and use of liquidated damages provisions in procurement contracts. (2) The model policy shall include the following elements: (i) guidance on when to include liquidated damages provisions in procurement contracts, including: 1. instances where liquidated damages provisions are required by law, including the requirements under §§ 14-303, 17-220, 17-222, and 18-108 of this Division II; and 2. conditions where liquidated damages provisions are recommended to protect State interests; (ii) guidance for drafting liquidated damages provisions, including recommended methods for calculating the amount to be assessed; (iii) a draft plan for responding to deficiencies in a contractor's performance that may trigger a liquidated damages provision, reviewed by legal counsel for the Board; and (iv) examples of liquidated damages provisions that may be used in a procurement contract with appropriate modification by the unit. (3) The Board may propose alternative elements or models based on contract type. (4) The Board may delegate the duties under this subsection to the Procurement Improvement Council established under § 12-105 of this Division II. (c) (1) Subject to paragraph (2) of this subsection, on or before July 1, 2024, a unit shall adopt a written policy concerning the inclusion and use of liquidated damages provisions in procurement contracts by the unit that is substantially similar to the model policy established under subsection (b) of this section. (2) (i) A primary procurement unit may establish a policy as required under paragraph (1) of this subsection that is applicable to those procurements that are within the control authority of the primary procurement unit. (ii) A unit that performs a procurement subject to the control authority of a primary procurement unit shall apply the liquidated damages policy established by the primary procurement unit to any resulting procurement contract. (d) A unit shall obtain the approval of the head of the unit if the unit decides not to include in a contract a liquidated damages clause specified under § 13-218(a)(4) of this article. (e) (1) This subsection applies only to procurements valued at $5,000,000 or more. (2) If a unit decides not to pursue liquidated damages when a specified breach associated with a liquidated damages provision has occurred, the unit shall: (i) obtain the approval of the decision by the head of the unit; and (ii) maintain documentation on the reason the unit decided not to pursue liquidated damages.
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