Embassy Builder Sues State Department for $461M Over Alleged Reversed COVID-19 Settlement

B.L. Harbert International, a contractor that has built numerous U.S. embassies and consulates, has filed a lawsuit against the State Department seeking more than $461 million. The company alleges that a $370 million settlement, agreed upon to address construction costs incurred during the COVID-19 pandemic, was reversed by current political leadership.

The lawsuit, filed in the U.S. Court of Federal Claims, covers 12 diplomatic construction projects across four continents, including facilities in Turkey, Iraq, Thailand, Morocco, Mexico, and Central America. According to the complaint, career State Department officials reached the settlement in September 2025, but the government paid only $501,636 before backing out of the agreement.

B.L. Harbert International claims that political leadership intervened after the settlement was reached, and that the decision to abandon it originated "from the top." Charles Bohn, president of BL Harbert's International Group, stated, "We did not want to take this step. The U.S. Government is an important partner, and we are proud of the work we do together to advance America's interests and protect Americans serving overseas. But we have a responsibility to our employees and to the future of that mission. We kept our commitment under extraordinarily difficult conditions. We are asking the government to keep its commitment to us."

The dispute stems from the early stages of the COVID-19 pandemic in 2020, when Harbert was working on 17 embassy and consulate projects. As countries implemented lockdowns and global supply chains faltered, Harbert sought guidance from the State Department regarding potential construction pauses. The company argued that the pandemic constituted an "excusable delay" under its contracts, allowing for the temporary suspension of work and securing of sites.

However, Harbert alleges that the State Department directed the company to continue operations, procure materials, and manage disruptions. The department reportedly instructed Harbert to document all additional costs and submit requests for reimbursement. Communications cited in the lawsuit indicate that Harbert warned the State Department about the financial burden of continuing to pay workers, with standby labor costs for the U.S. Embassy in Guatemala City alone running approximately $1.3 million per month in March 2020.

Despite these challenges, the State Department allegedly directed Harbert to continue shipping materials to prevent projects from falling behind schedule once global construction resumed. The company contends that pandemic restrictions increased costs and reduced productivity due to workforce limitations, supply-chain issues, and new operating requirements.

Harbert ultimately submitted more than $500 million in claims for equitable adjustments and other costs related to pandemic directives and separate project disputes, including alleged design changes and government-caused delays. The lawsuit states that the government has since taken possession of all 12 diplomatic facilities in question and has been using some for over three years.

The company asserts that members of the State Department's political leadership "inserted themselves into the process after a settlement was reached." Harbert formally certified its claims in March 2026, with the complaint alleging that the State Department's chief of staff had encouraged this step. However, State Department contracting officers began denying these claims in July, with all 13 certified claims receiving final decisions by October 13, 2026.

Harbert is now seeking at least $461,097,380 in damages, plus interest. The lawsuit does not currently seek to enforce the original $370 million settlement, as those claims remain in the administrative process, with Harbert reserving the right to add them to the lawsuit later.

The outcome of this dispute could have broader implications for the U.S. government's ability to secure contractors for high-security diplomatic construction projects. Harbert notes that the number of American companies qualified for such work has significantly decreased, with some projects attracting only two or three bidders. The company warns that a loss of confidence in the State Department's commitment to honoring its obligations could further reduce the pool of available contractors, impacting the government's capacity to build secure facilities overseas.