An Alabama-based construction firm has filed a lawsuit against the State Department, accusing it of reneging on a pandemic-era cost settlement for a dozen embassy and consulate projects. BL Harbert International lodged the complaint in the U.S. Court of Federal Claims on Wednesday, seeking at least $461 million in damages.
The company alleges that the government had agreed to a $370 million settlement in September 2025 to cover cost overruns incurred when COVID-19 disrupted global construction. According to court documents, an initial payment of nearly $502,000 was made, but the Trump administration now refuses to honor the deal.
The lawsuit contends that political appointees under Secretary of State Marco Rubio intervened to block the settlement. "And, on information and belief, the Government's decision to renege on this heavily negotiated agreement with a long-trusted construction partner of the Department of State came from the top," the filing states.
The projects in question span multiple continents, including new embassy compounds in Turkey, Guatemala, Montenegro, Namibia, and Honduras, as well as consulates in Morocco, Thailand, Iraq, and four locations in Mexico. BL Harbert says the State Department directed it to continue work during the 2020 shutdowns, driving up costs, and instructed the firm to submit adjustment claims.
The dispute echoes a separate controversy this summer when Sergio Gor, the U.S. ambassador to India, terminated BL Harbert's contract for a new embassy in New Delhi. Gor told The New York Times that President Trump personally approved that cancellation, which he said would save hundreds of millions of dollars. That decision is not part of the current lawsuit but underscores the administration's aggressive stance on embassy spending.
Charles Bohn, president of BL Harbert, expressed reluctance to pursue litigation. "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," he said in a statement. "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 State Department has not yet responded to requests for comment. Legal experts say the case could hinge on whether the government's initial agreement constitutes a binding contract, especially given the political context. The outcome may have broader implications for how federal agencies handle contractor claims during emergencies, a topic that has drawn scrutiny as legal battles over government actions intensify.
This lawsuit also comes amid a broader push by the Trump administration to cut federal spending, including efforts to rename the Pentagon as the Department of War and other cost-saving measures. Critics argue that such moves could undermine long-standing partnerships with private contractors essential to U.S. diplomatic infrastructure.
For now, BL Harbert is seeking not only the unpaid settlement but also additional damages for what it calls a breach of good faith. The case is expected to proceed in the coming months, with potential implications for other firms that have dealt with pandemic-related cost overruns on federal projects.
