An Alabama construction firm has filed a $461 million lawsuit against the State Department, alleging the agency reneged on a negotiated settlement covering pandemic-era cost overruns at a dozen diplomatic facilities worldwide. BL Harbert International lodged the complaint Wednesday in the U.S. Court of Federal Claims, accusing political appointees in Secretary of State Marco Rubio's orbit of scuttling a deal reached under the previous administration.
The company contends that the government had agreed in September 2025 to pay $370 million to resolve claims stemming from construction delays and added expenses triggered by COVID-19. An initial payment of nearly $502,000 was made, but the Trump administration has since walked away, according to the suit. The filing asserts that the decision to abandon the settlement "came from the top," citing political interference in what had been a routine contractual dispute.
BL Harbert's projects span embassies in Turkey, Guatemala, Montenegro, Namibia, and Honduras, as well as consulates in Morocco, Thailand, Iraq, and four locations in Mexico. The company says the State Department directed it to keep working when the pandemic shut down global supply chains and labor markets in 2020, then instructed it to submit cost adjustments.
The lawsuit comes amid broader scrutiny of the company's work for the U.S. government. The New York Times reported this summer that Sergio Gor, the U.S. ambassador to India, terminated BL Harbert's contract for a new embassy in New Delhi, saying President Trump had personally approved the cancellation to save hundreds of millions of dollars.
In a statement, BL Harbert president Charles Bohn expressed reluctance to sue, noting the firm's long partnership with the State Department. "We did not want to take this step," Bohn said. "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 could have broader implications for federal contracting, especially as the administration pursues aggressive cost-cutting measures across agencies. Legal experts say the case may hinge on whether the government's settlement agreement is binding and whether political appointees can override it. The State Department has not yet commented publicly.
This lawsuit is one of several recent flashpoints between the administration and contractors, as officials push to reduce spending on diplomatic infrastructure. The outcome could set a precedent for how pandemic-era claims are handled in the federal court system.
