A Birmingham construction firm has taken the U.S. State Department to federal court, demanding at least $461 million over pandemic-era cost overruns the company says the government promised to cover and then refused to pay. BL Harbert International filed a 99-page lawsuit in the U.S. Court of Federal Claims accusing federal officials of reneging on a heavily negotiated settlement with a longtime construction partner. The company says the decision to back out came from senior leadership within the agency.
According to The Hill, which reported the suit was filed Wednesday, Harbert is seeking at least $461 million in damages tied to cost overruns on 12 secure embassy and consulate construction projects spread across four continents. A separate accounting from Yahoo News puts the figure at at least $461,097,380 in damages, along with interest and other relief. Harbert, headquartered in Birmingham, was reportedly working on 17 embassy and consulate projects worldwide when the COVID-19 pandemic hit in 2020, and the company says it was directed by the government to keep building even as the shutdown drove costs sharply higher.
A $370 Million Deal That Fell Apart
Per the lawsuit, the government agreed in September 2025 to pay Harbert $370 million to settle the pandemic-related overruns, and an initial payment of nearly $502,000 was actually made toward that deal. The company alleges the agreement later collapsed after political appointees under Secretary of State Marco Rubio inserted themselves into the process, according to the same Hill report. Notably, the new lawsuit does not ask the court to directly enforce that alleged $370 million settlement, though Harbert has reserved the right to add settlement-related claims later, Yahoo News reports.
Harbert says it ultimately submitted more than $500 million in requests for equitable adjustments and other pandemic-related claims across its diplomatic projects. State contracting officers began denying those claims in July 2026, and by October 13, all 13 certified claims now at issue in the lawsuit had received final decisions, per the same account. As one striking example, Harbert says labor costs on the new U.S. Embassy in Guatemala City alone were running roughly $1.3 million a month in a communication from March 2020.
Projects Spanning Turkey to Mexico
The Hill reports the projects at the center of the dispute included new embassies in Turkey, Guatemala, Montenegro, Namibia and Honduras, along with consulates in Morocco, Thailand, Iraq and Mexico. BL Harbert's connection to secure diplomatic construction goes back decades; the company has been awarded roughly 60 U.S. embassy and consulate construction projects since 1999, according to Yahoo News. The firm's past work includes the new consulate complex in Erbil, Iraq, which ProPublica lists among federal coronavirus-era contracts.
Charles Bohn, president of BL Harbert International, said the company did not want to take this step. In comments carried by AL.com, Bohn said that “the U.S. government is an important partner and BL Harbert is proud of their work together to advance America's interests and protect Americans serving overseas.” He added that the company “has a responsibility to its employees and to the future of the mission,” and said Harbert “kept its commitment under extraordinarily difficult conditions” and is now asking the government to keep its own.
A Shrinking Pool of Qualified Builders
Beyond the dollar figures, Harbert's filing points to a narrower industry problem: the pool of U.S. contractors qualified to build secure diplomatic facilities has shrunk, with some State Department embassy projects now drawing just two or three qualified bidders, the Yahoo News report notes. That backdrop underscores why Harbert, as one of the government's more established overseas builders, frames this dispute as more than a single contract fight.
The State Department has declined to comment, according to AL.com.
Under federal law, the Court of Federal Claims holds jurisdiction over contractor disputes with the government arising under the Contract Disputes Act of 1978, including certain disputes over contract termination and contract rights, per the U.S. Code. Federal statute also requires that a contractor's claim against the government first be submitted to a contracting officer for a decision before it can proceed further. Whether Harbert's $461 million claim will ultimately hold up in court remains to be seen, as the allegations have not yet been adjudicated.
