Long-running embassy fight comes back to haunt Trump as State Dept hit with $461M lawsuit

FIRST ON FOX — The latest lawsuit launched against the Trump administration seeks to recover more than $461 million after the State Department directed a longtime embassy builder to continue construction projects worldwide through the COVID-19 pandemic. B.L. Harbert International, which has built dozens of U.S. embassies and consulates over more than two decades, reached a $370 million settlement with the State Department to handle resulting claims — but the compnay claims the deal was reversed after current political leadership intervened. The builders are now seeking to recover lost funding through suing the Trump administration, and filed a lawsuit on Wednesday in the U.S. Court of Federal Claims, Fox News Digital first learned. The complaint covers 12 diplomatic construction projects across four continents, including facilities in Turkey, Iraq, Thailand, Morocco, Mexico and Central America. The company alleges career State Department officials reached the $370 million agreement in September 2025, but the government paid just $501,636 before backing out. Harbert claims political leadership "inserted themselves into the process after a settlement was reached" and that the decision to abandon it "came from the top." "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," Charles Bohn, president of BL Harbert's International Group, said in a statement. TRUMP ADMINISTRATION UNCOVERS $1.2B IN SUSPECTED COVID CONTRACT FRAUD TIED TO BIDEN-ERA SPENDING "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." Harbert is one of a small pool of U.S. contractors capable of building highly secure diplomatic facilities overseas — work that requires specialized security clearances, vetted workforces and the ability to manage complex construction and supply chains abroad. According to the company, some State Department embassy projects now draw just two or three qualified bidders. The dispute stretches across three presidential administrations, beginning with State Department directives issued during Trump's first term in 2020, continuing as Harbert pursued compensation during the Biden administration and culminating in the alleged settlement and its collapse during Trump's second term. At the beginning of the Covid-19 pandemic, Harbert was working on 17 embassy and consulate construction projects around the world, representing nearly two-thirds of State's embassy construction program at the time, according to the lawsuit. As countries shut down and global supply chains seized up in early 2020, Harbert says it sought guidance from State on whether to pause construction. The company argues the pandemic constituted an "excusable delay" under its contracts that would have allowed it to send personnel home, secure construction sites and resume work once conditions stabilized. Instead, Harbert alleges State decided to keep its overseas construction program moving. The company says State directed it to remain ready to mobilize, continue procuring and shipping materials and work through the disruptions, while instructing Harbert to document the resulting costs and submit requests for reimbursement. In one March 2020 communication cited in the complaint, Harbert warned State that it could not afford to continue paying workers to remain on standby without assurances of reimbursement. Labor costs on the new U.S. Embassy in Guatemala City alone were running roughly $1.3 million per month, according to the filing. Weeks later, State directed Harbert to "continue to procure and ship materials" so projects would not end up at the "back of the line" when global construction activity resumed, the complaint alleges. State recognized that doing so could generate additional storage, shipping and other costs and directed the company to submit requests for equitable adjustments as those costs arose, according to the filing. The projects ultimately moved forward under pandemic restrictions that Harbert says increased costs and reduced productivity as the company dealt with workforce limitations, supply-chain disruptions and new operating requirements. The government has since taken possession of all 12 diplomatic facilities at issue in the lawsuit and has been using some of them for more than three years, according to Harbert. Harbert ultimately submitted more than $500 million in requests for equitable adjustments and other claims stemming from the pandemic directives and separate project disputes, including alleged design changes and government-caused delays. OBAMA CENTER SUBCONTRACTOR SHUTS DOWN AMID $4M FIGHT, LAYS OFF 25 Harbert alleges members of State Department political leadership "inserted themselves into the process after a settlement was reached" and that, "on information and belief," the decision to abandon the agreement "came from the top." Fox News Digital has reached out to the State Department for comment. With deadlines approaching to preserve its claims, Harbert says it formally certified them in March 2026. The complaint alleges State's chief of staff encouraged the company to do so, representing that certification would make it easier for the government to implement the settlement. Instead, State contracting officers began denying the claims in July. By Oct. 13, 2026, all 13 certified claims now at issue in the lawsuit had received final decisions. Harbert is now seeking at least $461,097,380 in damages, along with interest and other relief. The lawsuit does not currently ask the court to enforce the alleged $370 million settlement itself. Harbert says its settlement-related claims remain in the administrative process and that it reserves the right to add them to the lawsuit later. The dispute could carry consequences beyond the hundreds of millions of dollars at stake. Harbert has been awarded roughly 60 U.S. embassy and consulate construction projects since 1999. The company says the number of American contractors willing and qualified to undertake such work has dwindled significantly, in some cases leaving just two or three qualified bidders for projects. Embassy construction requires contractors to meet stringent security and workforce-vetting requirements while managing highly specialized construction, secure facilities and international logistics, creating significant barriers for companies seeking to enter the field. CLICK HERE TO DOWNLOAD THE FOX NEWS APP Harbert argues that if contractors lose confidence that State will honor its obligations, fewer could be willing to take on the work, further shrinking the government's options for constructing secure diplomatic facilities overseas.