Govt. Collected Liquidated Damages---And Then Extended A Portion Of The Contract

Friday, August 03, 2018 3:50 am
August 2018 - Volume 40 Number 8

Delay --- Damages

Appeal of Am. Int’l Contrs., Inc., 2018 ASBCA Lexis157 (May 29, 2018)

A contractor challenged the government’s levy of more than $150,000 in liquidated damages, but the Armed Services Board of Contract Appeals denied its motion because government-issued contract modifications extended portions of the work only---not the entire project.

In January 2014, the U.S. Army Corps of Engineers (Corps) entered into a contract with American International Contractors, Inc. (AICI) for work on a $9.7-million project in Bahrain. The contract contained 12 contract line item numbers (CLINs), the largest of which were (1) CLIN 0004: $4.2 million to construct a headquarters (HQ) facility and (2) CLIN 0002: $4.3 million to construct a support services and logistics site (FSU/FLS) facility. The completion deadlines were March 7, 2015 and April 6, 2015, respectively. AICI missed both deadlines, and the Corps assessed liquidated damages totaling $159,055.

After AICI demobilized from the site in January 2016, the Corps issued two unilateral contract modifications that required ACI to perform additional work on the HQ facility---and set a new completion date. AICI completed that work on time in December 2016. It then filed a claim for the return of the liquidated damages on the grounds that the newly extended completion date meant the already-assessed delay damages were improper. The CO rejected AICI’s claim twice, and this appeal followed. The Board upheld the government’s assessment of damages.

Govt. assessed 2 different liquidated damages daily rates

When AICI failed to complete the HQ work by March 9, the Corps withheld $26,917 in liquidated damages, per incorporated contract clause Federal Acquisition Regulations (F.A.R.) 52.211-12, for 22 days of delay at $1,223.50 per day from AICI’s March 2015 invoice. Note: This daily rate was half the contract-specified rate.

AICI also failed to complete the FSU/FLS facility on time. The Corps withheld $63,622 in liquidated damages from AICI’s April 2015[..]