Appeal seeking remission of all liquidated damages withheld by the government is denied, where the contract modification for additional work preserved the already assessed liquidated damages for the contractor’s failure to timely complete the previously assigned work on time.
American International Contractors Inc. appealed the contracting officer’s denial of its claim for the return of liquidated damages assessed under a contract with the Army Corps of Engineers. Before the board were the parties’ cross motions for summary judgment on the claim.
Initially, the contract provided for the construction of both a support services facility and a headquarters facility. AICI did not complete the construction of the HQ facility, and the CO assessed liquidated damages under the relevant clause at one half the rate specified in the contract. The CO assessed additional damages for AICI’s failure to complete the support services facility on time.
After AICI had demobilized from the site, the Corps sought a proposal from AICI for a variety of work in the HQ facility. AICI submitted a revised proposal, and the CO issued a unilateral modification extending the original contract’s period of performance for the work under the modification only. AICI completed the additional work on time and submitted an uncertified claim to the CO seeking return of the previously assessed liquidated damages. The CO issued a final decision rejecting AICI’s request for all liquidated damages but releasing a portion of the liquidated damages because there was no provision in the contract allowing for the assessment of half liquidated damages.
In its appeal, AICI alleged that by issuing the contract modification, the Corps could no longer assess liquidated damages because the modification effectively changed the contract completion date for all work. The government, on the other hand, maintained that the modifications had no effect on the liquidated damages already withheld.
ASBCA denied AICI’s motion and granted the government’s motion for summary judgment, except for a material dispute of fact and a quantum issue. The board first determined that it was possible for the Corps to have added work to the contract while retaining liquidated damages already withheld due to the FAR clause for time extensions. The board concluded that the modification clearly carved out a separate completion date for the new work while preserving liquidated damages already assessed.
American International Contractors Inc. is represented by Scott M. Heimberg, Mark J. Groff, Elise A. Farren of Akin Gump Strauss Hauer & Feld LLP. The government is represented by Michael P. Goodman, Rebecca L. Bockmann, Sarah L. Hinkle of the U.S. Army Engineer District.
