Time is Money—Recent Decisions on Liquidated Damages

A recent decision by the Armed Services Board of Contract Appeals reminds us how important it is to remember to ask for time as well as money when pursuing claims against the government. In OCCI, Inc. (May 29, 2018), the ASBCA upheld the Government’s imposition of liquidated damages against the contractor notwithstanding two prior Requests for Equitable Adjustment filed by the contractor seeking additional time and compensation for extra work allegedly performed on the project.

The underlying project was for construction of a floating bulkhead. During the course of construction, the contractor submitted two REAs, each seeking additional time and money. The total additional time sought by the contractor in the two REAs was 63 days. The government denied both REAs on March 28, 2013. The contractor converted one REA to a claim, but did not seek time as part of the claim, and did not pursue a claim following the denial of the second REA.

On May 11, 2017, the government issued a final decision assessing 71 days of liquidated damages for project delay.  This final decision was timely appealed to the ASBCA. The contractor conceded that the government had proved that the contractor failed to meet the contract completion date and that the period of time for which liquidated damages were sought was correct.

The contractor sought to show that its failure to complete on time was excusable by introducing evidence that the government was responsible for the time spent by the contractor performing the alleged extra work that was the subject of the two REAs. In issuing its decision, the Board said it was unnecessary to consider these issues because the contractor was precluded from raising these issues as defenses against the government’s liquidated damages claim because it had not filed proper CDA claims asserting entitlement to time extensions, citing the Federal Circuit’s landmark decision in M. Maropakis Carpentry, Inc. v. United States, 609 F.3d 1323 (Fed. Cir. 2010).

This decision reminds us that it is important to vigorously pursue claims for additional time, even if non-compensable, to protect against imposition of liquidated damages. Not only can such claims be used as a defense to liquidated damages claims but, if granted early on, can help avoid the need to accelerate at the end of the project to meet the original project completion date.