B-134111, NOV. 22, 1957

B-134111, NOV. 22, 1957

TO FONT AND MONTILLA INC.:

REFERENCE IS MADE TO YOUR LETTER OF OCTOBER 3, 1957, AND SUBSEQUENT CORRESPONDENCE REQUESTING RECONSIDERATION OF SETTLEMENT DATED AUGUST 2, 1957, WHICH DISALLOWED YOUR CLAIM FOR REFUND OF LIQUIDATED DAMAGES ASSESSED UNDER CONTRACT NO. DA-08-123-ENG-1743.

ON APRIL 13, 1956, A JOINT SURVEY MADE BY YOURSELF, AN ENGINEER OF THE ARMY CORPS OF ENGINEERS, AND A REPRESENTATIVE OF RAMEY AIR FORCE BASE DISCLOSED A SERIES OF DEFICIENCIES IN THE CONTRACT WORK WHICH YOU ACKNOWLEDGED BY YOUR SIGNATURE. ON THE SAME DATE, RAMEY AIR FORCE BASE ACQUIRED BENEFICIAL OCCUPANCY OF THE PROJECT AND ITS APPURTENANCES THEN COMPLETED. THE SCHEDULED COMPLETION DATE OF THE WORK WAS APRIL 24, 1956. AFTER AN INSPECTION ON MAY 15, 1956, TWENTY-ONE DAYS AFTER THE ESTABLISHED COMPLETION DATE, THE WORK WAS FORMALLY ACCEPTED AS ENTIRELY COMPLETED.

PARAGRAPH SC-9 OF THE CONTRACT PROVIDED:

"IN THE CASE OF FAILURE ON THE PART OF THE CONTRACTOR TO COMPLETE THE ENTIRE WORK WITHIN THE TIME FIXED IN THE CONTRACT OR ANY EXTENSIONS THEREOF, THE CONTRACTOR SHALL PAY THE GOVERNMENT AS LIQUIDATED DAMAGES THE SUM OF $50.00 FOR EACH CALENDAR DAY OF DELAY UNTIL THE ENTIRE WORK IS COMPLETED OR ACCEPTED.'

THEREFORE, UNDER THE TERMS OF THE CONTRACT, THE LIQUIDATED DAMAGES FOR THE DELAY WERE ASSESSED AT $1,050 ($50 PER DAY TIMES 21 DAYS). THE LIQUIDATED DAMAGES WERE DEDUCTED FROM THE FINAL PAYMENT MADE TO YOU. YOU SIGNED THE FINAL PAYMENT VOUCHER ON OCTOBER 2, 1956, AND ACCEPTED THE FINAL PAYMENT CHECK DATED OCTOBER 9, 1956, WITHOUT ANY PROTEST OR OBJECTION AT THE TIME.

IN YOUR LETTER OF OCTOBER 3, 1957, YOU REFER TO A STATEMENT MADE IN A LETTER TO YOU DATED MAY 17, 1957, FROM THE BASE COMMANDER ON THE CONSTRUCTION SITE. THE LETTER, INSOFAR AS PERTINENT, IS AS FOLLOWS:

"THE DEFICIENCIES LISTED AT TIME OF INTERIM TRANSFER ON 13 APRIL 1956 WERE REINSPECTED ON 15 MAY 1956 AND FOUND TO HAVE BEEN CORRECTED. THE WORK OF CORRECTING THESE DEFICIENCIES DID NOT PREVENT IN ANY WAY THE FULL USE OF THE SYSTEM BY THE GOVERNMENT.'

INASMUCH AS THE DEFICIENCIES DID NOT PREVENT THE GOVERNMENT FROM MAKING FULL USE OF THE PROJECT, YOU REQUEST REMISSION OF THE LIQUIDATED DAMAGES CHARGED YOU FOR DELAYED PERFORMANCE.

PARAGRAPH GC-10 OF THE CONTRACT PROVIDED:

"THE GOVERNMENT SHALL HAVE THE RIGHT TO TAKE POSSESSION OF OR USE ANY COMPLETED OR PARTIALLY COMPLETED PART OF THE WORK. SUCH POSSESSION OR USE SHALL NOT BE DEEMED AN ACCEPTANCE OF ANY WORK NOT COMPLETED IN ACCORDANCE WITH THE CONTRACT. * * *"

UNDER THIS PROVISION, THE GOVERNMENT SPECIFICALLY WAS ENTITLED TO OCCUPY THE PROJECT BEFORE IT WAS COMPLETED ENTIRELY; HOWEVER, CONTRACT PROVISION PARAGRAPH SC-9, REFERRED TO ABOVE, SPECIFICALLY STATES THAT LIQUIDATED DAMAGES WILL BE ASSESSED "UNTIL THE ENTIRE WORK IS COMPLETED OR ACCEPTED.'

A LIQUIDATED DAMAGE CLAUSE IS VALID AND ENFORCEABLE ACCORDING TO ITS TERMS EVEN THOUGH THE PARTY COMPLAINING OF THE BREACH IN PERFORMANCE IS UNABLE TO PROVE ACTUAL DAMAGES. UNITED STATES V. BETHLEHEM STEEL CO., 205 U.S. 105, 120-121; UNITED STATES V. KANTER, 137 F.2D 828, 830; FRICK CO. V. RUBEL CORP., 62 F.2D 765, 767.

ACCORDINGLY, UNDER THE TERMS OF THE CONTRACT THE GOVERNMENT COULD UTILIZE THE FACILITIES WITHOUT WAIVING ITS RIGHT TO LIQUIDATED DAMAGES AND IT IS IMMATERIAL THAT THE GOVERNMENT MIGHT NOT HAVE SUFFERED ANY PERCEPTIBLE LOSS BY CONSEQUENCE OF YOUR DELAY. AS A RESULT, THE SETTLEMENT DISALLOWING YOUR CLAIM IS SUSTAINED.