K-Con Building Systems, Inc. v. United States, 2015 U.S. App. LEXIS 2205

Background

K-Con Building Systems contracted with the U.S. Coast Guard to build a facility for $582,641 with a completion date of Nov. 20, 2004 and liquidated damages of $589/day; the Coast Guard later withheld $109,554 for 186 days of delay.
K-Con sent a July 8, 2005 letter requesting remission of the withheld liquidated damages, alleging (1) the clause was an impermissible penalty and (2) the government failed to grant time extensions for changes; the contracting officer denied relief and K-Con sued under the CDA.
While suit was pending, K-Con sent a detailed Dec. 15, 2006 letter claiming $196,126.38 for extra work arising from alleged contract changes and seeking a 186‑day extension; the contracting officer denied that claim and K-Con amended its complaint to add it.
The Court of Federal Claims held (1) the liquidated‑damages clause was enforceable, (2) K‑Con failed to satisfy the contract’s written‑notice precondition for change‑order compensation, and (3) the court lacked CDA jurisdiction over K‑Con’s time‑extension claim; K‑Con appealed.
The Federal Circuit affirmed: it found CDA jurisdiction over the penalty/enforceability claim and the post‑suited contract‑changes claim (based on the second letter), but not over the time‑extension claim (first letter lacked adequate detail), and upheld the merits rulings.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Court of Federal Claims had jurisdiction over K‑Con’s claim that the liquidated‑damages clause is unenforceable	K‑Con argued it gave adequate pre‑suit written notice (first letter) requesting remission of a sum certain because the clause was an impermissible penalty	Government argued claims must be separately pleaded and jurisdictional requirements satisfied for each claim	Held: Jurisdiction existed for the unenforceability claim — first letter gave adequate sum‑certain and basis; CFC had jurisdiction
Whether CDA jurisdiction existed for K‑Con’s contract‑changes (extra‑work) claim	K‑Con argued its second letter supplied detailed notice and a sum certain ($196,126.38) making the contracting officer’s denial a final decision	Government argued the changes claim was already in litigation (original complaint) so post‑suit letter could not create a new pre‑suit claim	Held: Jurisdiction existed for the changes claim — the second letter presented a materially different remedy (compensation) than the original complaint’s remedy (remission), and the contracting officer issued a final decision
Whether CDA jurisdiction existed for K‑Con’s time‑extension claim (remission basis)	K‑Con argued the first letter and complaint sufficiently raised entitlement to time extensions that would justify remission of liquidated damages	Government argued the first letter did not provide the detail needed; claim was in litigation and required adequate pre‑suit presentation	Held: No jurisdiction — first letter failed to provide adequate written notice of the basis for time extensions; claim was litigated without a valid pre‑suit, final agency decision
Whether the liquidated‑damages clause is an unenforceable penalty	K‑Con argued the $589/day rate was excessive and based on calculation errors, so it was a penalty	Government argued the rate was a reasonable pre‑estimate of government costs from delay (inspection, travel, supervision, inefficiency)	Held: Clause enforceable — $589/day was a reasonable estimate at formation and not an extravagant or disproportionate penalty
Whether K‑Con complied with the contract’s written‑notice requirement for claiming changes	K‑Con argued notice was futile or otherwise excused; the second letter sufficed	Government argued K‑Con repeatedly accepted or "will comply" during the project and never timely objected; notice requirement bars late claims beyond 20 days	Held: K‑Con did not comply with the written‑notice clause; its post‑hoc second‑letter notice was untimely and no futility evidence excused the requirement

Key Cases Cited

Reflectone, Inc. v. Dalton, 60 F.3d 1572 (Fed. Cir.) (describing CDA claim definition and jurisdictional standards)
DJ Mfg. Corp. v. United States, 86 F.3d 1130 (Fed. Cir.) (test for unenforceability of liquidated damages — whether amount is extravagant or disproportionate)
Joseph Morton Co. v. United States, 757 F.2d 1273 (Fed. Cir.) (each CDA claim must independently meet jurisdictional requirements)
Sharman Co. v. United States, 2 F.3d 1564 (Fed. Cir.) (once a claim is in litigation, contracting officer generally cannot issue a final decision on it)
Tecom, Inc. v. United States, 732 F.2d 935 (Fed. Cir.) (permitting some litigation‑developed increases in amounts without re‑submission to CO)
Case, Inc. v. United States, 88 F.3d 1004 (Fed. Cir.) (distinguishing claims by different remedies sought)
M. Maropakis Carpentry, Inc. v. United States, 609 F.3d 1323 (Fed. Cir.) (evaluating separate claims within one dispute for jurisdictional purposes)
Scott Timber Co. v. United States, 333 F.3d 1358 (Fed. Cir.) (same‑claim analysis when theories vary but claim is essentially the same)