Sauer Incorporated, ASBCA No. 62395

Background

Sauer, Inc. performed a three‑phase construction Task Order under Contract No. W91278-07-D-0030; the government assessed daily liquidated damages (LDs) for delay.
Phases I and II were completed and accepted before the contract completion date; Phase I accounted for roughly 98% of construction costs by Sauer’s schedule.
Sauer filed a claim seeking remission of LDs based on substantial completion of Phases I and II; the contracting officer’s final decision imposed LDs without addressing Sauer’s substantial‑completion argument.
On cross‑motions for summary judgment the Board granted Sauer partial relief, holding the government failed to meet its burden to justify assessing the full LD rate after substantial completion of Phases I and II (relying on ASBCA precedent that full daily LDs past substantial completion can be a penalty).
The government moved for reconsideration, advancing four principal arguments (jurisdiction to review LD rate, waiver by Sauer, error in holding LD unenforceable, and that the Board effectively rewrote the contract). The Board denied reconsideration.

Issues

Issue	Plaintiff's Argument (Sauer)	Defendant's Argument (Government)	Held
1. Does the Board have jurisdiction / did it rule on reasonableness/enforceability of the specific LD rate?	Sauer did not seek to litigate rate reasonableness on summary judgment; Board ruled gov failed to justify assessing full LD after substantial completion.	The Board mistakenly addressed rate reasonableness and lacked jurisdiction to do so.	Board clarified it did not decide rate reasonableness or jurisdiction on that issue; Sauer may seek to amend pleadings and the Board will address jurisdiction in a separate decision.
2. Did Sauer waive the right to challenge LD enforceability/rate?	Sauer raised unenforceability in its CO claim (based on substantial completion) and preserved the issue in briefing; no waiver.	Sauer should have protested the LD rate pre‑award or pled the affirmative defense earlier; otherwise it waived the defense.	Board found Sauer challenged enforceability in its claim and did not waive that defense; the timing/prejudice arguments by gov were insufficient.
3. Was it legal error to hold the LD rate unenforceable as a matter of law?	Precedent (Dick Pacific) requires apportionment and forbids full daily LDs after substantial completion of major contract parts; applied to undisputed facts here.	Dick Pacific was fact‑specific; Board improperly created a rule and failed to evaluate the LD’s reasonableness at formation (a factual inquiry).	Board applied the Dick Pacific principle: assessing the full daily LD after substantial completion of Phases I & II is unenforceable as a penalty; it did not decide the reasonableness of the rate at contract formation.
4. Did the Board improperly rewrite the contract by imposing phased LDs?	The Board did not rewrite the contract; it held that apportionment is appropriate under Board precedent where large portions were substantially complete. FAR 11.503(b) shows the government could have specified phased rates.	The Board exceeded its authority by inserting phased LD terms the parties never agreed to.	Board rejected the rewrite argument: it did not alter contract terms but applied precedent requiring apportionment where full LDs would operate as a penalty after substantial completion of major portions.

Key Cases Cited

Dixon v. Shinseki, 741 F.3d 1367 (Fed. Cir. 2014) (standards for motions for reconsideration).
George Hyman Constr. Co. v. United States, 832 F.2d 574 (Fed. Cir.) (courts may not rewrite contracts by inserting terms parties did not agree to).
K‑Con Bldg. Sys., Inc. v. United States, 778 F.3d 1000 (Fed. Cir.) (reasonableness of an LD amount is assessed as a factual inquiry at the time of contract formation).