## Facts

- A construction contractor entered into four federal contracts to build three VHF omni-directional radio facilities in Missouri and an airport approach lighting system at Lambert Field.
- Each contract set a completion date and a per-diem liquidated damages rate: $100/day for the Lambert Field project and $50/day for each radio facility.
- The contracts incorporated an excusable-delay clause covering unforeseeable causes beyond the contractor’s control (including government acts and unusually severe weather) and required written notice within ten days of the start of a qualifying delay.
- The contracting officer was authorized to decide whether delays were excusable and to extend the completion date; those administrative findings were final subject to departmental appeal.
- All projects finished after the contractual completion dates (including one project completed 97 days late).
- The contractor sought time extensions, asserting some delays were excusable and some were attributable to government conduct; administrative proceedings granted certain extensions but not all days requested.
- After extensions, the government treated remaining delay days as unexcused and withheld $8,300 from payments otherwise due as liquidated damages.
- The parties stipulated that the government suffered no actual damages from the late completions.

## Issues

1. Whether per-diem liquidated damages provisions in federal construction contracts are enforceable when the government suffered no actual damages from delay.
2. Whether government-caused or government-contributed delays bar the government from assessing liquidated damages for delay days that remain unexcused after contractual extension procedures.

## Decision

- The Eighth Circuit affirmed summary judgment for the United States.
- The court held the liquidated damages provisions were valid and enforceable even though the government incurred no actual damages.
- The court held that government responsibility for some delay did not preclude assessment of liquidated damages for the remaining unexcused delay days after administrative extensions.
- The contractor was not entitled to recover the $8,300 withheld.

## Legal Principles

- A liquidated damages clause is enforceable if, at the time of contracting, the amount is a reasonable forecast of anticipated harm and the harm from breach is difficult to estimate accurately.
- Enforceability is assessed ex ante; the absence of actual damages after performance does not, by itself, convert a liquidated damages provision into an unenforceable penalty.
- The party challenging liquidated damages bears the burden to show the clause is punitive or grossly disproportionate to anticipated harm.
- Where a contract provides a notice-based administrative mechanism for excusable delays (including government-caused delay), liquidated damages may be imposed for delay periods left unexcused after that process.

## Conclusion

The court enforced per-diem liquidated damages in government construction contracts because the stipulated amounts were a reasonable advance estimate of hard-to-measure delay harms, and the government could assess liquidated damages for delay days not excused through the contracts’ administrative extension procedures even if the government suffered no proven actual loss.


Sw. Eng'g Co. v. United States, 341 F.2d 998 (8th Cir. 1965)