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B-242980 1 (1991-09-20)

handle is hein.gao/gaobadnyk0001 and id is 1 raw text is: Comptroller General of the United States Wasbington D.C. 20548 Decision Matter of: Panama Canal Commission--Remission of Liquidated Damages File: B-242980 Date: September 20, 1991 DIGEST Liquidated damages attributable to costs that were not foreseeable consequences of performance delay are remitted, DECISION The Acting Administrator of the Panama Canal Commission has requested that this Office remit part of the liquidated damages assessed against Constructores Electromechanicos, S.A,, under Commission contract No. CC-2-566. This matter is before us under 41 U.S.C. § 256a (1988), which authorizes the Comptroller General, upon the recommendation of the head of any federal agency, to remit the whole or any part of liquidated damages assessed for delay as in his discretion may be just and equitable. The contract provides for the installation of a fire- protection system at the Miraflores Locks at the Panama Canal. A liquidated damages clause provided for damages to be assessed at a rate of $3,400 per day if the work was not completed by June 19, 1990. We understand- that the contract still has not been completed, and that damages at the rate of $3,400 per day currently are being assessed. The Commission believes that the daily rate of liquidated damages should have been only $650. That is the amount needed to cover the Construction Division's costs of providing on- site inspection ($250) as well as the cost of Marine Bureau personnel to coordinate the installation ($400). The remainder, consisting of relay operation costs and the costs of a craneboateand a cargo barge, should not have been included in the damage estimate, contends the Commission, because these costs were not foreseeable consequences of a performance delay. Under Federal Acquisition Regulation section 12.202(b), liquidated damages fixed without any reference to probable actual damages may be held to be a penalty, and therefore unenforceable. The Commission attributes the inclusion of these additional costs in the liquidated damages rate to an error in judgment by one of its estimators.

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