DENIED:  June 1, 2009 
CBCA 1009 
NORTHERN MANAGEMENT SERVICES, INC., 
Appellant, 
v. 
DEPARTMENT OF AGRICULTURE, 
Respondent. 
John Deshon, President of Northern Management Services, Inc., Sandpoint, ID, 
appearing for Appellant. 
Dawn M. Dickman, Office of the General Counsel, Department of Agriculture, 
Juneau, AK, counsel for Respondent. 
DRUMMOND , Board Judge. 
Through this appeal, Northern Management Services, Inc. (NMS) challenges a 
Department of Agriculture, Forest Service (FS) contracting officer’s decision which assessed 
$9750 in liquidated damages, and pending submission of a release of claims by NMS, 
withheld a contract balance of $1976.26.
1   NMS maintains that the project was substantially 
1  NMS has elected to have its claim decided under the Board’s small claim 
procedures.  Under such procedures, a decision is rendered by a single judge, is not 
appealable, and may not be cited as precedent. Board Rule 52 (42 CFR 6101.52 (2008)). 
The parties elected to submit their positions on the record. 

  
 
   
  
  
   
  
 
 
 
 
  
   
     
    
2 CBCA 1009 
complete earlier than the date on which the Government approved it as complete and that the 
imposition of liquidated damages was inappropriate. 
For the reasons discussed below, we deny this appeal. 2 
Background 
On September 21, 2006, the FS awarded to NMS contract AG-0116-C-06-0086 (the 
contract).  Appeal File, Exhibit 2 at 2.   The contract, in the amount of $533,093.74, required 
NMS to replace the lighting and lighting control systems for the exhibits and theater at the 
Ketchikan, Alaska, Southeast Alaska Discovery Center (SEADC).  Id., Exhibits 2, 4.  As 
awarded, all contract work was to be completed by April 1, 2007.  Id ., Exhibit 2 at 5. 
The contract described the SEADC as a visitor center operated by the FS.  Appeal 
File, Exhibit 2 at 11. The contract further described the SEADC as including exhibit areas, 
a theater, and offices for several FS employees.  Id .  The contract stated that the SEADC 
hosted over “139,000 visitors in 2005.”  Id. at 44.  The FS considers the SEADC important 
to the mission of the FS as the SEADC “provides many visitors to Southeast Alaska with 
their initial contact with the Forest Service in Alaska.”  Id., Exhibit 46. 
The contract included a “Selection Criteria Summary,” which warned the successful 
bidder that important award factors were: preset programming from the light control station, 
and from a personal computer, which was to be LAN (local area network) capable;  and easy-
to-use preset programming software. Appeal File, Exhibit 2 at 58.  As awarded, the contract 
contemplated fully operational lighting controls that would give the FS the capability and 
flexibility to program lighting presets as needed.  Id . at 46, 54.  The contract stated that “the 
new lighting system shall provide at a minimum equivalent lighting quality and flexibility 
in preset programming as the existing exhibit lighting.”  Id. at 46.  
The contract singled out for special attention the programming requirements for the 
new lighting controls for the theater and exhibits. Appeal File, Exhibit 2 at 54.  Specification 
01010, entitled “New Lighting Controls for Theater and Exhibits,” states in section III.A.6: 
[t]he Preset Programming Software for a PC connected to the 
lighting control system shall be provided by the Contractor 
2 The record consists of the pleadings; Appeal File, Exhibits 1 - 46; 
Supplemental Appeal File, Exhibits 1 - 8; Appellant’s Brief; Respondent’s Brief; and 
Appellant’s Opposition to Respondent’s Brief. 

 
     
   
  
 
   
        
   
 
  
 
   
 
 
  
 
  
3 CBCA 1009 
loaded on a laptop computer ready to go.  Contractor shall 
provide the laptop computer  with modem, operating system, 
standard software package, and manufacturer’s warranty. 
Contractor shall be required to set up the laptop, connected to a 
phone line provided by the government . . . .  The laptop will not 
be connected to the LAN. 
Id. at 54. Section III.A.8 of that same specification states: “Lighting control programming 
shall be user friendly, requiring minimal steps.”  Id.  Section  III.A.10 states: “All 
programming shall be finished and functioning prior to close out of the project.”  Id.  Section 
III.A.13 states: “The system shall have the capability to program lighting presets from each 
light control station in its respective exhibit area.”  Id. at 55.   Section III.A.14 states: “The 
system shall include protection at each light control station to prevent accidental 
programming.”  Id. 
During contract performance, NMS and its subcontractors, particularly Pacific 
Lighting, experienced problems completing scheduled tasks and ordering material in a timely 
manner.  Id., Exhibits 12, 14, 17. In February 2007, the contracting officer (CO) expressed 
his concern that timely completion of the project might be in jeopardy.  Id.  Exhibit 26.  The 
CO noted that “the lighting control installation was to begin in the theater on February 2 and 
in the exhibits on March 5; however, manufacturing of the controls has not yet begun.”  Id.
 Delays involving the manufacturing and installation of lighting controls for the theater and 
exhibit areas continued.  On March 30, 2007, Mr. Dane Ash for NMS wrote to the CO 
requesting an extension of the contract completion date to April 26, citing, inter alia, as 
reasons for the request: “1. A21 Panel Missing one Module - Rejected by QC (Quality 
Control) at the manufacturer and being rebuilt . . . . ” and “2.  A21 Key Pad interface 
problems  . . . [manufacturer to present programming solution or submit replacement model] 
. . . ,” and  “3.  C21 Panel to Laptop interface problems . . . .”  Id., Exhibit 32.  These three 
problems related to the lighting controls for the theater and exhibit areas. 
The extension of the contract completion date proposed by NMS was the subject of 
negotiations between the parties and resulted in the execution of modification 0003 by the 
CO and NMS.  Modification 0003 extended the contract completion date to April 27, 2007, 
and added a Liquidated Damages clause to the contract.  Appeal File, Exhibit 33.  The 
SEADC was scheduled to reopen on or about May 1, 2007, and the CO was concerned that 
further delays beyond the proposed revised completion date would adversely impact the 
scheduled reopening of the SEADC.  The CO considered the daily cost to rent another 
facility if the work was not completed by April 27, 2007.  Id ., Exhibit 46 at 2.  He also 
anticipated the adverse impact and disruption to the FS if it could not use the lighting 
controls as intended.  Id.   Originally, the CO calculated liquidated damages at $1000 per day, 

   
 
    
   
 
     
  
 
    
          
    
4 CBCA 1009 
but the parties agreed to $750 per day.  Id .; Affidavit of John Deshon (Feb. 11, 2008) ¶ 9. 
The Liquidated Damages clause states in relevant part: “If the Contractor fails to complete 
the work within the time specified in the contract, the Contractor shall pay liquidated 
damages to the Government in the amount of $750 for each calendar day of delay until the 
work is completed or accepted.”  Appeal File, Exhibit 33.  The modification contained no 
reservations or exceptions. 
By e-mail message dated April 26, 2007, the FS advised NMS that the system’s 
mobile unit and lighting recall buttons still were not functioning as required by the terms of 
the contract.  Appeal File, Exhibit 40.  Specifically, the FS stated: 
Once communication is established with the system, the laptop will not 
manipulate the presets in any way. 
Communication is only established after a preset station is physically 
manipulated. 
The laptop does not reflect current channel settings nor 
can channels be manipulated with the visual sliders even after communication 
is established. 
Id. 
On June 26, 2007, NMS submitted to the FS copies of manuals and the as-built 
drawings required by the contract. Appeal File, Exhibit 41.  NMS also submitted a final 
invoice for payment by the FS.  Id . 
By e-mail message dated August 14, 2007, the CO wrote to NMS requesting that it 
sign and return the release that was attached.  The CO stated that the “outstanding contract 
amount was $ 11,726.26 minus the liquidated damages (13 days at 750/day  = $9,750).” 
Appeal File, Exhibit 42. NMS responded by expressing its disagreement with the assessment 
of liquidated damages. NMS maintained that the contract work was completed within the 
contract period. Id.  NMS regarded the programming problems to be minor and not 
warranting the assessment of liquidated damages.  Id . 
On August 20, 2007, the CO wrote to NMS stating that the work was not complete 
until May 10, 2007, when a technician for the manufacturer of the lighting controls, Strand 
Lighting, corrected the problems with the laptop control which prevented the system from 
functioning as required by “Sections III.A.6 and III.A.13.”  Appeal File, Exhibit 43.   The CO 
stated that “because the laptop was the mechanism meeting Section III.A.13, the lack of 

  
        
     
  
  
  
 
  
 
 
 
  
  
5 CBCA 1009 
functionality prevented users from any use of the system beyond preset recall from the floor 
control stations.”  Id. 
On September 11, 2007, NMS responded to the CO’s letter of August 20, 2007. 
Appeal File, Exhibit 44. NMS’s letter enclosed an unsigned letter from a sales manager for 
Strand Lighting dated September 6, 2007, which stated the “C21/A21 dimming system . . . 
was complete and fully operational prior to April 26, 2007.  Further, all architectural control 
devices were programmed to specified presets.”  The Strand Lighting letter also characterized 
the two programming problems that existed on May 10, 2007, as being minor.  Id.  The 
record contains no persuasive evidence to corroborate the statements in September 6, 2007 
letter as being true. 
On November 7, 2007, the CO issued a final decision.  Appeal File, Exhibit 46.  In 
that decision, the CO rejected the claim by NMS for final contract payment, stating that: “it 
is my decision to collect thirteen days of liquidated damages at $750.00 per day for a total 
of $9,750.00.”  Id. The CO stated further that “I am awaiting your release, and upon its 
receipt, the Forest Service will process a payment of $1,976.26, which is the final invoice 
price less the liquidated damages . . . .”  Id. 
Among other things, the CO stated the contract was not complete on April 27, 2007, 
because: 
. . . the system did not function as it was designed.  Specifically, 
there were problems with the A21 and C21 dimmer racks.  The 
A21 problem prevented turning off the theater control board 
without losing the preset lighting levels, and the C21 problem 
prevented functional interface with the lighting controls using 
the laptop computer.  While these problems did not delay the 
reopening of the Discovery Center, they go beyond the 
definition of minor punch list items and they caused unnecessary 
confusion and work-arounds for the Discovery Center staff. 
Appeal File, Exhibit 46. 
After filing an appeal, NMS submitted an affidavit of John Deshon, the president of 
NMS.  In that affidavit, Mr. Deshon declares that during a conversation with the CO on 
October 24, 2007, the CO said NMS had to pay some amount in liquidated damages to 
“absorb some punishment.”  Deshon Affidavit ¶ 19.  The FS has denied that the CO made 
the alleged statement.  Respondent’s Brief at 15.  The record contains no evidence to 
corroborate Mr. Deshon’s assertion concerning the alleged improper statement by the CO. 

 
 
    
  
 
 
 
     
  
   
  
 
   
    
 
  
 
    
 
 
   
 
6 CBCA 1009 
Discussion 
NMS's objection to FS 's imposition of liquidated damages may be summarized as 
follows: (1) The liquidated damages constitute a penalty, and (2) the work was substantially 
complete by the contract completion date.  We do not find either of these arguments 
meritorious. 
NMS argues that the assessment of liquidated damages was punitive because the FS 
has not shown it suffered actual damages.  The burden of proving a liquidated damages 
clause to be unenforceable rests with the party challenging the provision.  DJ Manufacturing 
Corp. v. United States , 86 F.3d 1130, 1134 (Fed. Cir. 1996).  Whether or not the FS suffered 
actual damages is immaterial.  Such provisions will be enforced where they “are fair and 
reasonable attempts to fix just compensation for anticipated loss . . . .  They serve a 
particularly useful function when damages are uncertain in nature or amount or are 
unmeasurable, as is the case in many government contracts.”  Priebe & Sons, Inc. v. United 
States , 332 U.S. 407, 411 (1947). 
The record reflects that the visitor center was scheduled to reopen to the public on 
May 1, 2007.  The parties recognized the critical need for timely completion of the contract 
work, and they anticipated the cost and inconvenience the Government would suffer if the 
lighting controls could not be used as intended. The liquidated damages of $750 per day 
constituted a reasonable projection of the potential damage to the FS if NMS failed to timely 
correct the problems with the lighting controls, and NMS agreed to the terms.  Under these 
circumstances, the negotiated amount for liquidated damages is to be enforced as any other 
provision of the contract.  Hughes Bros., Inc. v. United States , 133 Ct. Cl. 108 (1955).  NMS 
has offered no evidence to overcome the presumption that the liquidated damages in this 
contract are reasonable.  Wise v. United States , 249 U.S. 361, 365-66 (1919).  Reasonable 
liquidated damages provisions “are not to be regarded as penalties.”  Rex Trailer Co. 
v. United States , 350 U.S. 148, 151 (1956). 
NMS also argues liquidated damages were punitively applied by the FS.  It contends 
that the CO assessed the liquidated damages because NMS “had to absorb some punishment 
for the delays.” We understand NMS to contend that the statement attributed to Mr. Patton 
is proof that the liquidated damages were improperly motivated and should be set aside as 
punitive; however, NMS stops short of asserting that the FS’s assessment should be vitiated 
by bad faith.  In the absence of evidence to the contrary, we find that NMS had not shown 
that the FS assessed the liquidated damages to punish NMS, nor has it shown that the FS was 
motivated by improper purpose. 

 
 
   
  
       
  
  
 
 
    
     
 
 
 
 
  
   
     
7 CBCA 1009 
We find that NMS’s allegation of an improper statement by the CO, without more, is 
insufficient to meet the evidentiary standard of proving bad faith on the part of the 
Government by “clear and convincing evidence,” a more onerous burden than that of a 
preponderance of the evidence.  Am-Pro Protective Agency, Inc. v. United States , 281 F.3d 
1234, 1239 (Fed. Cir. 2002). 
Finally, NMS contends that the work was substantially complete on April 27, 2007, 
and therefore, it is not subject to liquidated damages. Complaint ¶ 8.  NMS contends that the 
two programming issues that existed after April 27, 2007, were minor and had no impact on 
the use of the SEADC. 
The FS contends that NMS’s performance under the contract was not substantially 
compete until the two programming problems were corrected on May 10, 2007.  The FS 
maintains that the two programming issues were significant and prevented the system from 
functioning as intended.  The FS maintains that it is clear from both the contract and the 
parties’ conduct during the course of the performance that both the FS and NMS intended 
and expected to have the lighting system give the FS the capability and flexibility to program 
lighting presets as needed.  
The FS asserts that the first problem with the system involved the programming 
console for the theater lighting control system.  The FS maintains that the lighting control 
system located in the theater included a wall-mounted control unit and a mobile control unit 
that could be plugged into the computer in the wall-mounted control unit.  Respondent’s 
Brief at 6. The FS further asserts that when working properly, the mobile unit is connected 
to the wall-mounted unit to program the desired lighting settings, and then can be 
disconnected while the programmed presets are retained in the memory of the wall-mounted 
unit.  Id.  NMS has not disputed the FS’s assertions concerning the configuration and 
functionality of the lighting controls in the theater and exhibit areas. 
The FS argues that until NMS fixed the problem on May 10, 2007, all programmed 
lighting levels that should have been retained in the wall-mounted control system were lost 
if the mobile programming console was turned off or disconnected from the wall-mounted 
unit.  The FS states that when this happened, the lights would turn on to their maximum 
setting, thus interfering with the programming capability and the use of the room as a theater. 
Respondent’s Brief at 6. NMS counters by asserting that this was not a significant problem 
since “there was no reason for the DMX cable to ever be disconnected from the control 
system.”  Appellant’s Brief at 3.  However, this does not explain how the system was to be 
used as intended, since the mobile programming console was intended to be disconnected 
when not being used for programming. 

 
  
       
  
      
      
 
   
 
 
    
 
  
 
    
 
   
     
              
     
  
8 CBCA 1009 
The FS maintains that the second problem concerned lighting recall buttons.  The FS 
asserts that the lighting control system in the exhibit areas consisted of a preset group of 
lighting buttons that were programmed by a lighting specialist and blank recall buttons that 
could be programmed by FS staff as needed for special lighting situations.  Respondent’s 
Brief at 7.  NMS has not disputed the FS’s assertions concerning the configuration and 
functionality of the lighting recall buttons in the exhibit areas. 
The FS states that until the problem was fixed, FS staff was unable to program any 
of these recall buttons. Respondent’s Brief at 7. NMS contends that there was no reason for 
FS staff to change preset functions. Appellant’s Brief at 3. We find NMS’s assertion to be 
directly contrary to the plain language of the contract that the “[n]ew lighting system shall 
provide at a minimum equivalent lighting quality and flexibility in preset programming as 
the existing lighting system.” 
Liquidated damages are improperly assessed after the date of substantial completion 
of contract work.  Substantial completion of work on a contract occurs when a high 
percentage of work is complete and the project is available for its intended use.  AMEC 
Construction Management, Inc. v. General Services Administration, GSBCA 16233, 06-2 
BCA ¶ 33,410, at 165,653; Program and Construction Management Group, Inc. v. General 
Services Administration, GSBCA 14757, et al., 00-1 BCA ¶ 30,641, at 151,317.  Government 
occupancy of a building is not conclusive proof of substantial completion.  Haas & Haynie 
Corp. , GSBCA 5530, et al., 84-2 BCA ¶ 17,446, at 86,896.  
In the instant case, we know from reading the contract that programming the lighting 
system and presets was considered to be an important part of the work performed by NMS. 
The mandatory specifications set forth the performance requirements and the requirement 
that all programming “shall be user friendly, requiring minimum steps” and “finished and 
complete prior to close-out of the project.”  Until the systems were working properly, as 
intended by the contract, the work could not be considered substantially complete. NMS has 
not suggested that the systems were fully operational earlier than May 10, 2007.  We 
consequently cannot fault the FS’s determination that substantial completion was achieved 
on that day.  
We find the inability to turn off the theater control board without losing the preset 
lighting levels, and the inability to interface with the lighting controls using the laptop 
computer precluded the FS’s primary mode of operation as intended by the contract.  We 
further find, based upon a review of the record, that the system could not be used as intended 
by the contract until May 10, 2007. In this case, preset programing from the light control 
station, and from a personal computer and LAN, and the ability to readily lock and unlock 
programing at the light control station were important award factors. The CO’s computation 

   
                                                
9 CBCA 1009 
of liquidated damages was reasonable and consistent with the contract provisions.  NMS has 
offered no persuasive evidence which demonstrates that the system was substantially 
completed by an earlier date.  Southwest Marine, Inc. , DOT BCA 1577A, 95-1 BCA 
¶ 27,519. 
Decision 
We uphold the contracting officer’s decision.  This appeal is DENIED . NMS is 
entitled to the contract balance of $1976.26, pending its submission of a release of claims. 
JEROME M. DRUMMOND 
Board Judge