ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of - )

)

Metro Machine dba General Dynamics

 NASSCO-Norfolk

)

)

ASBCA No. 62221

)

Under Contract No. N00024-16-D-4408 )

APPEARANCES FOR THE APPELLANT: Michael J. Gardner, Esq.

Christopher M. O’Brien, Esq.

 Greenberg Traurig LLP

 McLean, VA

APPEARANCES FOR THE GOVERNMENT: Craig D. Jensen, Esq.

 Navy Chief Trial Attorney

Philip S. Lazarus, Esq.

 Trial Attorney

OPINION BY ADMINISTRATIVE JUDGE PROUTY

This appeal is about the overhaul of a guided missile destroyer that took longer than 

the delivery order (DO) on the above-captioned contract (the contract) allowed for. The 

long pole in the tent turned out to be the replacement of a davit and winch used to place a 

small boat into the water from the deck of the destroyer and to pluck it out. The repair of 

old parts and installation of new ones by appellant, Metro Machine’s (NASSCO’s),

subcontractor, Advanced Integrated Technologies (AIT), didn’t go well and AIT had to 

repair some of its work and its own subcontractor on the job wound up supplanting it at the 

end. The work was thus completed late, providing the basis for the Navy to impose 

liquidated damages, which it did and which NASSCO challenges here.

1

 As the reader 

might have surmised: NASSCO2 blames the Navy for the davit problems, arguing that the 

contractual requirement that it (AIT, actually) subcontract with the davit’s original 

equipment manufacturer (OEM) for certain work made the Navy responsible for any 

problems AIT had with the OEM and that when the OEM was not available, it was the 

 1 The parties elected to proceed under Board Rule 11, in which there is no hearing and we 

decide the merits of this dispute on the basis of the written record.

2 The appeal here is not technically a pass-through claim by AIT since the challenged 

liquidated damages were assessed against NASSCO; nevertheless, the advocacy 

often reads as if it were being advanced by AIT (NASSCO is sometimes presented 

in its briefs as an objective third party, rather than as an interested party to the 

lawsuit). In any event, we refer to arguments as being made by NASSCO herein, 

even if they appear to be advanced by AIT.
2

Navy’s responsibility to oversee AIT’s work and save it from its own mistakes; the Navy 

blames NASSCO and AIT. The Navy argues that this dispute was already largely resolved 

by means of a bilateral change order which (says the Navy) constituted an accord and 

satisfaction. Unfortunately for the Navy, the “bilateral” change order in the record is signed 

only by the Navy, effectively stopping this defense in its tracks. Nevertheless, the delays 

were the responsibility of AIT and thus NASSCO, not the Navy. NASSCO has also 

challenged the use of the liquidated damages clause that it had agreed to, but we find it to 

have been proper.

FINDINGS OF FACT

I. Preliminaries: the Contract and the DO

A. The Contract

The contract at issue in this case is a multiple award task order contract 

(MATOC)3 for the maintenance, modernization, and repair (also referred to as “overhaul” 

herein) of U.S. Navy warships (specifically, guided missile destroyers and cruisers) at the 

Navy’s Mid-Atlantic Maintenance Center, located at Naval Station Norfolk in Norfolk, 

Virginia (R4, tab 1.1 at GOV 1, GOV 18-194

). It consisted of a base year and four option 

years, and the DOs could be issued in either firm-fixed-price or cost-plus-fee varieties

(id. at GOV 2-10). The contract was awarded to NASSCO on February 17, 2016 (id. 

at GOV 1).

One set of contract provisions sets forth procedures to follow if, in the midst of the 

overhaul, the contractor finds more work that needs to be done on a ship than originally

planned for. That section in the Statement of Work begins in Section 3.0 and goes 

through Section 3.5. (R4, tab 1.1 at GOV 22-23) Section 3.1, “Identification of 

Condition Found,” requires the contractor to notify the government of “needed repairs” 

and to recommend corrective action for issues not identified in the original DO. It 

specifies the contractor should make notification to the government within one day of 

discovery, to be later followed by a more detailed “condition found report” (CFR) 

including the contractor’s recommendations. (Id. at GOV 22) The contract also 

incorporated by reference the Federal Acquisition Regulation’s (FAR’s) firm-fixed price 

Changes clause, FAR 52.243-1, (AUG 1987) (id. at GOV 68).

 3 A MATOC involves awards to numerous bidders who are available to perform 

individually-assigned task orders or DOs on the contract.

4 The documents in the Rule 4 file and its supplement that were submitted by the 

government are all stamped with a Bates number beginning with “GOV” and 

including zeros when the number is otherwise less than four digits long. We cite 

to these Bates numbers but omit the unnecessary zeros.
3

B. The DO

On August 18, 2016, the Navy awarded DO 0006 (the DO) to NASSCO in the 

amount of $14,854,857 (R4, tab 1.2 at GOV 90). The DO was for the overhaul of the 

USS Bulkeley, a guided missile destroyer (id. at GOV 92-93). The lion’s share of the 

work for the DO fell under contract line item number (CLIN) 0001 (id. at GOV 109). 

CLIN 0001 had a number of sub-CLINs (denoted as SLINs) beneath it, which included 

SLIN 0001BA (id.). One of the many “work items” set forth in SLIN 0001BA was 

583-11-001, “Boat Handling Equipment; repair” (id. at GOV 112). This is the work that 

is the focus of this appeal and we will discuss it more at length below. The cost of this 

work, to be performed by NASSCO’s subcontractor, was set by NASSCO at $334,975

(R4, tab 1.3 at GOV 139).

The delivery date for SLIN 0001BA (and for every SLIN for which a delivery date 

was applicable) was February 17, 2017 (R4, tab 1.2 at GOV 121-22). The DO included a 

liquidated damages clause in the event that the work on the Bulkeley was not completed 

when specified by the DO. That clause, located in tab 1.2 of the Rule 4 file, at GOV 122, 

includes, verbatim, the clause set forth in FAR 52.211-11, Liquidated Damages –

Supplies, Services, or Research and Development (SEP 2000), filling in the blank for the 

rate at $32,675 per day. Underneath the FAR clause, the DO includes a paragraph that is 

unique to the DO, explaining that the $32,675 number was derived from the daily salary 

of the sailors and officers on the Bulkeley and that the total amount of assessed liquidated 

damages would be limited to 10% of the value of the DO (R4, tab 1.2 at GOV 122).

The liquidated damages clause also provides that NASSCO will be excused if the 

delay is not its fault as fault is defined by the contract’s default clause (see 

FAR 52.211-11(c) as quoted in R4, tab 1.2 at GOV 122). The DO refers to the 

applicability of the default clause found in FAR 52.249-8, Default (Fixed Price Supply 

and Service) (APR 1984) (see R4, tab 1.2 at GOV 123), and this default clause is 

incorporated into the contract (see R4, tab 1.1 at GOV 68). This clause generally holds 

the contractor responsible for the defaults of its subcontractors “at any tier” unless they 

be excusable. See FAR 52.249-8(c), (d).

The DO includes a clause providing that only the contracting officer (the CO) is 

authorized to approve changes in the contract’s requirements (R4, tab 1.2 at GOV 105).

Of note, because NASSCO makes an argument about it, SLIN 0001BA contains 

work item 982-31-001, “Dock Trial, Fast Cruise, and Sea Trial; accomplish” (R4, tab 1.2 

at GOV 113).
4

Also of note, in late August, 2016, the parties agreed to a bilateral modification to 

the DO, adding work and increasing the contract price by to $16,017,900, though leaving 

the completion date at February 17, 2017 (R4, tab 2.1).5

II. What was Required by the Boat Handling Equipment Repair Work Item

The original version Work Item 583-11-001, “Boat Handling Equipment; repair” 

(the Work Item or the WI), may be found at tab 4.37 of the Rule 4 file. This is known as 

the “QG” version.6

 As explained below, it would later be replaced by the “VG” version, 

to be found at tab 4.38 of the Rule 4 file, but it is helpful to discuss the original version, 

which we do below. We will point out any changes made by the VG version where 

appropriate.

The original version of the Work Item identified the items that made up the boat 

handling system. Of note to our dispute, this included a “Slewing Arm Davit (SLAD) 

Assembly,” a winch assembly, and a control panel (R4, tab 4.37 at GOV 460). The work 

required pre-repair testing; the removal of the entire system from its foundation on the 

ship and its transport to the contractor’s facility for work; the inspection, repair and 

replacement of certain parts; re-installation of the system on the ship; and post-repair 

testing (id. at GOV 461-70). Section 3.1.1 required the use of a technical representative 

of North American Crane and Equipment (the OEM) to perform and oversee much of the

work:

Provide the services of a North American Crane and 

Equipment Manufacturer Technical Representative to 

perform pre-repair testing, condition assessment, repair 

oversight, final adjustments and operational load tests 

of equipment listed in 1.3.

(Id. at GOV 461) The Work Item also included contact information for the “known 

source” for the technical representative “listed in 3.1” for “North Pacific Crane 

Company” (NPCC) (id. at GOV 471).7

 North American Crane and Equipment is the 

 5 The change order in the Rule 4 file is a copy that is unsigned by NASSCO, but there is 

no dispute that it was agreed upon by both parties. This will be an all too common 

occurrence in this appeal.

6 As those who routinely deal with the Navy well understand, its use of terms is 

oftentimes obscure to the uninitiated. A “Q” test requires verification and 

documentation from a qualified technical representative; the requirements of a “V” 

test are satisfied by the presence of a qualified tradesperson, trade supervisor, or 

inspector (R4, tab 4.34 at GOV 440). 7 We note that this refers to Section 3.1, rather than Section 3.1.1, in which the Work 

Item sets forth the requirement for a manufacturer’s technical representative 
5

company that manufactured the davit and NPCC is essentially the same company (see 

R4, tab 4.44 at GOV 497).

III. Performance

NASSCO subcontracted with AIT to perform all of the work on the boat handling 

equipment repair for the DO through a purchase order dated September 23, 2016 (see R4, 

tab 3.4 at GOV 188; app. supp. R4, tab A-52).8 Shortly before the purchase order was 

issued to AIT, but in plain anticipation of it, AIT reached out to NPCC to obtain an 

estimate for the work its technical representative would perform. NPCC estimated that 

for its role in the inspection and removal of the SLAD, its re-installation, and the load 

test, it would charge $1,475 per day plus marked-up travel and living expenses for the 

technician. It anticipated that inspection and removal would take six days while the 

re-installation and load test would be about the same, though perhaps shorter by a day or 

two. (App. supp. R4, tab A-5 at 819

) On September 30, 2016, AIT issued a purchase 

order to NPCC for the six days of work necessary to inspect and remove the SLAD. This 

purchase order did not encompass the technician’s involvement in the re-installation and 

testing of the repaired SLAD. (See id. at 82)

The Bulkeley entered its period of “Selected Restricted Availability” (SRA)10 and 

contract period of performance began on October 17, 2016 (see R4, tab 2.2 at GOV 153 

(referencing period of performance); R4, tab 4.32 at GOV 424, tab 4.33 at GOV 427).

A. The Pre-Repair Test

The WI required a test of the SLAD using the Bukeley’s rigid hull inflatable boat 

(RHIB) before the SLAD was removed from the Bulkeley so that any previously 

 

(Section 3.1 does not refer to a technical representative (see R4, tab 4.37 

at GOV460)) and that the technical representative in Section 3.1.1 is from North 

American Crane and Equipment, rather than North Pacific Crane Company.

These differences are not significant.

8 Both parties agree that AIT and NASSCO entered into this subcontracting arrangement, 

though neither cites to the actual subcontract in the record (see app. br. at 10; gov’t 

br. at 14) and we have not seen it in the record.

9 NASSCO’s supplemental Rule 4 file has no Bates numbers, though the tabs are 

bookmarked in the large pdf files that comprise them (AIT submitted its 

supplements in three batches). Our citations to page numbers are the pages in the 

larger pdf files. Thus, for example, the first page following tab A-2 in appellant’s 

supplemental Rule 4 file, would be page 33.

10 Our understanding from the context of its use is that the SRA is the period that a 

warship is taken out of regular service with the fleet and is available for depot 

repairs and overhaul.
6

undiscovered problems with the SLAD might be identified and addressed (R4, tab 4.34 

at GOV 437, GOV 441). As noted above, under the QG version of the WI that was 

applicable when performance began, the technical representative of the OEM, NPCC, 

was required to be present during the test. The test was scheduled by NASSCO to occur 

sometime between November 8 and November 22, 2016 (R4, tab 4.34 at GOV 435, 437). 

NASSCO asserts in its brief that the date of the test was moved up to October 14, 2016 at 

the direction of the Navy (app. br. at 11 ¶¶ 31-32 (citing R4, tab 3.7 at GOV 212-15)). 

The cited portion of the record does not support this finding. We read it to indicate when 

the SLAD test and others would be conducted in light of changes to the schedule, without 

any indication of which entity changed the schedule (see R4, tab 3.7 at GOV 212-15).11 

Indeed, because the opening email in this discussion was one from Navy personnel 

making sure that the Navy didn’t ‘drop the ball’ in light of the schedule changes (see id. 

at GOV 215), we read it, more likely than not, to indicate that it was the Navy that was 

reacting to NASSCO’s decision, rather than the other way around.

On October 13, 2016, NASSCO submitted “condition found report” (CFR), 

number 133, to the Navy, informing it that it would be unable to complete the pre-repair 

test of the SLAD before the RHIB was taken off the Bulkeley for its own repairs because 

the NPCC representative would not be available during that time period. The CFR 

requested that NASSCO be allowed to conduct the VG version of the test (which did not 

require the presence of the NPCC representative), instead. After some staffing of the 

request, Mr. Tony Stevens, the Navy’s project manager for the Bulkeley overhaul, 

approved it, and directed the issuance of a no-cost modification to the contract to permit 

NASSCO to perform the VG version of the test. (R4, tab 4.2, tab 4.34 at GOV 435, 

GOV 437-40)12 He did this through Request for Contract Change (RCC) 45G (R4, 

tab 4.34 at GOV 437-38). This RCC was more formally adopted by the Navy in Contract 

Modification 1C (Mod 1C) with an effective date of November 16, 2016, though signed 

by the CO on January 11, 2017 (see R4, tab 2.2 at GOV 151-56). Though titled a 

bilateral modification, the document that the Navy placed into the record is missing a 

signature on behalf of NASSCO (id. at GOV 151).

Mr. Stevens approved the change in the procedure because he perceived the 

schedule risk of waiting until the NPCC technical representative was available to be far 

more significant than any risks that would be incurred by the operation of the SLAD 

without the presence of the technical representative. Indeed, Mr. Stevens perceived the 

pre-repair test as a very simple test. (R4, tab 4.34 at GOV 438) Given the fact that the 

 11 To be sure, October 14, 2015 is a few days before the original POP was set to begin 

and just before the formal beginning of the Bulkeley’s SRA, but just because the 

Navy permitted work to begin early does not mean it was the party that required it.

12 The no-cost modification was actually approved by the parties on November 2, 2016, 

with the cost sheet having been prepared by NASSCO on October 25, 2016 (R4, 

tab 4.39 at GOV 490).
7

test appears to be a simple matter of the routine operation of the SLAD as intended when 

the Bulkeley was at sea or port, we find it hard to disagree. Moreover, there was 

absolutely no contemporaneous complaint in the record from AIT or NASSCO that the 

prospect of completing the work without the presence of the technician would be to its 

prejudice. To the contrary, this was AIT/NASSCO’s idea and request.

It is not so clear, moreover, that NPCC’s technician truly was unavailable to attend 

the pre-repair test as AIT had claimed then and NASSCO asserts now. The NPCC 

technician who ultimately was involved in the SLAD work, Mr. Gareth Thompson (who 

also was the individual who prepared the cost estimate to AIT on behalf of NPCC), stated 

in a declaration prepared for this appeal that AIT had never, in fact, requested his 

appearance for the pre-repair test and further averred that he would have been available in 

October 2016 were he requested (R4, tab 4.35 at GOV 449). In its own rebuttal affidavit, 

executed by Mr. Carl Spraberry, the founder and president of AIT, NASSCO directly 

disputes Mr. Thompson’s assertions (see app. supp. R4, tab A-53 at 127-28). 

Mr. Spraberry’s affidavit, however, is short on specifics regarding AIT’s efforts to secure 

an NPCC technician and is directly contradicted by some of the evidence it cites. To be 

sure (as Mr. Spraberry notes), AIT’s September 30, 2016 purchase order does seek the 

services of an NPCC technician for the pre-repair test, but there is no evidence of 

follow-up on the part of AIT actually seeking to schedule the attendance of Mr. Thompson 

or another employee of NPCC – certainly not before the October 13, 2016 CFR in which 

NASSCO stated that the NPCC technician was unavailable.13 Indeed, the first 

correspondence in the record from AIT to NPCC after the purchase order is dated 

October 28, 2016, and is an email from Mr. Earl Proetzel of AIT to NPCC titled, “USS 

Bulkeley – Need your techs qual letter ASAP.” The text of the letter was short: “We’ve 

asked ten times with no response. Navy needs your letter before we can begin repairs.” 

(App. supp. R4, tab A-1 at 14) Mr. Thompson responded shortly thereafter on the same 

day, apparently providing the required letter (id. at 15). NASSCO provided no evidence of 

the “ten” previous attempts to obtain that letter from NPCC. NASSCO did include its own 

 13 NASSCO, in fact, submitted an earlier affidavit from Mr. Spraberry in which he stated 

that the test was originally intended to be on October 7, 2016 – a week earlier – and 

that the Navy had moved it to the later date with no prior notice (app. supp. R4, 

tab A-39 at 294-95 ¶ 11). That is the general tenor of its brief as well (see app. br. 

at 10-11). If this is accurate, it undercuts NASSCO’s current suggestion that the 

problem was that the Navy made the test earlier than planned and that was why the 

NPCC representative could not attend. If the test was supposed to be on October 7 

and October 7 is when the Navy changed the date of the test, presumably, NPCC’s 

representative would have been present on that date. There is no evidence that this 

was even contemplated. Mr. Spraberry’s statement in the same affidavit that “we 

reached out to NPCC” on or about October 10, 2016 to determine whether they 

could perform on that date (app. supp. R4, tab A-39 at 295 ¶ 12) appears 

second-hand and without the supporting documents we would expect.
8

internal email traffic just before the October 28 email to NPCC. On October 26, 2016, the 

NASSCO project manager, Mr. Maurice (“Moe”) Adams, emailed Henry Bose and others 

at NASSCO that he was having trouble with AIT which, according to Mr. Adams, had not 

yet been in touch with NPCC and had conveyed to him that they did not know when they 

would be able to talk with the NPCC representative (id. at 12-13). This email was 

forwarded to Mr. Spraberry who, in turn, forwarded it to Mr. Proetzel who responded to 

Mr. Spraberry by criticizing Mr. Adams as “not a strong [project manager]” and stating

that “Joe” (presumably Joe Croteau, the production manager from AIT) had already 

reached out to NPCC and been told that the technician was “booked” with other matters, 

but that AIT should go ahead and disassemble the SLAD14 (id. at 12). Mr. Spraberry’s 

affidavit also cites an email from Mr. Croteau in support of the notion that AIT had made 

attempts to schedule the NPCC technician without success (app. supp. R4, tab A-53 at 127 

(citing, inter alia, app. supp. R4, tab A-19)). The email, however, places the blame for the 

NPCC technician’s unavailability squarely on NASSCO, with Mr. Croteau stating, 

“NASSCO prematurely set up the (Q)(G) paragraph 3.2 checkpoint without giving us 

enough time to contact the OEM . . .” (App. supp. R4, tab A-19 at 210).15 In light of the 

lack of specificity and first-hand knowledge on the part of Mr. Spraberry, and 

Mr. Croteau’s blaming NASSCO for setting the pre-maintenance test before he could 

contact NPCC, we conclude that, more probably than not, AIT made no real effort to 

secure the timely attendance of an NPCC technician for the pre-repair test or, for that 

matter, for the disassembly of the SLAD.

AIT performed the pre-repair test twice, as required by the VG version of the WI, 

on October 25, 2016 (R4, tab 4.34 at GOV439), which would have been just before the 

email string discussed immediately above.

16 Nothing of particular note appears to have 

 14 There is some slight support for this in the record in the email from Mr. Croteau to 

Mr. Spraberry, dated October 26, 2016, which we discuss immediately below, in 

which Mr. Croteau states that he had “called the tech rep yesterday” and been told by 

the NPCC representative that he did not need to be present for removal of the SLAD. 

Mr. Croteau also said that he had been trying to get the representative’s credentials 

for the prior three weeks, without success. (App. supp. R4, tab A-19 at 210)

15 This email also supports our earlier finding that it was NASSCO/AIT which moved the 

SLAD pre-operation test to mid-October 2016, and not the Navy.

16 NASSCO’s brief asserts that the Navy performed the test, itself, on October 14, 2016, 

but this assertion is supported by no reference to the record (see app. br. at 11 

¶ 40). We independently came across evidence to support this, however, in the 

affidavit that Mr. Spraberry executed in this matter (see app. supp. R4, tab A-39 

at p. 295 ¶ 13). In the case of the dueling affidavits, we find it more likely than 

not that the test was performed the same time that the documents were drafted 

which indicated the problems with the SLAD (that is, October 25) – certainly it 

would not reflect well upon AIT if it waited two weeks to draft them, rather than 
9

transpired during that test, although the SLAD plainly needed work as reflected in

CFR 267, dated October 27, 2016, which forwarded to the government an AIT report, 

dated October 25, 2016, detailing several apparent issues with the SLAD, which were 

presumably noted in the pre-repair inspection and test (R4, tab 4.6 (the CFR), tab 4.4 (the 

AIT report attached to the CFR)).

B. Removal of the SLAD and Work on it at AIT

At some point after the October 25, 2016 test,17 the SLAD was removed from the 

Bulkeley and moved to AIT’s nearby facility. NPCC’s Mr. Thompson visited on 

December 13, 2016 to perform a “condition assessment” and observed a completely 

disassembled crane (R4, tab 4.35 at GOV 446, GOV 450). While there, he performed his 

own evaluation of the state of the equipment and wrote a report about it (id. at GOV 450). 

This report was made part of CFR 753, submitted by NASSCO to the Navy (see R4, 

tab 4.11 at GOV 336 (the CFR), tab 4.10 at GOV 323-35 (the report)). In general, the 

report depicts a heavily corroded and poorly maintained SLAD that was in “pretty bad 

shape” and required substantial refurbishment (see R4, tab 4.10 at GOV 323-26).

While at AIT, Mr. Thompson also noted the parts that had been delivered by 

NPCC to AIT as part of their contract and found that they were complete (R4, tab 4.35 

at GOV 446) (this will be important later). Though he was in Norfolk the following 

week to work on the SLAD for a different Navy destroyer, AIT declined his offer to 

oversee their repair work on the Bulkeley’s SLAD. Mr. Thompson states in his 

declaration that AIT told him that it declined his offer to oversee the repair work due to 

budget concerns. (Id. at GOV 446, GOV 450) AIT denies this, but does not provide an 

alternate reason for eschewing his services (app. supp. R4, tab A-53 at 127-28). Thus, we 

find it likely that the expense of consulting with Mr. Thompson played a part in AIT’s 

limited use of him.

One subject of importance that arose during Mr. Thompson’s condition 

assessment during his initial visit was the state of the control console used to operate the 

SLAD. It had problems, as noted in AIT’s initial October 2016 report (see R4, tab 4.4) 

and Mr. Thompson’s December 2016 report (see R4, tab 4.10 at GOV 324), and it was 

 

completing them contemporaneously with the test. In the end, for our purposes, it 

does not particularly matter if the test were held on October 14 versus October 25.

17 NASSCO has provided a chronology of events in its supplement to the Rule 4 file 

which states that the “SLAD boom and console” were removed from the 

“Buckeley” [sic] on October 20, 2016 (app. supp. R4, tab A-52 at 100). That 

would be inconsistent with the October 25, 2016 date of the test. It would also be 

inconsistent with Mr. Proetzel’s email dated October 26, 2016 which referenced 

the removal of the SLAD being planned in the future (app. supp. R4, tab A-1 

at 12).
10

agreed that it should be shipped back to NPCC on the West Coast for its own overhaul. 

(R4, tab 4.35 at GOV 446)

Following the submission of CFR 753, the Navy issued a contract modification 

(Mod 03), which incorporated RCC 172, a request for contracting change that 

encompassed the extra work on the SLAD recommended by CFR 753 (see R4, tab 2.3 

at GOV 161 (incorporation of RCC 172 in entry number 583-11-001), tab 4.33 at GOV 431 

(identifying scope of RCC 172)). The terms of RCC 172 were agreed to by the parties on 

December 28, 2016 (R4, tab 4.33 at GOV 431). Mod 03, which was effective February 1, 

2017, but actually executed by the CO on March 1, 2017 (R4, tab 2.3 at GOV 157) also 

extended the time to complete DO 6 from February 17, 2017 to March 21, 2017 (id. 

at GOV 158). For unknown reasons, Mod 03 was not executed by NASSCO – or at the 

very least, the copy of the modification provided by the government does not include the 

signature of any person on behalf of NASSCO (id. at GOV 157). That does not mean, 

however, that we entertain any doubt that NASSCO agreed to its general terms about the 

increases in work, time to complete the job (which reflected NASSCO’s proposal), and 

payment. Notably, NASSCO presents no evidence that any of these things were in dispute 

at the time.

C. Re-Installation of the SLAD and Things go Downhill Quickly

At some point prior to February 15, 2017, the console, which had been shipped to 

NPCC for overhaul as planned, was returned; AIT performed the remainder of the shop work 

on the SLAD; and the SLAD was re-installed on the Bulkeley by AIT.

18 Mr. Thompson was 

present on AIT premises on February 15, but was unable to board the Bulkeley because, 

apparently, AIT and/or NASSCO had not secured security permission from the Navy to 

allow his presence (R4, tab 4.41 at GOV 494). The console controlling the SLAD was not 

installed on the Bulkeley until March 8, 2017 (R4, tab 4.36 at GOV 456).

1. The Console’s “Mother Board” Gets Fried by AIT

AIT had asked Mr. Thompson, around the time of his February visit, to return to 

Norfolk by March 5, 2017 for the operational test of the SLAD, and he had agreed to 

change his plans to make that happen (app. supp. R4, tab A-35 at 280). On March 3, 

2017, AIT submitted a CFR to the Navy, informing it that Mr. Thompson would not be 

available until March 15, 2017 and proposing that a Navy technical representative 

perform the duties usually performed by the OEM pursuant to paragraph 3.1.1 of the 

 18 NASSCO’s Request for Equitable Adjustment (REA) alleged that this all happened on 

February 14, 2017 (R4, tab 3.4 at GOV 189) and there is other evidence in the 

record supporting a finding that it happened about that time (app. supp. R4, 

tab A-19 at 203). There is no reason to question this.
11

WI.

19 Mr. Stevens of the Navy responded to the CFR on March 8, 2017, stating that it 

was “unsat” that the OEM technical representative would not be there, and that there 

should be a credit to the Navy for the contractor not doing what the WI required of it.20 

He further noted that the Navy’s supervision “will be available for oversight only and 

will not replace the OEM.” (R4, tab 4.18) The record does not reflect why 

Mr. Thompson was unavailable or when he would have informed AIT of the problem, 

although one of Mr. Spraberry’s declarations states that it was on or about March 3 (see

app. supp. R4, tab A-39 at 297). The evidence is that he was first on the Bulkeley for this 

trip on March 9, 2017 (R4, tab 4.36 at GOV 456).

On March 8, 2017, AIT installed and powered up the new SLAD control console 

on the Bulkeley without Mr. Thompson’s involvement and contrary to his advice that it 

not be wired and energized without him being present (see R4, tab 4.35 at GOV 447,

tab 4.36 at GOV 456; app. supp. R4, tab A-35 at 280 (email from Thompson telling AIT 

that if the SLAD were powered up in his absence, it would void the NPCC warranty),

app. supp. R4, tab A-47 at 52). Mr. Thompson came onto the Bulkeley the next day and 

observed wiring problems, which he addressed with an AIT employee (R4, tab 4.35 

at GOV 447). Mr. Thompson alleges that he was told by the AIT employee who installed 

the system that he was not a qualified electrician, but that he did not feel that he needed 

to be to do the job (R4, tab 4.35 at GOV 451). Although NASSCO insists that the system 

was not energized prior to Thompson’s arrival21 (see app. br. at 16 (stating that the 

system was energized on March 9); app. supp. R4, tab A-39 at 297), the balance of the 

evidence shows that this is wrong: Mr. William Paetz’s declaration, based on his 

contemporaneous notes, reflects that not only was the console energized on the 8th of 

March, but that it caused a “ground” fault that was detected by Bulkeley personnel. The 

AIT personnel on-site denied that the ground was related to the SLAD, but Bulkeley

personnel and the Port Engineer (Mr. Paetz) proved it to be a problem with the SLAD by 

isolating it through a circuit breaker. When Mr. Paetz looked at the wiring of the control 

panel that day, he saw that it was all white wires (similar in description to what 

Mr. Thompson noted on his investigation the next day) with no diagrams to show where 

the different leads belonged. (R4, tab 4.36 at GOV 456) Mr. Thompson also stated in his 

declaration that it had been energized the day before his March 9 arrival (R4, tab 4.35 

at GOV 447). NASSCO argues that a statement in Mr. Thompson’s declaration that he 

 19 We quote paragraph 3.1.1 verbatim earlier in the Facts section of this decision. It does 

not detail exactly what the oversight duties of the OEM are for the SLAD and 

console installation (see R4, tab 4.37 at GOV 461).

20 There is no evidence in the record that the Navy ever attempted to obtain this credit. 

Mr. Stevens, it appears, was just upset. 21 In its brief, NASSCO asserts that it was the Navy which energized the panel on 

March 9 (see app. br. at 16). This assertion is not supported by the portion of the 

record cited by NASSCO’s brief (see R4, tab 4.34 at GOV 443, cited by app. br. 

at 16), nor anywhere else in the record that we encountered.
12

had opened the panel on March 9, so that he could disconnect it if there were a problem 

when it was energized means that he was the first one to energize it and did so on that 

date (app. reply br. at 11, 22), but this is incorrect. In context, it is clear that 

Mr. Thompson had expected to energize the system when he arrived (consistent with his 

advice to AIT) and only discovered the truth after he opened the panel. (R4, tab 4.35 

at GOV 447)22

Unfortunately, because the wiring had been done incorrectly (with a 110 Volt 

alternating current lead being wired to a 24 Volt direct current portion of the card (see

R4, tab 4.35 at GOV 447)) and the system energized the previous day, the “mother 

board” on the console was already damaged beyond easy repair. NASSCO issued a 

corrective action request (CAR) to AIT to fix the problem with the console and to find 

the root cause. AIT’s response to NASSCO alleged that its electrician re-wired the 

console without the assistance of the NPCC representative because of scheduling 

problems making Mr. Thompson unavailable. It further alleged that NPCC had failed to 

provide it new directions for installation. That said, under the heading, “Preventative 

Action,” AIT stated that “ . . . AIT Marine will take additional measures when utilizing 

an OEM or technical representative required by a work item. Scheduling will be 

addressed as a priority and additional oversight is to be included when working with 

technical representatives.” (App. supp. R4, tab A-18 at 193) NASSCO’s investigation of 

the matter put the blame on AIT, stating that that the AIT “[w]orker failed to obtain any 

updated electrical drawing or schematics from” NPCC (app. supp. R4, tab A-23 at 221).

23

Thus, though NASSCO argues today that the damaged mother board was NPCC’s fault, 

in its internal correspondence, NASSCO concedes that AIT improperly installed the 

console and damaged it, which is our finding as well.

The damage to the console’s mother board required its replacement. Although 

Mr. Thompson and AIT worked together in the days after the problem was diagnosed in 

an effort to fix the motherboard,

24 and the parties searched for an available substitute, 

 22 Included in NASSCO’s supplement to the Rule 4 file is a chronology of events that 

puts this installation at March 9, 2017 (app. supp. R4, tab A- 52 at 113), but there 

is no identification of who wrote this or its basis and it is thus unpersuasive.

23 The NASSCO author of the report had significant enough concerns to recommend “an 

audit of current AIT jobs for proper workmanship” (app. supp. R4, tab A-23 

at 221).

24 Mr. Thompson’s daily fee went up to approximately $5,000 at this point (app. supp. 

R4, tab A-29 at 263-64). NPCC justified this increase due to the need to replace 

him on other projects so as to deal with the emergency on this one (id.; R4, 

tab 4.44 at GOV 498). Whether or not it was justified is beyond the scope of this 

appeal, but it cannot have been good for their relationship and, indeed, there is 

evidence from NASSCO that AIT withheld full payment on those invoices (app. 

supp. R4, tab A-26 at 241).
13

including the possibility of taking one from another Navy destroyer that was in port (see

R4, tab 4.36 at GOV 456; app. supp. R4, tab A-17), those attempts failed and it was 

ultimately decided that they needed another one to be fabricated by NPCC (R4, tab 4.34 

at GOV 443, tab 4.36 at GOV 456). NPCC did not have a board that was identical to the 

one that had been damaged, but had an upgraded console which the Navy paid for (since 

it was an upgrade), though it was agreed that NASSCO would absorb the cost of 

installing it (R4, tab 4.34 at GOV 443).

At some point later in March 2017, NASSCO issued a stop work order to AIT and 

directly hired NPCC to complete the work on the SLAD, apparently jointly with 

NASSCO personnel (R4, tab 4.34 at GOV 443). The console was repaired on about 

March 20, 2017 (id. at GOV 443).

2. More Problems Arise: the Brakes and Others

On March 16, 2017, NASSCO submitted CFR 376, informing the Navy that there 

was a rust hole on the SLAD’s brake actuator cylinder which would prevent it from being 

ready for sea trials the next day, and requesting a contract extension to repair it. 

Mr. Stevens denied the request, stating that the Navy would obtain a replacement part with 

an “RTR” (apparently using the Navy’s own replacement stocks) and that this issue would 

not hold up the sea trials, considering the fact that the “electrical issues” were the problem 

holding up the SLAD work. (R4, tab 4.21) Indeed, as noted above, the electrical issues 

were not resolved until March 20, which mooted the notion of sea trials on March 17, and 

this CFR is the last place in the record that we see any discussion of the hole in the brake 

actuator cylinder being a potential cause for delay.

On or about March 21, 2017, (now that the control panel was repaired) NASSCO 

and the Navy were running additional tests on the SLAD and discovered that the brake 

assembly had been improperly installed by AIT and which necessitated its removal and 

repair (R4, tab 4.34 at 443-44; app. supp. R4, tab A-24 at 230 (NASSCO internal fact 

finding report)). NASSCO removed the assembly, apparently returned it to AIT for 

repair, and then re-installed it by April 1, 2017 (R4, tab 4.34 at 443-44). NASSCO’s 

internal “Cause and Corrective Action Form” on the many problems it had with the 

SLAD attributed the brake assembly problems to the AIT technician having been in a 

rush when he did the work on it (app. supp. R4, tab A-23 at 221-22).

In addition to the brakes, there were problems during the last weeks of March 2017 

with hydraulic hoses leaking and leaks of hydraulic fluid around solenoids. These were 

repaired by the end of the month. (R4, tab 4.36 at GOV 458)
14

3. The Bad Blood Between NPCC and AIT

It is hardly surprising that, by the time NASSCO gave AIT the stop work order 

and had NPCC complete the SLAD work, NPCC’s relationship with AIT had badly 

deteriorated. Because one of the disputes between them has caused AIT to essentially

allege that NPCC was attempting to blackmail it and thus should not be trusted in today’s 

appeal (app. br. at 27; app. reply br. at 23), we will briefly touch upon it.

During his February 2017 visit to the AIT facility, Mr. Thompson observed a 

number of parts for the SLAD still in their original packaging from NPCC, which 

indicated that they had not been changed out as expected (R4, tab 4.35 at GOV 446-47). 

Mr. Thompson took photographs of these parts and shared them with AIT and NASSCO 

management (id.; R4, tab 4.44 at GOV 502-04 (the photos); see also R4, tab 4.43 

at GOV 496 (e-mail from NPCC dated March 24, 2017 forwarding photos to NASSCO)). 

He also raised the subject with AIT employees then and there (R4, tab 4.35 

at GOV 446-47; see also app. supp. R4, tab A-19 at 203, 208 (AIT’s perspective)).

Mr. Spraberry states in his affidavit that the extra parts allegations were false, and 

proven so by a NASSCO investigation, but gives little support for this conclusory 

statement (app. supp. R4, tab A-53 at 129).25 That remains NASSCO’s position now (see

app. br. at 17).

A month after the February 2017 visit, and after the wiring issues had come to a 

head, AIT employees alleged that, during that visit, Mr. Thompson suggested a quid pro 

quo, by which AIT would pay the money it owed to NPCC and Mr. Thompson, in turn, 

would draft a less damning report about the excess parts he discovered (see app. supp. 

R4, tab A-19 at 202-03). Mr. Thompson, for his part, denies these allegations, stating 

that he is not involved in “debt collection” or accounting (R4, tab 4.44 at GOV 497). 

Later in contract performance, NPCC would make allegations to NASSCO that AIT had 

failed to pay it invoices that were due and payable. A NASSCO employee looked into 

the matter and reported to his superiors that, for the most part, AIT had paid NPCC its 

 25 Mr. Spraberry’s affidavit references an email from a NASSCO procurement specialist 

as proof of this (see app. supp. R4, tab A-53 at 129 (citing app. supp. R4, 

tab A-26)). We have reviewed this email and it is primarily about billing disputes 

between AIT and NPCC (finding that AIT is primarily in the right about them), 

but conclusory, to say the least, about the parts dispute, merely stating that AIT 

“has the documentation to substantiate” its claim that Mr. Thompson’s assertions 

on this subject were baseless (app. supp. R4, tab A-26 at 241). Nevertheless, we 

also note that NASSCO’s internal investigation of the situation was summarized in 

its larger investigation of all of the problems with the SLAD and concluded that all 

of the parts required to be removed and replaced were, in fact, removed and 

replaced (app. supp. R4, tab A-24 at 230).
15

invoices in full except for those it disputed because of the increased rate NPCC charged 

for Mr. Thompson’s services (app. supp. R4, tab A-26 at 241). The Board has no need or 

inclination to determine who was in the right about the payments between AIT and 

NPCC as there is no allegation, much less evidence, that they had any bearing on the 

timeliness of the work, but they underscore the bad relationship between the parties. 

Similarly, we need not decide who was correct about the excess parts issue except that we 

have found no basis to question Mr. Thompson’s belief that it was a problem and that he 

was obliged to raise it with AIT.

In any event, the implication from NASSCO on the alleged quid pro quo 

conversation appears to be that Mr. Thompson’s greed regarding payments from AIT 

motivated him to misrepresent matters to the detriment of AIT unless it were willing to 

make payments. Though we suspect that payments from AIT to NPCC did arise in 

conversations between AIT and Mr. Thompson in February 2017 (we see them in later 

emails and in Mr. Thompson’s statement that AIT had declined further services from him 

in December 2016 for money issues), we also suspect that it is exaggerated by NASSCO. 

Our belief in this exaggeration arises from the fact that AIT did not internally document 

the alleged threat until a month after the fact, following the serious mutual recriminations 

regarding the console installation, when we believe such allegations (at face value) are 

serious enough to have merited immediate documentation, even if only for internal use. 

Moreover, the only direct evidence before us from any participant in the alleged 

discussion is Mr. Thompson’s declaration. NASSCO has not provided affidavits from 

any of the individuals who reported the alleged threats. We also believe it is highly 

unlikely that Mr. Thompson took the photographs of the excess parts in February 2017 

with the intention of blackmailing AIT with them: if they did not show what he alleged 

them to show, the photos would only hurt him and NPCC. Thus, in the end, the 

allegations regarding the quid pro quo demand are not particularly persuasive and do not 

give us reason to significantly discount Mr. Thompson’s written testimony on other 

matters, even though they underscore the dysfunctional relationship that developed 

between AIT and NPCC.

IV. The Job is Completed; Liquidated Damages and the Government’s

Agreement to Limit Them

As noted above, Mod 03 extended the date of contract performance until March 21, 

2017. On March 22, 2017, the CO sent to NASSCO a letter formally stating that the work 

on the Bulkeley was incomplete and that NASSCO was incurring liquidated damages at 

the contractual rate (see R4, tab 3.1). There were other problems with the Bulkeley

overhaul than just the SLAD repairs that are the focal point of this appeal. According to 

the letter, in addition to the problems with the SLAD, NASSCO had not yet completed 

work replacing passive countermeasures material that it had damaged while repairing the 

“Sliding Padeye Tilting;” had not yet completed the replacement of passive 

countermeasures materials on the bridge wings; and had not yet completed a tabletop 
16

repair (id. at GOV 177). NASSCO responded to the Navy’s letter on March 27, 2017, 

expressing that it took the matter seriously and that two of the four problems would be 

remedied by March 28, 2017, while the work on the sliding padeye tilting and the SLAD 

would be completed on March 31, 2017 (R4, tab 3.2).

According to NASSCO’s internal “fact finding” documents, the work on the 

SLAD was not, in fact, complete on March 31, but troubleshooting for the solenoid 

valves and hydraulic leaks led to the winch assembly being removed from the SLAD on 

April 3, 2017 and taken to AIT’s shop26 for repairs.27 Those repairs were done that day 

and the assembly was delivered to another contractor for a bench test, in which 

satisfactory results were obtained after NASSCO made further adjustments. The 

assembly was re-installed on the SLAD on the Bulkeley on April 5, 2017, at which point 

the Navy deemed the work complete. (App. supp. R4, tab A-24 at 231; see also R4, 

tab 4.34 at GOV 444 (government assertion that work complete on April 5, 2017))

April 5, 2017 was 14 days after March 21, 2017. Effective June 29, 2017, the CO issued 

a Modification 06 to the DO, assessing 14 days of liquidated damages against NASSCO 

in the amount of $457,450 total (R4, tab 2.6 at GOV 173-74).

On July 3, 2017, the Navy issued an internal “tasking memo” changing the 

availability date of the Bulkeley to May 9, 2017 to reflect the time that sea trials on the 

ship were completed. The memo provided that the “POP” (presumably, period of 

performance) for NASSCO remained “21 March 11” [sic]. (R4, tab 4.32 at GOV 424)

On July 7, 2017, the Navy and NASSCO met to discuss the liquidated damages. 

The Navy offered to reduce them by three days and to also offset $25,000 in 

“uncompensated work” from the assessed damages. In an email of that date, NASSCO’s 

Director of Contracts, Wayne Willey, wrote that “NASSCO accepts your offer of a 

reduction in 3 days damages and $25,000 for uncompensated work for a total of 

$123,025.00.” (R4, tab 3.3) NASSCO has submitted a declaration from 

Mr. John Anderson, its Senior Director of Business Operations, stating that the reduction 

in damages was based upon “a Navy calculation error – not due to settlement of this 

Appeal” (app. supp. R4, tab A-40). Mr. Anderson’s declaration does not indicate his 

relationship to Mr. Willey or the basis of his knowledge about the “settlement” discussion 

between the Navy and NASSCO, except for the unhelpful conclusory statement that he 

 26 Though we have previously found that NASSCO generally replaced AIT by NPCC to 

conclude the work on the SLAD, obviously AIT continued to play some part in the 

work performed.

27 NASSCO alleges in its brief that it would have removed the winch assembly two days 

earlier, but that the Navy held up its use of a barge and a crane because it was 

unwilling to open the necessary security gates over the weekend without 72 hours’

notice (app. br. at 18 (citing R4, tab 4.29)).
17

had personal knowledge of the matters in his affidavit (id.). We have not heard from 

Mr. Willey.

Ms. Tara Boyd, the administrative contracting officer (ACO) for the Navy, who 

was present during the discussions (and whose list of attendees does not include 

Mr. Anderson), states that the discussions between NASSCO and the Navy were 

conducted with the understanding of both parties that they were undertaken to avoid 

NASSCO’s filing an REA. (R4, tab 4.33 at GOV 433-34)

Fourteen days of liquidated damages at the contractual rate of $32,675 per day 

minus the three days and the $25,000 offset agreed to by the parties’ sums to $334,425. 

Effective July 7, 2017, the CO issued Modification 07 to the DO, reducing liquidated 

damages to $334,425. Modification 07 was not executed by NASSCO. (R4, tab 2.7 

at GOV 175-76)

On November 27, 2017, NASSCO submitted to the CO a document entitled a 

Request for Equitable Adjustment, passing through28 the claim of AIT for the sum of 

$334,425 (R4, tab 3.4). There was some back and forth between the parties, with the 

Navy seeking additional information and NASSCO and AIT responding (see R4, 

tabs 3.6, 3.7) and on August 10, 2018, the CO denied the REA (see R4, tab 3.9). On 

June 4, 2019, NASSCO submitted a pass-through claim on behalf of AIT for $334,425 

(see R4, tab 3.11). On August 16, 2019, the CO issued a final decision denying the claim 

(R4, tab 3.14). NASSCO has filed a timely appeal.

DECISION

There is much to unpack here. We will address the Navy’s accord and satisfaction 

defense first since it had the potential to limit the scope of the litigation (but it did not). 

We will then move to the question of whether the Navy, by allowing AIT to proceed 

without NPCC’s presence on certain occasions, took on the responsibility for assuring the 

quality of AIT’s work. It did not. Next, we are presented with the legal question of 

whether it is the Navy or AIT which must bear responsibility for the wrongs allegedly 

committed by AIT’s subcontractor, NPCC. We find that since AIT, not the Navy, had 

privity of contract with NPCC, the relationship was AIT’s (and thus, ultimately, 

NASSCO’s) responsibility. Even if it weren’t, we further find that, as a factual matter, 

AIT was the party responsible for the many failures in workmanship that delayed the 

work on the SLAD; not NPCC. Finally, we find that the imposition of liquidated 

 28 As noted earlier in this opinion, because the challenge before us is to the liquidated 

damages that the Navy asserted against NASSCO, there is no reason the claim 

needed to be a pass-through since the costs were, in fact, imposed directly on 

NASSCO as far as the Navy was concerned even if (as appears to be the case) 

NASSCO turned around and charged AIT for them.
18

damages was contractually proper and not to be set aside because the Bulkeley’s SRA 

was extended by the Navy beyond the contract’s period of performance.

I. The Principle of Accord and Satisfaction Does Not Limit the Navy’s Potential 

Liability

The Navy argues that Mod 1C, which changed the terms of the contract to allow 

the pre-repair test to proceed without the OEM representative present, eliminated any 

potential liability against the government for the test proceeding in Mr. Thompson’s 

absence (gov’t br. at 50-52). This would be a solid argument if the Navy had presented 

evidence of a bilateral contract modification. Unfortunately for the Navy, as noted earlier 

in this opinion, the only signatures on the contract modifications that the government 

submitted for the Rule 4 file were government signatures, leaving us no evidentiary 

basis29 to find them to be bilateral. In such circumstances, we cannot find an accord and 

satisfaction. See Mil-Spec Contractors, Inc. v. United States, 835 F.2d 865, 868-69 (Fed. 

Cir. 1987) (no accord and satisfaction without written bilateral agreement).

II. The Navy’s Assessment of Liquidated Damages was Proper

As a general proposition, once the Navy demonstrated that the work was 

completed late, it was entitled to impose the liquidated damages set forth in the liquidated 

damages clause and the burden shifted to NASSCO to justify the delay in completing the 

project. See Ken Laster Co., ASBCA Nos. 61292, 61828, 20-1 BCA ¶ 37,659 at 182,855 

(citing OCCI, Inc., ASBCA No. 61279, 18-1 BCA ¶ 37,062 at 180,415); see also Sauer 

Inc. v. Danzig, 224 F.3d 1340, 1345 (Fed. Cir. 2000) (burden on contractor to justify 

delay).

A. NASSCO was Fourteen Days Late

NASSCO presents no real challenge to the Navy’s assertion that the Bulkeley was 

not complete until April 5, 2017 and that the DO, as modified by Mod 03, required its 

completion by March 21, 2017. That gets us 14 days, though the Navy ultimately only 

 29 As noted above, we found that NASSCO concurred with these changes since they were 

consistent with the CFR, and suspect that it would have signed the modification if 

so requested, but the Navy did not accomplish this. Similarly, the Navy’s signal 

failure to get a NASSCO signature on the compromise that reduced its liquidated 

damages liability by $123,025 is baffling to us: the email correspondence from 

NASSCO “accepting” the offer reads very much like it would if a bargain had 

been struck between the parties, and it would have likely precluded the present 

litigation.
19

sought 11.30 Nevertheless, we discuss the matter in somewhat more detail because of the 

Navy’s failure to obtain NASSCO’s signature on any bilateral modification setting the 

completion date for March 21 and because, in its reply brief, NASSCO argues that the 

March 21 date was not reasonable (see app. reply br. at 19). Although the Navy’s failure 

to present a bilateral modification signed by NASSCO prevents it from availing itself of 

the accord and satisfaction defense for issues preceding the change, under the facts 

present here, it does not change the fact that March 21, 2017 was the date that completed 

performance was due.

We reach this result because the Changes clause does give the Navy the right to 

make unilateral contract modifications changing NASSCO’s contractual obligations, so 

long as NASSCO is adequately compensated for the increased costs and time necessary 

to complete the contract that it identifies to the CO. See FAR 52.243-1. NASSCO, 

which we have found agreed to the terms of Mod 03 even if the Navy did not obtain its 

signature, made no challenge to is terms, which the Changes clause requires be done in 

30 days.31 See FAR 52.243-1(e). We further note that March 21, 2017 was a more than 

adequate amount of time for NASSCO to accomplish the additional work required by 

Mod 03: the SLAD and console were ready for re-installation in early March, 2017, and, 

if not for the missteps in “frying” the mother board, installing the brake assembly wrong, 

and the hydraulic hoses and solenoids, there is every reason to believe that NASSCO

would have had ample time to complete the work by March 21, 2017.

B. The Navy did not Assume Responsibility for Performing OEM Duties

NASSCO’s first argument as to why the Navy should bear responsibility for the 

delay is that the Navy’s “standing in” for NPCC during the pre-repair test and for 

oversight of the repairs means that it is responsible for all of AIT’s errors since the 

OEM’s responsibilities were to ensure that the work was done correctly and obviously 

 30 Because of this three-day difference, we need not consider whether the delays in 

making the Bulkeley available on the weekend of April 1 and 2 were the Navy’s 

responsibility or not.

31 The contention that NASSCO makes in its reply brief, that it was given, at most, only 

20 days’ notice of the new date because that was the date that Mod 03 was signed 

(see app. reply br. at 19), is misleading, to say the least. To be sure, this project 

was bedeviled by the fact that the paperwork was often a trailing item, but, as we 

found above, the parties actually agreed to the additional work and the timeline

that was reflected in Mod 03 in December 2016 (AIT would certainly not have 

ordered the new console without the Navy’s agreement to pay for it). The 

absolute lack of contemporaneous complaint by NASSCO over the imposition of 

the March 21, 2017 completion date only underscores this – a lack of complaint 

that carried over into the talks where the Navy reduced the liquidated damages by 

three days.
20

the Navy didn’t save it from its errors (app. br. at 22-24). This argument is as mistaken 

as it is overreaching, for it completely ignores what AIT/NASSCO requested the Navy to 

do; what the Navy agreed to do; and who bears responsibility for contractual 

performance. It also misapprehends the burden of proof: once the Navy proved that 

NASSCO was late in completing the contract, the burden of proof shifted to NASSCO to 

prove that the delay was caused by the Navy.

1. The Pre-Repair Test

First, as to the pre-repair test, the Navy did not agree to perform the duties of 

OEM. To the contrary, the request from NASSCO which the Navy granted was for 

NASSCO to be freed of its contractual obligation to have the OEM present and to have a 

lesser amount of supervision – the VG test. NASSCO does not cite to any portion of the 

record where the Navy affirmatively undertook to provide the kind of oversight that the 

OEM would provide, nor does it provide any evidence that the Navy undertook to be the 

guarantor of the quality of AIT’s work because it did no such thing.

Another fatal evidentiary shortcoming to this allegation is that NASSCO fails to 

offer any evidence that, even if a qualified technician were performing the OEM 

technician’s responsibilities at the test, it would have made a material difference to the 

many missteps that AIT made afterwards which delayed the installation of a functioning 

SLAD. Indeed, NASSCO’s own internal reports lay the blame on AIT, not the Navy, for 

the many missteps in the re-installation of the SLAD and not a single one that we have 

encountered alleges that the failure of the OEM representative to be present at the 

pre-repair test (or of a Navy technician acting like an OEM technician) led to any of 

AIT’s later problems. NASSCO asks us to ignore the particular facts presented in its 

reports (indeed, it is silent about them) and, instead, to look to Mr. Thompson’s 

statement32 that his presence at the pre-repair test was important and would help identify 

issues that were later encountered (app. br. at 22 (citing PFOF 108, which, in turn, cites

R4, tab 4.35 at GOV 452)). There are a number of problems with this approach, not the 

least of which is that Mr. Thompson made no statement regarding the pre-repair test on 

the page of the declaration cited by NASSCO (see R4, tab 4.35 at GOV 452). Where he 

did discuss the consequences of his absence from the pre-repair test, he stated that his 

absence from the pre-repair test made his condition assessment of the SLAD system less 

effective because it is hard to diagnose problems without seeing it in action (R4, tab 4.35 

at GOV 450). This is undoubtedly true, and consistent with common sense, but it has 

 32 We cannot help but observe that NASSCO’s hanging its figurative hat on 

Mr. Thompson’s declaration here is inconsistent with its general disagreement 

with most of what he has testified to, with NASSCO stating most clearly in its 

reply brief that, “Mr. Thompson’s declarations are contradictory, inconsistent with 

the record, and reference matters irrelevant to the present claim. . . . NASSCO 

materially disagrees with [their] contents.” (App. reply br. at 6)
21

nothing to do with AIT’s mis-wiring of the control panel; sloppy installation of the 

brakes, and the other defects in its workmanship that led to the delay, and NASSCO has 

presented no evidence that it did.

To the extent that NASSCO is obliquely arguing that the Navy’s alleged 

re-scheduling of the test, which prevented Mr. Thompson’s presence, is the issue, we find 

this also less than persuasive. We found earlier in this opinion, as a matter of fact, that 

AIT made no real effort to obtain Mr. Thompson’s presence for the pre-repair test and that 

there is considerable uncertainty over who scheduled the test and whether there was any 

objection by NASSCO to the schedule which gave it more time to work on the SLAD and 

reduced its out-of-pocket costs by eliminating its obligation to pay for Mr. Thompson’s 

presence. NASSCO cannot use the changed schedule of the pre-repair test as the basis for 

offloading the responsibilities of the OEM representative to the Navy. Moreover, this 

argument would suffer from the same evidentiary deficiencies that plague NASSCO’s 

argument that the Navy assumed responsibility for the OEM’s role in the pre-repair test: 

there is no evidence that the pre-repair test is where things went wrong.

2. Oversight of the Repairs

NASSCO appears to argue, in general, that the Navy also agreed to provide 

oversight of its repairs of the SLAD throughout the performance of the contract (see app. 

br. at 23 (“As it pertains to the repair oversight, by filling in for NPCC, the Navy had an 

affirmative responsibility to ensure the appropriate plans were being utilized and that the 

parts were being properly installed . . .”)). To the extent that this is meant to be an 

argument that the Navy made a wholesale agreement to fill in for NPCC for the entirety 

of the work on the SLAD and to be the guarantor of AIT’s work, it is without any 

evidentiary basis and may be easily rejected on these grounds.33

3. Oversight of the Installation of the SLAD and Console

Perhaps the NASSCO argument about repair oversight is meant to be limited to 

the re-installation of the SLAD and the console and the errors that attended AIT’s 

performance of these acts.34 Indeed, much of its briefing discusses this in more detail 

 33 It is also implausible: AIT’s original purchase order with NPCC was for six days of 

technician work – far less than would be needed if the OEM were to oversee all of 

its repairs – making it far from likely that, even if the Navy agreed to undertake all 

the duties AIT originally intended for the NPCC that it would extend that far. In 

fact, AIT affirmatively declined Mr. Thompson’s offer to be present for the repair 

work because it did not have the budget for it.

34 Notably, this argument is inconsistent with NASSCO’s factual contention that 

Mr. Thompson presided over the energizing of the panel on March 9 (a contention
22

(see app. br. at 23-24). This argument fails because the Navy project manager made clear 

that the Navy was stepping in for the OEM technician grudgingly, and in a limited 

capacity – a limited capacity that cannot be read to carry the obligations that NASSCO 

seeks to impose upon it.

As discussed above in the Facts section, when NASSCO, at the last minute, 

informed the Navy project manager, Mr. Stevens, that NPCC would not be present for the 

installation of the console, his response was not that the Navy would take over; rather it 

was that this was unsatisfactory and that the Navy’s role “will be for oversight only and 

will not replace the OEM.” Whatever Mr. Stevens meant by the rather hazy term, 

“oversight,” it was clearly a lesser role than what NPCC would have provided under the 

contract, as was evident by the fact that he clearly stated that the Navy was “not 

replac[ing] the OEM” – an important phrase not addressed by NASSCO. One thing he 

was certainly not doing was imposing upon the Navy the responsibility to guarantee 

AIT’s work as NASSCO would now have it.

First, he never wrote that the Navy would be the guarantor of AIT’s work, and to 

impose upon the Navy such a responsibility would be something of such significance that 

it cannot be implied from the record here. Indeed, though it is commonplace for 

government inspectors to observe (perhaps even “oversee”) work performed in 

government contracts (the nearest analogy we can find here), this observation on their 

part does not relieve the contractor of responsibility to do its work properly. Cf. Atterton 

Painting & Constr., Inc., ASBCA No. 31471, 88-1 BCA ¶ 20,478 at 103,586-87 (citing 

and quoting cases for the proposition that the erroneous approval of contractors’ work by 

government inspectors does not, by itself, constitute waiver by the government).

Second, even if Mr. Stevens had agreed to make the Navy responsible for AIT’s 

work, NASSCO has not proved that Mr. Stevens had the authority to impose such a

commitment upon the Navy. The DO, in fact, provides that only the CO had authority to 

make changes to the contract and there is no evidence here that the CO adopted any such 

change.35

 

contrary to our findings): the Navy could not be standing in for NPCC if NPCC 

were, in fact, there.

35 NASSCO argues that Mr. Stevens’s statement that the government should be refunded 

the money for the OEM to perform its duties for the installation of the console is

evidence that the Navy was assuming those responsibilities, itself (app. br. at 23). 

We read this more as a complaint that a service was not being provided than proof 

that the Navy was performing it. More to the point, the Navy never did get the 

money back because the CO (the only person with authority to make a contract 

change on behalf of the government) never sought it.
23

C. AIT and NASSCO are Responsible for any Problems with NPCC

The argument which NASSCO devotes most of its energy to advancing is that 

NPCC, being foisted upon it by the DO, was effectively a Navy agent and any problems 

to which NPCC contributed were thus problems for which the Navy should bear 

responsibility or, at the very least, for which NASSCO should be absolved of 

responsibility (app. br. at 25-30). To be sure, it dresses the argument in somewhat 

different clothing, arguing, as a general proposition that the Navy is responsible for any 

delays caused by a mandatory sole-source contractor (app. br. at 25-26); that NPCC’s 

supposed ineffectiveness made timely performance impossible (app. br. at 27-28); and

that the inclusion of NPCC as the OEM was a deficient specification on the part of the 

Navy (app. br. at 28-30), but it all comes down to a question of who is responsible for the 

performance of a subcontractor that is recognized by all to be the sole source available to 

perform the work. Lest there be any ambiguity: that responsibility here fell upon 

NASSCO.

Our analysis of the question begins with the general proposition that contractors 

are responsible for the work of their subcontractors as if it were done by them. This may 

be found in the FAR provision governing liquidated damages (see FAR 52.211-11(c) 

(applying the test for the contractor’s responsibility is the same as in the default clause of 

the contract which, itself, states as much)) and is recognized by the law as discussed 

below. There are many good reasons for this, not the least of which is that it is the 

contractor who has privity with the subcontractor and can impose discipline upon the 

subcontractor if it is not performing. The government does not have that ability.

NASSCO argues that there should be an exception to this rule for circumstances 

where the government has essentially dictated who the subcontractor will be and cites 

dicta in a non-binding concurrence-in-result in a Board decision from 1967 that a 

contractor “might well be relieved of responsibility” for the late delivery of an item in 

such circumstances (see app. br. at 25 (citing Bromion, Inc., ASBCA No. 12075, 67-2 

BCA ¶ 6543 at 30,403 (Spector, J., concurring in result))). It also cites dicta in a trial 

judge’s decision adopted by the Court of Claims for a similar proposition (see app. reply 

br. at 23 (citing Franklin E. Penny Co. v. United States, 524 F.2d 668, 676 (Ct. Cl. 1975))

and a 1975 case from the Department of Commerce Board of Contract Appeals that it 

concedes is “not completely analogous” (see app. br. at 26 (citing Electro-Nav, Inc., 

DCAB No. NOAA-1-74, 75-1 BCA ¶ 11,162)). These cases (and one other case from 

NASSCO’s reply brief that we will discuss later) do not make a very persuasive case.

We dispose of the last case first, given that NASSCO concedes that it is not 

directly on point as it involved a warranty that a part was available on the open market 

when it was not, and, being from the Department of Commerce Board of Contract 

Appeals, it is not binding upon us in any event. Similarly, the concurrence in Bromion is 

not binding upon us because it is a concurrence-in-result and the Board’s practice is that 
24

concurrences-in-result do not establish binding precedent. Moreover, the cited portion of 

the Bromion concurrence-in-result and the cited portion of the Franklin E. Penny

decision from the Court of Claims are both dicta from more than 40 years ago. They do 

not engage in any analysis, offer any rationale, or cite any law in support of their 

statements. Other binding decisions directly on point, however, come to a different 

conclusion and demonstrate the speculative opinions voiced in the cases cited by 

NASSCO to be outliers which the law has passed by.

In 1964, three years before Bromion, in Federal Television Corp., ASBCA 

No. 9836, 1964 BCA ¶ 4,392, we squarely rejected an argument that the prime contractor 

was not responsible for the behavior of a subcontractor that was the sole source available 

as a result of the government’s requirements, quoting the default clause and noting that 

the clause “contains no exception based upon the subcontractor being a sole source.”

1964 BCA ¶ 4,392 at 21,217. Federal Television was cited with approval for this 

proposition by the Board in Fuller-American, a Joint Venture, ASBCA No. 19629, 75-2 

BCA ¶ 11,438 at 54,514.

The next significant decisions from us on this subject matter after the Bromion

concurrence came in two opinions issued within two months of each other in 1974: 

Therm-Air Mfg. Co., ASBCA No. 17128, 74-2 BCA ¶ 10,652, and Datametrics, Inc.,

ASBCA No. 16086, 74-2 BCA ¶ 10,742. Therm-Air, which was first, involved a contract 

which, for all practical purposes, required the use of air compressors made by a single 

company, Carrier. We recognized that appellant’s bargaining power with Carrier was 

“limited,” but nevertheless denied it relief because, “[d]oing business with Carrier was a 

risk which appellant assumed when it undertook its contract with the government, and 

this risk included the possibility of failures attributable to vendor workmanship 

deficiencies.” 74-2 BCA ¶ 10,652 at 50,583. Datametrics, coming shortly thereafter, 

acknowledged the difficulty a sole-source subcontractor might impose upon the prime 

contractor, but came to the same conclusion as Therm-Air, denying relief: 

Here appellant has complained that at times it was delayed 

and incurred increased costs because its [sole source] 

suppliers delivered unsatisfactory items. The evidence 

supports this contention . . . . However, under the 

circumstances the problem is solely between appellant and 

the suppliers. The government has no privity of contract with 

the subcontractors and has no control over them. Appellant 

has both. We are not unmindful that our decision in this 

regard may seem to ignore the economic power which a “sole 

source” wields, or at least may wield, if it desires to do so. 

We do not ignore this fact, but rely instead upon the 

proposition that it is a fact of life that this disparity in 

bargaining power exists; and that no contractor is forced to 
25

accept a contract containing designated “sole sources.” The 

contractor can and should make its contract with the supplier 

in such a fashion that the contractor has recourse against the 

supplier for the furnishing of improper items . . . 

74-2 BCA ¶ 10,742 at 51,102 (citing Therm-Air, 74-2 BCA ¶ 10,652).

The law on the government’s obligations involving sole-source suppliers has 

continued to move in a different direction than NASSCO argues. In Alabama Dry Dock & 

Shipbuilding Corp., ASBCA No. 39215, 90-2 BCA ¶ 22,855, we stated that, “[w]e 

consider the law clear that when the Government directs use of a sole source it represents 

only that the requirement of the contract can be met by use of the item and not that the 

item will be properly manufactured or delivered on time. . . . If appellant suffered 

damages as a result of the late delivery or improper manufacture . . . its recourse is against 

[the sole-source supplier], not the Government.” 90-2 BCA ¶ 22,855 at 114,811-12

(citing Cascade Electrical Co., ASBCA No. 28674, 84-1 BCA ¶ 17,210 at 85,682-83, and 

Environmental Tectonics Corp., ASBCA No. 21657, 79-1 BCA 13,796 at 67,578). This 

statement of law in Alabama Dry Dock & Shipbuilding was quoted with approval in the 

more recent case of Demusz Mfg. Co., ASBCA No. 55311, 07-1 BCA ¶ 33,463 

at 165,884.

Ironically, NASSCO cites our case of S-Tron, Inc., ASBCA No. 45890, 94-3 BCA 

¶ 27,249, in its reply brief for the notion that the government is responsible for problems 

with sole source contractors (app. reply br. at 23). But the case does not say this. Rather,

S-Tron follows the statement of law discussed above from Alabama Dry Dock & 

Shipbuilding, citing yet another case of ours for the proposition that, when the 

government designates a sole source for supplies or materials, “it warrants only that the 

source has the ability to produce the product, not that it will, or will do so without 

defect.” S-Tron, 94-3 BCA ¶ 27,249 at 135,777 (quoting Salisbury Special Tool Co., 

ASBCA No. 37530, 89-2 BCA ¶ 21,838 at 109,873).

Although these cases (including all those cited by NASSCO) involve the supplier 

of parts, as opposed to services as presented in our facts, the reasoning would be identical 

if applied to a sole-source provider of services. Indeed, such was the case in General 

Ship Corp. v. United States, 634 F.Supp. 868 (D. Mass. 1986), in which the district court 

addressed a dispute involving a contract which specified the use of an identified 

subcontractor for work on a ship. In that decision, the court applied much of the law 

discussed above and concluded that, in a subcontract for repair services, the most that 

could be imposed on the government was a warranty that the subcontractor was capable 

of performing the work. 634 F.Supp. at 869-70. Though the case is not binding upon us, 

we find it persuasive authority, consistent with our reasoning. Thus, with the exception 

of the warranty that the sole-source supplier identified by the government is capable of 

performing the work, the government makes no other warranties when such a 
26

subcontractor is identified by contract, and the prime contractor is as responsible for that 

subcontractor’s work as it would be any other subcontractor. Given the limits of that 

warranty, the government is not liable for the acts or omissions of a sole-source 

contractor who, though capable, does not meet the performance needs of the prime and 

the identification of such a sole source contractor would not make a deficient 

specification for which the government is liable. And, NASSCO does not argue that 

NPCC was not capable of performance, perhaps because NPCC completed the job at 

NASSCO’s behest when AIT was sidelined in late March.

D. The Delays Were AIT’s Fault, not NPCC’s, in any Event

Even if the law were different, and NPCC were effectively an agent of the 

government, we would still find for the Navy since the missteps were, as a matter of fact, 

the fault of AIT. To draw this conclusion, we need go no further than NASSCO’s own 

internal documents which, as discussed at greater length above, squarely cast the blame 

on AIT. The fried motherboard? According to NASSCO, this was AIT’s fault for not 

getting the wiring diagram before proceeding.36 The improper brake installation? Again, 

according to NASSCO, the responsibility for this rests upon AIT for its technician 

installing it in a rush. Despite bringing this appeal, NASSCO has never disavowed these 

conclusions nor expressed regret that it had NPCC complete the work. To be sure, there 

were other problems with the SLAD: the solenoids, the leaking hydraulic cables, and the 

leaky drum, but NASSCO has produced no evidence assessing blame for these problems

on anybody besides itself, much less blame on NPCC. In the absence of such evidence, 

NASSCO could not meet its burden of proof that the fault lied with NPCC – even if that 

conclusion would absolve NASSCO, which it would not.

III. The Liquidated Damages Clause and its Application was Appropriate

NASSCO’s final set of arguments challenges the use of the liquidated damages 

clause here. In particular, NASSCO argues that the $32,675 per day cost was so high as 

to not reflect a reasonable estimation of the damages to the Navy and that, since the ship 

was “99%” complete and the Navy “had access to 99% of the ship”, this was particularly 

so (app. br. at 31). NASSCO further argues that because the SRA was extended until 

May 9, 2017, the delay did not damage the Navy at all and should thus pay no damages 

(id. at 31-32). NASSCO’s arguments reflect a misunderstanding of what both liquidated 

damages and warships are for.

 36 Though AIT may blame NPCC for not giving it the wiring diagram beforehand (see 

app. br. at 23; app. reply br. at 13), it has produced no evidence that it sought the 

diagram and was refused by NPCC.
27

A. What Makes a Permissible Liquidated Damages Clause

A liquidated damages clause is enforceable as long as “‘the amount stipulated for

is not so extravagant, or disproportionate to the amount of property loss, as to show that

compensation was not the object aimed at or as to imply fraud, mistake, circumvention or

oppression.’” DJ Mfg. Corp. v. United States, 86 F.3d 1130, 1133 (Fed. Cir. 1996)

(quoting Wise v. United States, 249 U.S. 361, 365 (1919)); see also K-Con Bldg Sys., Inc. 

v. United States, 778 F.3d 1000, 1008 (Fed. Cir. 2015); Weis Builders, Inc., ASBCA 

No. 56306, 10-1 BCA ¶ 34,369 at 169,721. Similar proscriptions may be found in 

FAR 11.501(b), cited by NASSCO (see app. br. at 30). See K-Con, 778 F.3d at 1008

(including a citation to FAR 11.501(b) amongst other authorities in support of the general 

statement of the law). A fair summary of the law is that liquidated damages clauses are 

perfectly allowable so long as they do not appear to have been designed as a punishment 

for late performance but, instead, reflect an attempt to place a value on late performance 

in circumstances where ascertaining that value would be otherwise difficult, if not 

impossible. See DJ Mfg., 86 F.3d 1130; K-Con, 778 F.3d 1000; Weis Builders, 10-1 

BCA ¶ 34,369.

Indeed, liquidated damages clauses (which, of course, the contractor has agreed to) 

are such a rational response to uncertain damages that (at least in the federal system): 

A party challenging a liquidated damages clause bears the 

burden of proving the clause unenforceable. . . . That burden 

is an exacting one, because when damages are uncertain or 

hard to measure, it naturally follows that it is difficult to 

conclude that a particular liquidated damages amount or rate 

is an unreasonable projection of what those damages might 

be.

DJ Mfg. Corp., 86 F.3d at 1134 (citations omitted).

B. The Liquidated Damages Clause Here was Reasonable

It cannot be gainsaid that the purpose of a guided missile destroyer, like the 

Bulkeley, is to project American sea-power and that it does not do that very effectively 

when it is tied up to a pier in Norfolk, Virginia and cannot go to sea. How valuable that 

projection of power by a single guided missile destroyer is, is necessarily immeasurable,

37

 37 This makes it the kind of contract well-suited for a liquidated damages clause. See 

Priebe & Sons v. United States, 332 U.S. 407, 411 (1947) (cited by DJ Mfg. Corp., 

86 F.3d at 1133). Indeed, the value of the timely delivery of a naval warship was a 

classic case supporting the use of liquidated damages referenced by the Federal 
28

but one way to gauge it is to consider what the Navy is willing to pay for it. That amount 

would surely include the salaries of the Bulkeley’s officers and crew as well as its capital 

and other operational expenses, which would be significant. Hence, setting liquidated 

damages at the salary of the Bulkeley’s crew strikes us as a measured way of recovering a 

portion (and only a portion) of the value that the Navy has assigned to operational access 

to the ship. The clause’s limitation of damages to only 10% of the value of the DO only 

serves to make it more reasonable.

C. Liquidated Damages are Appropriate Even if the Bulkeley did not 

Immediately go to sea After Substantial Completion of the DO and Even if 

the Overhaul Was Largely Complete at the Delivery Date

NASSCO argues that since the overhaul was “99%” complete by the DO’s 

(revised) delivery date, it should effectively be considered substantially complete at this 

time (app. br. at 31). A major flaw in this argument is that, according to NASSCO’s own 

submission to the Navy in CFR 376, dated March 16, 2017, the Bulkeley was not ready 

for the sea trials apparently scheduled for the next day38 because of problems with the 

SLAD. Thus, NASSCO recognized that an inoperative SLAD meant that the Bulkeley 

would not be ready for sea trials. And since the sea trials were a critical last step before 

the end of the SRA, 39 the inability to perform them kept the Bulkeley from being 

available to the fleet when required. When a contract requires the return of a ship 

capable for sea duty, it cannot be said to be substantially complete if the ship is 

unavailable for that purpose, no matter what percentage of the work is done.

40

To the extent that NASSCO argues that there were no damages because the sea 

trials wound up taking place sometime after it completed its work on the Bulkeley, and 

thus the Navy was not harmed (see app. br. at 31-32), the argument founders on two 

shoals: first, the evidence before us in the form of CFR 376 implies that, had NASSCO 

 

Circuit in DJ Mfg. Corp. See 86 F.3d at 1137 (citing United States v. Le Roy Dyal 

Co., 186 F.2d 460, 463 (3d Cir. 1950)).

38 Except for CFR 376, the record does not tell us much about when the sea trials were 

scheduled and what effect NASSCO’s delays in completing the work on the 

SLAD had upon the Navy’s ability to schedule sea trials after that date.

39 Accomplishing the sea trials, in fact, is required by SLIN 0001BA. To NASSCO’s 

apparent benefit, the Navy did not require completion of the sea trials before 

halting the accumulation of liquidated damages.

40 Thus NASSCO’s citation on page 31 of its opening brief to our decision in Dick 

Pacific Constr. Co., Ltd., ASBCA No. 57675, et al., 16-1 BCA ¶ 36,196, is 

inapposite. In Dick Pacific, discrete, easily divisible portions of the project were 

complete and available for full use and, in the very limited facts presented by that 

case, we held that the liquidated damages clause should have broken out the 

damages with that potentiality in mind. See id. That is not the case here.
29

completed its work on time, the Navy was set to perform a sea trial on March 17, 2017. 

Second, and conclusively, it is black-letter law that the reasonableness of a liquidated 

damages clause is determined at the time that the parties enter the contract and that it is 

enforceable even if no damages are, in fact, incurred. See, e.g., Downing Electric, Inc., 

ASBCA No. 37851, 90-3 BCA 23,001 at 115,504 (citing Priebe & Sons, Inc. v. United 

States, 332 U.S. 407 (1947)). We perceive this as part of the bargain that the parties have 

struck: they have agreed that the government is not at liberty to increase damages 

beyond those that the liquidated damages clause imposes, regardless of the 

circumstances, and that neither may the contractor cite changed circumstances to reduce 

them. With this law in mind, it is immaterial whether the Navy would have actually been 

ready to put the Bulkeley to sea the minute the DO was scheduled to be completed; what 

was important under the terms of the liquidated damages clause was that the work on the 

Bulkeley was not completed when required by the contract.

CONCLUSION

The evidence supports a finding that NASSCO completed its work under the DO 

late by at least the 11 days for which the Navy exacted the compensation under the 

liquidated damages clause. The fault for this delay lies completely with NASSCO and its 

subcontractor, AIT. To the extent that NPCC bore any responsibility for the delay (which 

it did not), by law, the responsibility for NPCC’s missteps lies with AIT and NASSCO. 

Moreover, the liquidated damages clause was reasonable and lawfully applied. This 

appeal is denied.

Dated: March 29, 2022

J. REID PROUTY

Administrative Judge

Vice Chairman

Armed Services Board

of Contract Appeals

I concur I concur

RICHARD SHACKLEFORD

Administrative Judge

Acting Chairman

Armed Services Board

of Contract Appeals

MARK A. MELNICK

Administrative Judge

Armed Services Board

of Contract Appeals
30

I certify that the foregoing is a true copy of the Opinion and Decision of the 

Armed Services Board of Contract Appeals in ASBCA No. 62221, Appeal of Metro 

Machine dba General Dynamics NASSCO-Norfolk, rendered in conformance with the 

Board’s Charter.

Dated: March 29, 2022

PAULLA K. GATES-LEWIS

Recorder, Armed Services

Board of Contract Appeals