Editor's Notes

A contract clause establishing “disincentive deductions” was described as unusual. The clause authorized the government to withhold $2,700 per calendar day if the contractor failed to meet an interim milestone in the contractual construction schedule.

The defaulted contractor argued that the clause did not allow the government to withhold both the disincentive deductions and liquidated damages for late completion of the overall project. The Civilian Board of Contract Appeals disagreed.

The other case in this issue involved the commencement date of a claim limitation period. The date was established not by the contractor’s demand letters or change order proposals, but by a state statute defining when a public project owner must make final payment.