Liquidated damages

About thirty-five years ago, I was working at a company which was the prime contractor for test equipment for one of the military services. However, one particular piece of test equipment, a digital multimeter (DMM) was a subcontracted item for which my company sought to win the follow-on production contract.

They won it and I became the "unit engineer" for that test instrument.

It was agreed by a signed contract with the customer that since the follow-on DMMs were going to be made to the same prints as the first batch had been made, that several known deficiencies of that first batch were still going to be present in the follow-on units. Those deficiencies would be addressed going forward, but for the time being at least, they would still exist.

One of the known issues was input capacitance in the AC voltage mode. It was specified as a maximum of 100 pF, but because of a really long piece of RG-188/U coaxial cable and the capacitance of the "AC converter" circuit board itself, the capacitance was actually 300 pF. This was acknowledged by the customer as a minor issue.



A one page agreement was drawn up to the effect that this specific concern was acceptable as thus described. This contract was signed by three company executives and the representative of the client.

Some time later, several months later, when it came time to run a full-performance confirmation test, I did the doing of the doings in front of the DCAS  inspector and all went well until we came to that input capacitance measurement.

When the 300 pF showed itself, the inspector was outraged. The fact that the input capacitance was triple the specified maximum sent him stalking away in such a state of fury, I actually feared he might have a stroke right then and there and literally die in a fit of apoplexy.

Shortly afterward, I was summoned to the department manager's office to be royally reamed for having let this situation come to pass. How dare I have let this happen?

I spoke of the one page agreement, but nobody knew about it. There was no record of it in the Contracts Department, there was no record of it in the Subcontracts Department, there was no record of it known to any department in the entire company. It had quite simply vanished.

Furthermore, since this entire debacle was obviously MY fault, I was told that I would be held personally liable for liquidated damages to the customer at the rate of five-hundred dollars per day until the input capacitance problem was solved.   

As it happened, my immediate supervisor had just left the company. His office had no door and because it was so soon after his departure, the contents of his office were still as he had left them. I thus discovered a personal talent I had not until that time suspected that I had: Burglar.

Staying very late until I was all alone, I used a large screwdriver to pop open the lock on the office desk's main drawer and found therein, the key to the file cabinet. I opened the cabinet and began going through it folder by folder, page by page, sheet by sheet.

I found a confidential review of my own performance. It read: "Not brilliant, but highly persistent. Does not err unless unduly pressed."  Well, at least now I'd learned something interesting.

Around midnight, after several hours of this searching and scouring, I found a copy of the missing contract where, in beautiful black-and-white, it stated the input capacitance agreement and bore the signatures of those three company executives, all of whom had subsequently resigned.

It was past midnight at that point, but I was in no mood for propriety. I telephoned my new supervisor knowing he'd be sound asleep and told him what I'd found, but of course, not how I'd found it. He wasn't angry at having been awakened, he was elated.

The next day, everything was sweetness and light. The department manager who had threatened me wanted to shake my hand for having solved the problem, but I refused. I was too angry for that.

In fact, I never did forgive him.

After this many years though, after some mellowing perhaps, if you ever read this, Hal, I forgive you.

John Dunn, P.E., P.C., is a consultant for Ambertec.