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When a contractor expends time and money attempting to comply with design specifications that fail to accomplish the owner’s performance needs, it is entitled to recover its costs from the owner on the basis that the owner breached its implied warranty of specifications.  A curtain wall contractor on a federal courthouse was entitled to an equitable adjustment for costs it incurred in redesigning wall systems that had conformed to the owner’s design specifications but which could not satisfy performance requirements for the walls. The owner, General Services Administration (GSA), argued that it had no liability to the contractor because the contract described the drawings as merely “diagrammatic” and put the design and engineering responsibilities for the curtain wall on the contractor.

The project A/E  rejected the system proposed by the contractor’s curtain wall subcontractor,  and required the wall to be redesigned at the subcontractor’s expense. GSA argued that the specifications were “performance specifications,” and that the contractor was required to do what it takes to design a wall that would meet the performance requirements of the specifications.  The contractor argued that it did not have discretion to meet the performance specifications by ignoring the detailed design details contained in the specifications.  Whether particular specifications are of the design or performance type often turns on the degree of discretion the contract provided the contractor in meeting the specification.

In this case, the contract documents stated that the drawing details were “requirements.” The contractor’s discretion was, therefore, confined by the requirements shown on the drawing details. Another section of the contract required the contractor to “provide shapes and profiles as shown” for aluminum members.    The Board of Contract Appeals, therefore, concluded: “We cannot agree with the Government’s argument that the drawing details were merely schematic, or that the written specifications subordinated the drawing details to the performance requirements.”

In trying to overcome the contractor’s right to rely upon the specifications, the owner argued that if there was a defect, it was patent (readily apparent) and one which the contractor had a duty to seek clarification of before submitting its bid.  Because the ambiguity was not found to be glaring, substantial or patently obvious, the Board rejected the GSA’s argument.  An ambiguity is only patent when a cursory examination would have revealed inconsistencies in the details of two drawings and where the inconsistencies could be resolved without reference to other drawings or written specifications.   Finally, the Board stated: “A reasonably prudent construction contractor is not expected to become an amateur structural engineer and hunt down defects in Government design drawings upon which the contractor has been told to rely,”  especially given the relatively short time for preparing bids.   For these reasons, the Board held that the contractor was entitled to recover its redesign costs from the project owner.  J.E. Dunn Construction Company v. General Services Administration, GSBCA No. 14477, 01- BCA 30,806, March 2000.

Comment on Case:  Spearin doctrine

The underlying principle of this decision is founded upon what is commonly referred to as the Spearin doctrine. In the seminal case of Spearin v. United States, 248 U.S. 132 (1918), the U.S. Supreme Court held that a contractor is entitled to rely upon the accuracy and adequacy of design specifications provided by the government, with the understanding that, if followed, they will produce a project meeting the performance requirements of the owner.  Moreover, that decision states that the government cannot disclaim the right of the contractor to rely upon the specifications by creating requirements such as site inspection in advance of bidding.  The Supreme Court stated that “if the contractor is bound to build according to plans and specifications prepared by the owner, the contractor will not be responsible for the consequences of defects in the plans and specifications (citations omitted).  This responsibility of the owner is not overcome by the usual clauses requiring builders to visit the site, to check the plans, and to inform themselves of the requirements of the work (citations omitted)”

The legal theory allocates the risk to the government when the specifications it furnishes are not suitable for their intended purpose.  It does not matter that the government was innocent of any negligence or wrongdoing.   What owner’s sometimes fail to realize is that their duty to the contractor is greater than the A/E’s duty to the owner.  It is not necessary for the contractor to prove negligence on the part of the owner or those for whom the owner is responsible in order to recover from the owner.  The implied warranty means what it says.  It is a warranty and can be breached even in the absence of  wrong doing or negligence.  Having incurred liability to the contractor, the owner may be unable to recover the cost of that liability from not all design errors are negligent ones.  Only those that result from the design professional’s failure to follow the generally accepted standard of care are deemed negligent. And the owner can only recover against the A/E if the A/E is found negligent.  In this same regard, professional liability policies for A/E’s only cover damages arising out of the A/E’s negligent performance of professional services.

Copyright 2001, ConstructionRisk.com, LLC – Virginia

About the author: Article written by J. Kent Holland, Jr.,  a construction lawyer located in Tysons Corner, Virginia,  with a national practice (formerly with Wickwire Gavin, P.C. and now with Construction Risk Counsel, PLLC) representing design professionals, contractors and project owners.  He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects.  He is publisher of ConstructionRisk.com Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932.  This article is published in ConstructionRisk.com Report, Vol. 3, No. 1 (Jan/Feb 2001).