Where Navy’s plans and specifications for roofing work were less than clear, and the contractor reasonably interpreted the contract as calling for waterproof paint rather than multiple-ply flashing material, the Court of Appeals for the Federal Circuit found the contractor’s interpretation was reasonable and it was therefore entitled to recover its costs for installing the more expensive system the Navy directed it to install. In reaching this decision, the court in States Roofing Corp. v. Winter, 587 F.3d 1364 (Fed. Cir. 2009), stated that in evaluating whether the contractor’s interpretation was reasonable, the court “need not conclude that it was the only possible reasonable interpretation, or even the best one.” As explained by the court, “It is well established that if a drawing or specification is ambiguous, and the contractor follows an interpretation that is reasonable, this interpretation will prevail over one advanced by the Government, even though the Government’s interpretation may be a more reasonable one, since the Government drafted the contract.”
The issue concerned whether the contract required the contractor to use a three-ply flashing material rather than waterproof paint. The specifications were silent on this subject. A witness for the Navy testified that it the specifications for the roofing material were inadvertently omitted when the specification documents were prepared. The Navy argued, however, that the requirement for the three-ply system on the parapet walls was clearly shown in one of the drawings even though not shown in the specifications. The contractor filed a request for equitable adjustment (REA) for the extra costs it incurred installing the system the Navy ultimately required. When this was denied, the contractor appealed to the Board of Contract Appeals.
The Board denied relief. It found that the contractor failed to take account of the detail appearing on one of the drawings – which was one of 48 sheets of drawings included with the contract. That drawing, according to the Board, provided sufficient information that felt flashing material was required on the parapet walls, to render the contractor’s interpretation “not within the zone of reasonableness.” As an alternative ground for its decision against the contractor, the Board found that there was a patent rather than latent ambiguity in the specifications and drawings arising out of the references to “coats,” “layers,” and “plies” about which the contractor was obligated to inquire. As a patent liability the contractor would be required to inquire as to the problem.
In reversing the Board decision, the Court of Appeals found that in view of the evidence, including what the court considered to be weak testimony of the Navy’s witnesses concerning the drawing in question, the contractor’s interpretation of the contract requirements was within the zone of reasonableness. Factors considered by the court were that (1) waterproof paint had been used by another contractor on two panels of the roof prior to award to this contractor for the balance of the roof; (2) the contract omitted to include a specification addressing what material to use; (3) the one drawing that showed any detail was less than clear and on the Navy presented conflicting expert testimony as to its meaning; and (4) the contract used words such as “layers” and “coats” that were not so precise as to dictate the use of multi-layered felt material instead of paint. Finally, the court explained that it would give “due attention to the rule of contra proferentem, meaning the contract will be interpreted against the party that drafted it, i.e., the Navy.
About the author: J. Kent Holland is 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 also founder and president of ConstructionRisk, LLC, a consulting firm 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