{"id":898617,"date":"2021-04-01T12:09:06","date_gmt":"2021-04-01T18:09:06","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=898617"},"modified":"2021-04-01T12:09:11","modified_gmt":"2021-04-01T18:09:11","slug":"defective-design-liability","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/defective-design-liability\/","title":{"rendered":"Assessing Defective Design Liability on Federal Design-Build Projects"},"content":{"rendered":"\n<p>Dirk Haire, Adam Hamilton and Dana Molinari | <a href=\"https:\/\/www.consensusdocs.org\/assessing-defective-design-liability-on-federal-design-build-projects\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Fox Rothschild<\/a><\/p>\n\n\n\n<p>A common misconception by many government officials is that a <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/can-design-builders-rely-on-owner-supplied-specifications\/\" target=\"_blank\" rel=\"noreferrer noopener\">design-builder<\/a> is always responsible for every design error or omission on a design-build project.\u00a0 This article examines the actual liability standard applied by the courts and boards of contract appeals when a design defect arises on a federal design-build project.<\/p>\n\n\n\n<p><strong>Background:<\/strong>&nbsp;<strong>Design-Build Contracts and the&nbsp;<em>Spearin<\/em>&nbsp;Doctrine<\/strong><\/p>\n\n\n\n<p>Design-build contracts combine the design and construction elements of a construction project into one contract. \u00a0Design-build contracts often include two types of specifications: design and performance.\u00a0 Design specifications may set forth various parameters, such as\u00a0precise measurements, tolerances, and materials.\u00a0 In doing so, the specifications create a fixed \u201croadmap\u201d governing a contractor\u2019s performance of the project.\u00a0 Performance specifications, on the other hand, set forth \u201coperational characteristics\u201d to achieve a particular objective or standard, but generally leave the details to the contractor.\u00a0<\/p>\n\n\n\n<p>When the government provides a contractor with design specifications, typically as a portion of the \u201cbridging documents\u201d included in the solicitation, it impliedly warrants that those specifications are free of defects and, if properly followed, will facilitate a successful project build.&nbsp; The concept of implied warranty is best known as the&nbsp;<em>Spearin<\/em>&nbsp;doctrine, which developed from the seminal US Supreme Court case&nbsp;<em>United States v. Spearin<\/em>, 248 U.S. 132 (1918).&nbsp; Under the&nbsp;<em>Spearin<\/em>&nbsp;doctrine, a contractor will not be held liable for defects in the government-provided specifications the contractor was required to follow.&nbsp; As a result, despite the nature of a design-build contract, the government remains responsible for the&nbsp;<em>design<\/em>&nbsp;specifications it provides to the bidding contractors in the design-build solicitation.&nbsp; This fact is not always understood by government contracting officials.&nbsp; Since most design-build contracts are a combination of both design and performance specifications, determining the type of specification that caused the design defect is a paramount consideration in determining design liability.&nbsp;<\/p>\n\n\n\n<p><strong>Application of the&nbsp;<em>Spearin<\/em>&nbsp;Doctrine to Design-Build Contracts<\/strong><\/p>\n\n\n\n<p>Contractors regularly exercise broad discretion with respect to the specifications in design-build contracts, meaning the&nbsp;<em>Spearin<\/em>&nbsp;doctrine will only apply if the government substantially participates in developing specifications in a way that takes discretion away from the contractor.&nbsp; As such, courts and boards will typically deny recovery in cases where the contractor \u201cvoluntarily\u201d and substantially participated in drafting design specifications.&nbsp;<\/p>\n\n\n\n<p>The sections below discuss cases of contractor success in recovering against the government using defective design theories of recovery, as well as an examples of cases where a contractors were unsuccessful.<\/p>\n\n\n\n<p><strong>A.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cases Involving Successful Defective Design and Specification Claims<\/strong><\/p>\n\n\n\n<p><em>Metcalf Const. Co. v. United States<\/em>, 742 F.3d 984, 996 (Fed. Cir. 2014).<\/p>\n\n\n\n<p>In&nbsp;<em>Metcalf<\/em>, the government provided erroneous soils reports which caused the contractor to incur over $4.8 million in soil excavation costs.&nbsp; Specifically, the government issued a revised request for proposals which provided a \u201csoil reconnaissance report,\u201d stating it was \u201cfor preliminary information only.\u201d&nbsp; The report turned out to be wrong.<\/p>\n\n\n\n<p>At the trial court level, the Court of Federal Claims (COFC) held that the government was not liable for the removal of expansion soil because its investigative soil report was for \u201cpreliminary information only.\u201d&nbsp; On appeal, the Federal Circuit disagreed, holding that statement merely signaled \u201cthat the information might change,\u201d not that the contractor would bear the risk if the \u201cpreliminary information turn[ed] out to be inaccurate.\u201d &nbsp;Furthermore, none of the provisions requiring the contractor to check the work site as part of the&nbsp;<em>design-build<\/em>&nbsp;contract \u201cexpressly or implicitly\u201d warned that the contractor could not rely on the government\u2019s soil report or that the contractor bore the \u201crisk of error\u201d contained in the government\u2019s soil report.&nbsp; Simply put, under&nbsp;<em>Spearin<\/em>, the government remained liable for its own design error under this design-build contract.&nbsp;<\/p>\n\n\n\n<p><em>Drennon Constr. &amp; Consulting, Inc.<\/em>, 13 B.C.A. (CCH) \u00b6 35213 (Jan. 4, 2013)<\/p>\n\n\n\n<p>In&nbsp;<em>Drennon<\/em>, the Civilian Board of Contract Appeals (CBCA) decided in favor of a contractor who claimed the government\u2019s flawed geotechnical information caused it to incur unexpected costs when a hillside collapsed. &nbsp;The government argued that because of the design-build nature of the procurement, the contractor should be liable for the hill collapse that occurred during excavation.&nbsp; The CBCA disagreed, noting that the contractor\u2019s design had to fall within the confines of its own engineering firm\u2019s design, not the government-provided geotechnical information.&nbsp;<\/p>\n\n\n\n<p><em>Drennon&nbsp;<\/em>is an example of how an agency\u2019s involvement in project design during the solicitation stage of a contract can be the basis of a&nbsp;<em>Spearin<\/em>&nbsp;defective design claim.&nbsp;&nbsp;<em>Drennon<\/em>&nbsp;also exposes the common misconception that the government bears no liability simply because the federal contract is design-build.&nbsp; Indeed, a contractor may prevail on a claim arising from a design-build contract if it can demonstrate that it incurred damages caused by defects in specifications provided by the government.<\/p>\n\n\n\n<p><em>Appeals of \u2014 CDM Constructors, Inc<\/em>., ASBCA No. 60454, 18-1 B.C.A. (CCH) \u00b6 37190 (Oct. 24, 2018).<\/p>\n\n\n\n<p>The contractor in&nbsp;<em>CDM Constructors<\/em>&nbsp;successfully argued that it was entitled to an equitable adjustment for costs it incurred as a result of defective specifications contained in the Army Corps of Engineers\u2019 (\u201cCorps\u201d) concept drawings in a design-build contract.&nbsp; The Board concluded that, \u201cby providing the concept drawings, the Corps warranted that satisfactory performance would result from adherence to those drawings.\u201d&nbsp; Therefore, the Corps \u201cbreached that warranty\u201d when it later rejected the contractor\u2019s design that followed those concept drawings. &nbsp;The Corps argued that the drawings provided were not specifications because the contract did not require the contractor to comply with them.&nbsp; The Board rejected this argument, holding that these \u201cconcept drawings\u201d were indeed specifications and the contractor had to rely on them in order to price its proposal.&nbsp;<\/p>\n\n\n\n<p>The Corps further argued that the contractor\u2019s reliance on the concept drawings was unreasonable because the drawings were inconsistent with directives in the contract.&nbsp; The Corps contended that the directives took precedence over concept drawings. &nbsp;The board, however, found the concept drawings to be consistent with the contractual requirements.&nbsp; Therefore, \u201c[b]ecause the concept drawings were not trumped by inconsistent [contractual requirements], those drawings created an&nbsp;implied&nbsp;warranty&nbsp;that adherence to the drawings would result in satisfactory contract performance, which the Corps breached.\u201d&nbsp;<\/p>\n\n\n\n<p><strong>B.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Cases Involving Unsuccessful Defective Design Claims<\/strong><\/p>\n\n\n\n<p><em>In Re Lovering-Johnson, Inc.<\/em>, ASBCA No. 53902, 05-2 B.C.A. (CCH) \u00b6 33126 (Nov. 17, 2005).<\/p>\n\n\n\n<p><em>In Re Lovering-Johnson<\/em>&nbsp;involved government-drafted preliminary drawings.&nbsp; The drawings at issue were of drainage piping that included the pipe sizes and language that \u201cexpressly indicated\u201d that design concepts and information&nbsp;<em>must be verified<\/em>&nbsp;before development of final design by the contractor.&nbsp; The contractor failed to verify the government\u2019s design concepts, which turned out to be defective.&nbsp; The CBCA rejected the contractor\u2019s claim for failing to follow the contract requirements.<\/p>\n\n\n\n<p>As demonstrated in&nbsp;<em>In Re Lovering-Johnson<\/em>, a&nbsp;<em>Spearin&nbsp;<\/em>claim is not viable where a contractor has assumed responsibility to develop aspects of the preliminary drawings and specifications for design elements.<\/p>\n\n\n\n<p><strong>Conclusion<\/strong><\/p>\n\n\n\n<p>The government will often try to avoid liability in design-build contracts by assigning much of the responsibility for concept design to the contractor.\u00a0 However, design-build contractors do not always bear the risk for design errors.\u00a0 When the government plays a substantial role in developing initial designs during the solicitation process, design-build contractors assume less risk of design error liability and have a greater chance to succeed in recovering additional costs associated with defective government-provided specifications.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Dirk Haire, Adam Hamilton and Dana Molinari | Fox Rothschild A common misconception by many government officials is that a design-builder is always responsible for every design error or omission on a design-build project.\u00a0 This article examines the actual liability standard applied by the courts and boards of contract appeals when a design defect arises&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/defective-design-liability\/\">Continue reading <span class=\"screen-reader-text\">Assessing Defective Design Liability on Federal Design-Build Projects<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[9009],"tags":[9895,9039,284,10633,11446],"class_list":["post-898617","post","type-post","status-publish","format-standard","hentry","category-design-professionals","tag-advise-consult","tag-design-liablity","tag-design-professionals","tag-design-build-projects","tag-federal-design-build-projects","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Assessing Defective Design Liability on Federal Design-Build Projects - Advise &amp; 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