Sometimes, even the government’s design specifications are flawed. When the government’s design is flawed, the contractor may recover cost overruns caused by these flaws.
The Spearin doctrine, which comes from a 1918 construction case against the government, holds that a contractor will not be liable for loss or damage that result solely from defects in the plan, design, or specifications provided to the contractor. This doctrine has been applied for nearly 100 years to mean that the contractor will not be responsible for the consequences of defects in the plans.
A recent case before the U. S. Civilian Board of Contract Appeals applied the Spearin doctrine to a Bureau of Land Management project to widen a campground road in Alaska. The engineering firm hired to design the project noted early on that the digital terrain model the Bureau of Land Management provided was not accurate and requested additional funds to perform a new survey on which to base the design. The Bureau of Land Management refused and the engineer then recommended that “weasel words” be placed in the solicitation for construction work to warn potential bidders of possible inaccuracies in the model. The winning bidder, Drennon Construction, soon found that the plans and reports on which it based its bid were not accurate.
Drennon sued the government to recover cost overruns. The Board of Contract Appeals found in favor of the contractor. Some the Board’s key findings were:
- In addition to flawed plans, the soil borings did not accurately reflect site conditions that exacerbated the engineer’s design flaws;
- Drennon could not have anticipated the design flaws, primarily because the area was covered by snow at the time of bidding; and
- The Bureau of Land Management’s recommended construction methods were contrary to the manufacturer’s instructions.
Relying on the Spearin doctrine, the Board found that Drennon was entitled to delay damages and the additional cost of materials, both of which were caused by the government’s faulty design.
Given the clear design flaws, this case was still hard fought. Drennon was awarded the bid in August, 2009 and the Board ruled on the case in January, 2013. That is 3 ½ years of litigation to recover just under $200,000.
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