Requests for Equitable Adjustment

When an owner provides design plans and specifications for building a project, there is an implied warranty that if the contractor follows those plans and specifications, a satisfactory result will be produced. This principle is called the Spearin doctrine, which comes from the United States Supreme Court case United States v. Spearin

Under the Spearin doctrine, if a contractor incurs additional costs due to the defective design of a project, the contractor may assert a defective specification claim, which may also be called a claim for breach of the implied warranty of design.

Generally, proving such a defective specification claim requires the contractor to show that the defective specification:

  1. was a design specification, not a performance specification;
  2. contained a latent (not obvious) error; and
  3. caused the contractor’s damages (e.g., additional construction costs).

Although it can be difficult to satisfy all three requirements, a recent Armed Services Board of Contract Appeals case–Appeal of KiewitPhelps–shows that it can be done. 

Continue Reading Contractor Wins on $40.7 Million Defective HVAC Design Claim

Disputes regarding a contractor’s scope of work are common. Frequently, there are times when a contract or solicitation is unclear as to whether a certain item of work is within a contractor’s scope.

In federal government contracts, if a contract is ambiguous as to whether a contractor must perform a specific item of work, the issue may turn on whether it was a patent or latent ambiguity. A patent ambiguity is one that is readily apparent or obvious. In contrast, a latent ambiguity is one that is hidden or could not be discovered through the exercise of reasonable care.

The distinction is important because if an ambiguity as to whether a contractor has to perform a specific item of work is patent or obvious, the contractor has an affirmative duty to seek clarification before submitting its proposal. If the contractor fails to seek clarification, the ambiguity must be construed against the contractor.

Continue Reading Change-in-Scope Claims: Patent vs. Latent Ambiguities

If a construction contractor working on a federal government project is impacted by a government-caused change, the contractor must take steps to preserve its right to obtain additional compensation or time to complete the project. In particular, a contractor must comply with the contract’s claim process. (Click here for the six most common contractor claims.)

Generally, there are three steps to obtaining additional money or time on a federal government project:

1. Submit a request for equitable adjustment: If the government causes a change to the project, the contractor should submit an REA that explains the change, how that change has impacted the contractor’s work, the amount of additional money and/or time to which the contractor is entitled, and backup for the amounts claimed.

Although a contractor is not required to submit an REA before submitting a formal claim, contractors frequently submit the REA first, because it can serve as a starting point for the contractor and the contracting officer to negotiate. The main downside to submitting an REA rather than a claim is that interest will not to start running until a claim is submitted. Also, there is no deadline for the contracting officer to make a decision on an REA.

Continue Reading How to Get More Money and Time on Federal Government Construction Projects