LAW: THE CONTRACTO'S SIDE: Defective argument

Dewatering cofferdam runs into complications

Blog Entry August 14, 2012

Larry Caudle is a principal in Kraftson Caudle LLC, a law firm in McLean, Va., specializing in heavy-highway and transportation construction.

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Litigation involving defective specifications today typically centers on whether the specifications issued by an owner are design specifications or performance specifications. This distinction is significant because, as noted by the U.S. Court of Federal Claims in the case of Martin Constr., Inc. v. U.S., 102 Fed.Cl. 562 (2011), an owner warrants the former, but not the latter.  

The Martin Construction case involved a contract with the U.S. Army Corps of Engineers for construction of a marina at Lake Sakakawea in Garrison, N.D.

The design specified that Martin was to construct the cofferdam in two zones: an underwater granular fill zone and an above-water level zone composed of compacted earth fill. The specifications designated the materials to be used for both zones.  

By all accounts, Martin successfully placed the underwater fill and in the spring of 2008 it began dewatering the interior of the cofferdam in preparation for placing the earth fill. Martin started with a 4-in. pump, but when that failed to decrease the water level it brought in a 12-in. pump. When the larger pump likewise failed to reduce the water level sufficiently, Martin sought input from the Corps. The Corps eventually issued two modifications aimed at slowing the flow of water through the granular underwater fill, but neither remedy worked. Martin thus gave written notice to the Corps that it believed the design was defective, but the Corps refused to acknowledge any liability. The Corps also threatened Martin with a default termination for falling behind schedule. Several months later, the Corps followed through on that threat. In response, Martin filed a claim alleging defective design, which the contracting officer denied. Martin appealed.

The court observed that liability attaches to the government for defective design only if the contractor (i) relies on government “design specifications” and not merely “performance specifications” and (ii) fully complies with such specifications. In this regard, the court noted that design specifications are ones in which “the government sets forth in precise detail the materials to be employed and the manner in which the work [is] to be performed, and [the contractor is] not privileged to deviate therefrom.” Design specifications, the court explained, include “detailed measurements, tolerances, materials, i.e., [they] elaborate instructions on how to perform the contract.” By contrast, performance specifications merely set forth “an objective . . . to be achieved, and the successful bidder is expected to exercise his ingenuity” in selecting the means to achieve that objective.

The Corps’ specifications designated the underwater fill to be “State of North Dakota Type 7 aggregate or equivalent,” but also provided that the “contractor may utilize alternative materials, including recycled concrete, as along as the material is stable and free draining, and approved by the contracting officer prior to use.” The court noted that by directing the use of a specific material, the government set forth in precise detail the material to be used and the contractor had no choice but to provide the specified material. It further noted that while the contract permitted the use of “alternative materials,” the contractor’s discretion was limited and the contracting officer’s approval was necessary. The court thus concluded that the underwater fill requirements set forth in the contract was a design specification. According to the evidence presented, the court also ruled that Martin relied on a design specification and fully complied with the design specification to use North Dakota Type 7 for the underwater fill.

Although the decision in Martin Construction was a relatively easy one, contractors should realize that specifications are often part performance and part design in nature. In these instances, it is usually a “battle of the experts” to determine whether defective specifications or defective construction is the culprit. R&B

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