When Government Specifications Are Wrong, Preserve the Claim—Don’t Abandon the Contract
Few contract-administration problems are more frustrating than discovering that the Government’s specifications may not work.
The legal doctrine can appear contractor-friendly. Under appropriate circumstances, defective design specifications can support an equitable adjustment and may even excuse performance. The practical difficulty is preserving those rights while continuing to manage the contract.
Two recent board decisions illustrate dramatically different approaches.
In All Phase Services, Inc., the Department of Veterans Affairs awarded a contract to reroof numerous buildings at a VA medical center. The contractor identified what it believed was a design defect that could allow water to enter the roofing system. The VA consulted its architect and directed the contractor to proceed. The contractor ultimately stopped work and was terminated for default. The CBCA later concluded that the contractor had not proven the alleged specification defect or established that it excused its failure to perform.
Ralph Nash’s October analysis contrasts that result with KiewitPhelps, where a contractor encountered hundreds of design problems during construction of a major U.S. Strategic Command facility. Rather than abandoning performance, the contractor and Government developed teams devoted to processing changes, negotiated modifications as work progressed, and attempted to preserve unresolved cumulative impacts.
The practical difference is important.
When a contractor believes a specification is defective, merely identifying the problem once may not be enough. The contractor should create a disciplined record showing what requirement is defective, why it cannot produce the intended result, how the defect affects cost or schedule, what clarification or direction was requested, and what the contracting officer instructed the contractor to do.
If a cure notice or show-cause letter follows, the defective-specification issue should not suddenly disappear from the contractor’s response. Consistency matters. A contractor trying later to establish that a defect prevented performance will face difficulty if contemporaneous correspondence identified entirely different reasons for delay.
Continued performance also requires careful claim preservation.
A contractor directed to proceed may need to perform while reserving its position, tracking incremental labor, material, delay, inefficiency, subcontractor, and overhead impacts. Individual modifications should be reviewed closely for release language. Settling one discrete change should not inadvertently waive cumulative disruption or other impacts the contractor intends to preserve.
There are obvious limits. Safety issues, impossibility, funding concerns, or other circumstances can materially change the analysis. Contractors should not blindly perform dangerous or unlawful work simply to avoid default.
But self-help through unilateral work stoppage is exceptionally risky.
A defective specification can create a Government liability.
A poorly managed response to that defect can create a contractor default.
The objective is to preserve both performance and entitlement long enough to resolve the dispute through the mechanisms the contract provides.
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Disclaimer:
This article is provided for general informational and educational purposes only and does not constitute legal, construction, claims, safety, or government-contracting advice. A contractor’s obligation to continue performance and its entitlement arising from defective specifications depend on the contract language, nature of the defect, Government direction, safety implications, causation, notice, and specific facts.