Too often I’ve heard, “we didn’t want to rock the boat, so we just discussed the problem, but didn’t provide written notice.” But, remember The Godfather – “It’s not personal, it’s strictly business.”
Under a contract to furnish and install HVAC piping for a U.S. Army training facility at Joint Base Elmendorf-Richardson in Anchorage, Alaska, the Contractor argued the contract drawings and specs lacked the design details necessary to perform the work. The Contractor submitted several RFIs.
The Government argued the Contractor must use a letter, not an RFI, to notify the Contracting Officer of design problems. The Board held the information conveyed in the Contractor’s RFIs was sufficient to notify the government of a design discrepancy and “the Board (and the government) should not elevate form over substance in evaluating the sufficiency of a contractor’s notice.”
The Government also argued that the Contractor bore the risk of performing the changed work before the CO responded to the Contractor’s notice. Holding in the Contractor’s favor, the Board reasoned the risk borne by the Contractor is the risk of an incorrect course of action. If the Contractor takes the correct course of action (i.e., if it performs the work exactly as the CO would have directed) the Government suffers no harm, so the Contractor bears no such risk. When the Contractor acts before the CO responds, the Contractor bears the risk of taking incorrect action. If you’re gonna act, make it the correct action.
This case did not decide which party was at fault for the missing design details (i.e., Spearin Doctrine). But, [spoiler alert] the Government doesn’t automatically bear such responsibility even if it is a design-bid-build contract.
Appeal of UNIT Company, Armed Services Board of Contract Appeals, No. 60581 (Feb. 12, 2018).
When You Can’t Recover from a Third-Party (The Economic Loss Doctrine)
Suppose that you (the Contractor) had extra costs and want payment for those extra costs from the designer.
Barbecue and Construction Contracts
While barbecue recipes can be short and simple, contracts can be long and complicated. Fundamentally, though, recipes are very much like contracts: what’s required, how much of each part/ingredient, in what order should they be assembled/added, when, and for how long?
Show Your Work
A mentor of mine once said that process and procedures can be more important than substance and results. Like solving a math problem, how you solve it is often more important than the answer itself. The same is true in resolving construction contract disputes with public owners.
Substandard is Not Defective
The government need not follow the industry standard. It can do less or more.
Hide, Seek, & Seek
Have you ever played hide and seek? If you are the seeker, do you win the game when you find the hidden person? Yes, of course! Unless, you’re a government contractor.
Contractor Schooled School
Have you ever done exactly what you were supposed to do, but it didn’t work and you were blamed anyway? Nevertheless, if contractors follow the owner’s plans and it still doesn’t work, the contractor may be without fault – this is as it should be.
Walk It Off, Keep Going
During a recent soccer game, my seven-year-old son took the ball squarely in the face. But, he walked it off and continued playing. Contractors must do the same with changes.
Are We There Yet?
Next time you close a deal, get the essential terms on paper and signed by all parties before it’s Miller Time.
Show Me the Money!
You told the guy to do the work, the work is done, and now it’s time for payment, right? But, you only told […]
