Several years back I blogged (#36) on how design-build contracting – combining design and construction responsibilities in a single phased contract – might impact a contractor’s liability for design defects where there is joint participation by owner and contractor in the design. I pointed out the approach taken in Coghlin Electrical Contractors, Inc. v. Gilbane Building Co., 472 Mass. 549 (2015), which held that because the owner has the ultimate decision on acceptance or rejection of the design, the design-build contractor is not a “guarantor against all design defects.”
Sometimes a design-build contractor is obliged to use an architect/engineer’s preliminary design as a template. (See Arco Ingenieros, S.A. v. CDM International, Inc., 368 F.Supp.3d 256, 259 (D.Mass. 2019), in which a design-builder was required to “use the preliminary designs to create final designs.”) In such cases, the Spearin doctrine – the owner’s implied warranty of sufficiency of design specifications (see Blog #24) – may still be in the mix. As described by AAB Joint Venture v. United States, 75 Fed. Cl. 414, 428-29 (2007), “the implied warranty is that the specifications will result in a satisfactory, acceptable, or adequate result; short of that, the specifications are defective and the contractor is entitled to an equitable adjustment.”
Because Spearin only applies to design specifications, a contractor’s Spearin claim turns on whether the specification in question is a true design spec – one that leaves no discretion to the contractor to deviate from it – or is, rather, a performance spec which leaves it to the contractor to figure out how to achieve a required performance level.
A recent Federal Circuit Court of Appeals decision, Balfour Beatty Construction, LLC v. Administrator of the General Services Administration, 2025 WL 798865 (Fed. Cir. March 13, 2025), sheds some light on the issue. The project was to construct and expand phase two of the central utilities plant for the Department of Homeland Security headquarters in Washington D.C. The design-build contractor in that case was presented by GSA with preliminary design drawings about 30% complete – so-called “bridging” documents – and was obliged both to validate the design and to complete it. GSA’s bid solicitation contained this caveat:
“The Bridging Documents are conceptual in nature and are intended to depict the overall intent of the project terms of general design concept, the major architectural elements, and describe the required performance of the other systems. As Bridging Documents they are preliminary in nature, are not fully coordinated and are not intended to indicate or describe the scope of work required for the full performance or completion of the project.”
The design-build contractor found errors in the bridging documents that required significant redesign – specifically, a drawing that directed the contractor to match an existing foundation thickness of 18 inches, belied by calculations from GSA consultants that called for a 24-inch foundation – and even that turned out to be inadequate. The contractor ultimately installed a 43-inch slab and submitted a claim for increased costs, which the contracting officer rejected. The Board of Contract Appeals upheld that rejection, concluding that the discrepancy “should have caused Balfour to raise the issue before contract award.” But the Court of Appeals disagreed. Finding that “the drawing is sufficiently definite to constitute a design specification,” the Court ruled that “there was an implied warranty with respect to the mat slab thickness.” Accordingly, the contractor was entitled to extra compensation for putting in a thicker slab.
[The contractor did not fare so well on its second claim, for additional costs related to meeting ventilation requirements when compliant generators were too large to fit in the building space. The Court upheld the Board’s rejection of this claim, noting that GSA had made clear to bidders that compliance with ventilation requirements must be assumed as the basis for bids. The Court ruled that “The ventilation requirements were set out as a performance specification, and therefore, no implied warranty attached.”]
Despite the outcome, it would be a mistake to read this case as approving of a bidder’s silence in the face of an obvious discrepancy in the bid documents. The safer course is to raise the issue with the owner before submitting a bid.
Sometimes a design-build contractor is obliged to use an architect/engineer’s preliminary design as a template. (See Arco Ingenieros, S.A. v. CDM International, Inc., 368 F.Supp.3d 256, 259 (D.Mass. 2019), in which a design-builder was required to “use the preliminary designs to create final designs.”) In such cases, the Spearin doctrine – the owner’s implied warranty of sufficiency of design specifications (see Blog #24) – may still be in the mix. As described by AAB Joint Venture v. United States, 75 Fed. Cl. 414, 428-29 (2007), “the implied warranty is that the specifications will result in a satisfactory, acceptable, or adequate result; short of that, the specifications are defective and the contractor is entitled to an equitable adjustment.”
Because Spearin only applies to design specifications, a contractor’s Spearin claim turns on whether the specification in question is a true design spec – one that leaves no discretion to the contractor to deviate from it – or is, rather, a performance spec which leaves it to the contractor to figure out how to achieve a required performance level.
A recent Federal Circuit Court of Appeals decision, Balfour Beatty Construction, LLC v. Administrator of the General Services Administration, 2025 WL 798865 (Fed. Cir. March 13, 2025), sheds some light on the issue. The project was to construct and expand phase two of the central utilities plant for the Department of Homeland Security headquarters in Washington D.C. The design-build contractor in that case was presented by GSA with preliminary design drawings about 30% complete – so-called “bridging” documents – and was obliged both to validate the design and to complete it. GSA’s bid solicitation contained this caveat:
“The Bridging Documents are conceptual in nature and are intended to depict the overall intent of the project terms of general design concept, the major architectural elements, and describe the required performance of the other systems. As Bridging Documents they are preliminary in nature, are not fully coordinated and are not intended to indicate or describe the scope of work required for the full performance or completion of the project.”
The design-build contractor found errors in the bridging documents that required significant redesign – specifically, a drawing that directed the contractor to match an existing foundation thickness of 18 inches, belied by calculations from GSA consultants that called for a 24-inch foundation – and even that turned out to be inadequate. The contractor ultimately installed a 43-inch slab and submitted a claim for increased costs, which the contracting officer rejected. The Board of Contract Appeals upheld that rejection, concluding that the discrepancy “should have caused Balfour to raise the issue before contract award.” But the Court of Appeals disagreed. Finding that “the drawing is sufficiently definite to constitute a design specification,” the Court ruled that “there was an implied warranty with respect to the mat slab thickness.” Accordingly, the contractor was entitled to extra compensation for putting in a thicker slab.
[The contractor did not fare so well on its second claim, for additional costs related to meeting ventilation requirements when compliant generators were too large to fit in the building space. The Court upheld the Board’s rejection of this claim, noting that GSA had made clear to bidders that compliance with ventilation requirements must be assumed as the basis for bids. The Court ruled that “The ventilation requirements were set out as a performance specification, and therefore, no implied warranty attached.”]
Despite the outcome, it would be a mistake to read this case as approving of a bidder’s silence in the face of an obvious discrepancy in the bid documents. The safer course is to raise the issue with the owner before submitting a bid.
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