Sometimes the desired end result of the construction is not only to “be” something (like a bridge or a residence), but also to “do” something―to perform in a specified manner (like a “clean room” or waste water treatment plant). These are often called “performance specs.”
Courts have picked up this verbiage. To quote from Stuyvesant Dredging Co. v. United States, 834 F.2d 1576, 1582 (Fed.Cir.1987), “Design specifications explicitly state how the contract is to be performed and permit no deviations. Performance specifications, on the other hand, specify the results to be obtained, and leave it to the contractor to determine how to achieve those results.” This makes it sound as though a set of specs must be one or the other. The truth is that a given set of specs will often have elements of both.
The distinction is important when it comes to assigning blame for a project that doesn’t work out as planned. If the contractor implements the precise design he is given, then regardless of how he implemented it and regardless of whether the owner or the contractor dictated the means of implementing it, the contractor is off the hook. This is the so-called Spearin doctrine, named for the case of United States v. Spearin, 248 U.S. 132, 136 (1918) (“But if the contractor is bound to build according to plans and specifications prepared by the owner, the contractor will not be responsible for the consequence of defects in the plans and specifications”).
Not only does the contractor have no liability when he implements the specs he is given, but he is entitled to be paid for his work―even if the outcome is unsatisfactory. This is the teaching of Perkins v. Roberge, 69 N.H. 171, 173 (1897), in which a contractor “agreed in writing with the defendant to build a baker's oven and furnace in a workmanlike manner, in accordance with a plan and specifications furnished by the defendant. The oven was built by the plaintiff in accordance with the contract. It did not work in a satisfactory manner on account of the fault of the plans. The failure of the oven to work in a satisfactory manner being attributable to the defects in the plans furnished by the defendant, and not to the failure of the plaintiff to perform his contract, he is entitled to recover the contract price for the performance of his undertaking.”
The Spearin doctrine and the rule enunciated in Perkins apply to design specs, not to performance specs. Consequently, contractors often find themselves arguing that a relevant spec is design and not performance based. If, as some courts hold, design specs are those which eliminate contractor discretion as to the means and methods of implementation, the argument is a hard one to win. In my view, such a focus on discretion is overblown. The first question should always be whether the fault lies in the plans and specs themselves, or in how they were implemented ―and only in the latter case should we ask whether the means and methods of implementation were dictated or chosen.
Losing this argument is not always the end of the game for a contractor. As Smith, Currie and Hancock’s Common Sense Construction Law (5th ed. 2014) notes, “an owner still can be liable for a contractor’s unanticipated difficulties under a performance specification if the contractor shows that the owner-furnished performance specification was impossible or commercially impracticable to achieve. A performance specification is commercially impracticable if it can be performed only at an excessive and unreasonable cost.” I’ll be blogging on this at a later date.