- Posted by John P. Ahlers
- On December 3, 2018
The Supreme Court’s ruling in United States v. Spearin,  also referred to as the Spearin doctrine, is a landmark construction decision. The Spearin doctrine provides that the Owner impliedly warrants the information, plans and specifications which an Owner provides to a General Contractor. If a Contractor is bound to build according to plans and specifications prepared by the Owner, the Contractor will not be responsible for the consequences of defects in the plans and specifications.
In the design-build delivery world, many Owners and Contractors assume that the implied warranty is no longer applicable. This assumption does not apply if the specifications are hybrids. That is, if there are warranties in the specifications despite the fact that the project is “design-build” or if the Owner retains control over the design of the Project. Despite the title of “design-build,” public works entities often retain great control, direction and approval over the design-build project. The specifications and government design-build jobs are more extensive than in private design-build projects. Thus, design requirements contained in specifications are a two-edged sword. If the specifications are held to be design requirements even though the contract is a design-build contract, the design-build contractor cannot ignore them in its performance.  Similarly, the government cannot avoid warranty liability for such design requirements. The following cases demonstrate this principle:
• In Metcalf Const. Co. v. United States,  the Federal Circuit Court of Appeals held that government representations in an RFP for a design-build project effectively assigned the risk for differing subsurface site conditions to the government. The contractor did not assume the risk of significant errors in the pre-contract representations by the government concerning subsurface site conditions even though the contractor became contractually responsible for investigating site conditions once work began. The Metcalf contract contained a differing site conditions clause. The court concluded that the government had retained the risk for differing site conditions, despite the design-build procurement.
• AAB Joint Venture v. United States,  the contractor was awarded a design-build contract to construct a military storage base in Israel. The government provided specifications and after the construction commenced, the contractor submitted requests for information questioning the accuracy of the specifications. After the government responded to those RFIs, the contractor performed the earth work using three-inch stone fill as opposed to six-inch maximum stone fill as specified in the contract. The use of the smaller fill precluded use of the contract-specified density tests as the tests could not be used on the smaller fill. Therefore, the contractor sought an equitable adjustment as a result of the defective specifications and increased costs which was denied. The court found that the Spearin doctrine applied to design-build projects. It held that the purpose of the specifications is to serve as a guide to the contractor, “[t]o rely on a reasonable interpretation of the Contract.” The standard that must be met under 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.
• Drennon Contr. and Consulting, Inc.,  In this case, the contractor contracted with the Bureau of Land Management (BLM) to widen a road at a central Alaska camp ground. Widening the road required excavating a hillside and building a gabion wall along the cut. The hillside ultimately collapsed, and the contractor’s work was placed on suspension. Ultimately, the road was widened without the use of a gabion wall and the contractor sought recovery for its costs during the suspension period, as well as the cost of purchasing gabions which were no longer used. The contractor contended that the geotechnical information provided in the BLM solicitation was defective. BLM argued that the contract was a design-build contract and that the contractor was not entitled to any recovery.
Again, the court sided with the contractor, finding that the hillside would have collapsed regardless of the approach undertaken by the contractor. The court found that the inaccuracy in the engineering model contained in the solicitation, upon which the contractor based its bid, was defective and the contractor prevailed.
• Donohue Electric, Inc.,  the government specified in a design build contract that a particular machine would be used in a hospital and stated that a boiler of a particular strength would be able to operate the machine. As it turned out, however, the boiler of the specified strength could not run the machine as intended and the Board (VABCA) ruled that the government created an “implied warranty of specification suitability” regarding the strength of the boiler. When the government goes beyond basic performance requirements and issues detailed instructions, drawings or specifications on a design-build contract, the contract documents carry an implied warranty similar to the one that arises in the traditional design-bid-build contracting world.
• United States for Use and Benefit of Bonita Pipeline, et al. v. Balfour Beatty Const., LLC.  Here, a subcontractor sued the general contractor alleging breach of contract and breach of implied warranty. The subcontractor sought a summary judgment finding that the general contractor could not shift legal responsibility for its defective plans and specifications to the subcontractor. The general contractor provided incomplete design documents to the subcontractor at the bid stage, and expressly indicated that those design documents were incomplete. The subcontractor was awarded design-build structural steel, metal decking and other features. The parties agreed that the plans and specifications could be refined with further design. The subcontract contained language that the subcontractor would assume the risk of further change (“refinement”) of the plans and specifications and provided that the subcontractor was not entitled to additional costs for refinements resulting from the design build process. Instead, the subcontractor was only entitled to compensation for enhancement requested by the owner. During the project, the subcontractor sought compensation for design errors and changes. The subcontractor finished its work 290 days late.
The general contractor argued that the Spearin doctrine did not apply because this was a design-build project and the parties expressly acknowledged the plans and specifications were incomplete at the time of bidding. The subcontractor in turn argued that it acknowledged it assumed the risk that the plans and specifications would be “refined,” but the general contractor nonetheless impliedly warranted that the plans and specifications would be correct even if incomplete. The court held that the subcontractor’s position was persuasive, finding that the Spearin doctrine does apply to design-build projects. If the subcontractor could prove at the time of trial that the extra work was due to errors in the plans and specifications, not due to design work expected of the subcontractor under the design-build subcontract, the subcontractor would prevail. Because this was a motion for summary judgment, there were insufficient facts in the record for the court to determine what the bases of the extra work claims were.
The above examples all involved design-build contracts. Nevertheless, contractors could reasonably rely on the owner’s initial specifications in formulating a bid, further corroborating that the Spearin doctrine remains alive and well in the design-build delivery world.
 248 U.S. 132 (1918).
 Still Spearin After All These Years? Hinkle, MacPherson, Nagle Journal of ACCL Vol. 12 No. 1 (2018).
 Dillingham Const. N.A., Inc. v. US, 33 Fed. Cl. 495,502 (decision aff’d) 91 F3d 167 (Fed. Cir. 1996).
 742 F.3d 984 (Fed. Cir. 2014).
 75 Fed. Cl. 414 (2007).
 13 BCA ¶35213 (2013).
 VABCA No. 6618, 03-1BCA ¶32,129 (2002).
 2017 WL 2869721 (S.D. Cal. 2017).