Overview
Additional Resources in this Section:
It's not unusual to read a claim or an REA in the government contract area and see all of the bases for the contractors entitlement alleged to be caused by the government's "defective specifications."
In many instances this is just simply wrong, or there are other better alternative bases for the claim or REA.
The purpose of this resource paper is to briefly distinguish the other claim bases, as well as focus in a bit more on what really is a defective specification.
We have also referred you to several key cases that you may wish to review, as well as related additional resource papers.
The Defective Specification. What is it?
The concept is simple. When the government issues a specification for work on a contract that contains some level of detail, the expectation is that a competent contractor can perform to that specification using ordinary manufacturing or performance techniques.
There is no need for re-engineering of the specification. There is no need for proof testing of it before performance starts.
The government has already paid good money for that specification, and it's getting the advantage of lower bids by representing to bidders that the specification can be performed by ordinary manufacturing or performance techniques.
That's it – straightforward, is it not? But it is full of nuance, potential confusion, and overlap with other claim bases.
The Origin of the Defective Specification Concept
Most commentators in this area would say that the defective specification concept originated with the Spearin case in 1918. We are not sure that's correct, but that case is definitely worth reading to ground oneself on where the concept came from and what it covers or doesn't cover.
There's a citation for it below, and we have also listed several other key cases on this issue and shown excerpts of the key parts.
What it is Not
But as stated above, people tend to overuse the defective specification concept and label everything that comes out of a federal government contract that's a problem as a defective specification, entitling the contractor to additional money that it spent performing.
That's far too broad a use and completely unfair to the government, and completely contrary to the case law in this area. Take a look at the Federal Acquisition Regulations and see what you turn up about explanation of this key concept. The answer is nothing. And that's typical of the FAR – all procedure – and no help on substantive problems of government contracts.
So now let's talk briefly about common areas of misuse:
1. An Interpretation Dispute
An interpretation dispute is most often not a defective specification claim. Just because the specification is subject to several different interpretations, that does not mean it's defective. Indeed, most specifications are subject to several different interpretations.
That's the entire basis for the competitive bidding system. Tell the contractor that this is the specification that needs to be complied with and give them what details it needs from an engineering point-of-view, and then it's his job to pick the lowest cost approach and reduce his bid accordingly. This gives the government lower prices.
When the government asks for only one interpretation, that's a constructive change. The government is abridging the contractor's ability to perform to the lowest cost interpretation of the specifications.
2. A Government Furnished Property Issue
When the government gives the contractor materials to perform with, of any kind, and then the materials do not work in a satisfactory fashion, that's not a defective specification, but rather a government furnished property problem – – for which most contracts contain a separate clause. If they do not, there's other case law that helps the contractor on this point.
3. An Impossibility of Performance
Although some commentators might say utilizing a specification that's impossible to perform is a defective specification, we don't think that's a correct analysis. There's a whole separate body of case law dealing with impossibility of performance situations, whether they're objective, subjective, practical, economic, or actual. This is another area full of nuance. But it's not a defective specification problem.
4. A Simple Change Order – Directed or Constructive
There are many situations in which the government simply wants the work performed in a particular fashion. It doesn't really care what the specification says. It either disregards the specification, or comes up with some basis that the specification as interpreted or performed by the contractor is unsatisfactory.
The government either directs that the work be done in a particular way – – that's either a directed, or an informal change. Or the government can say if you don't perform it in the fashion we're telling you, we will reject the work – – that's a constructive change.
5. Differing Site Condition or Change Condition
This type of claim arises most often on land-based construction contracts. They have their own separate proof requirements and a separate construction contract-oriented clause. And the proof requirements at times favor the government. This type of claim is easily confused with a defective specification because the contract does not work the way it is written, but it does not work because of the conditions in the location of work, not because of a problem with the contract's design elements. Or in some instances, it could be both a defective specification and a differing site condition!
All of these situations above may very well be compensable – but not under a defective specification theory of entitlement.
Initial Conclusions
We hope the foregoing is helpful to you. This is a good deal of an oversimplification of this entire area, but you have to start some place. And people will disagree with what we said. That's fine – – it starts a good dialogue on the issues.
The Leading Cases - If you would like to do some more reading, these three cases are a good place to start:
a. Supreme Court's decision in U.S. v. Spearin, 248 U.S. 132 (1918).
[This case sets out the rules, exposes the typical government defenses, and then deals with the difference between performance specifications and detailed design. It is quite a remarkably perceptive case for something that was issued 100 years ago by the Supreme Court!]
b. The Board's decision in Appeal of Bethlehem Steel Corp., 72-1 BCA P 9186 (1971).
[A shipbuilding case – – new construction. It covers a wealth of information for the concepts of defective specifications and why it exists, down to disclaimers of those obligations by the government – – which often do not work]
c. The Court of Claims’ decision in Ithaca Gun Co., Inc. v. U. S., 176 Ct.Cl. 437 (1966).
[This case is significant because often no one knows where the specification is defective – – the contractor is just producing to it and he's having abnormal difficulties and cost increases. The Court finds that specification is still defective under straightforward rules and guidelines, which it sets out]