Federal Circuit Holds Government Is Not Responsible for Alleged Defective Drawings

The contractor appealed an ASBCA decision that denied its request for equitable adjustment. The contractor claimed the solicitation’s designs differed from the state’s local requirements. The Federal Circuit affirmed ASBCA’s decision. The conceptual drawings from the solicitation clearly stated the design was an approximation, and the solicitation documents sufficiently placed the responsibility on the contractor to determine the “actual size and location” of the system to be built.

Sheffield Korte Joint Venture v. Secretary of the Army, Fed. Cir. No. 2024-1134

• Background – The contractor was awarded a contract to design a centralized stormwater management system. The contractor claimed the solicitation documents differed from those required by the state’s local requirements. The design depicted a centralized system, while the state required a decentralized system. The government disputed the alleged disparity, although it did unilaterally increase the contract price by $418K to compensate for meeting local requirements. The contractor submitted a request for an equitable adjustment of $1.8M based on changes to the system.
• ASBCA Decision – The government denied the contractor’s request for an equitable adjustment and asked the contractor to repay the $418K, which the government claimed was issued in error. ASBCA affirmed the government’s denial and granted the government’s request for repayment of improperly issued funds. The contractor appealed to the Federal Circuit.
• Decision – The government breaches the Spearin implied warranty when the government provides a contractor with a defective design specification. CAFC found that the conceptual drawings the government provided stated that the stormwater management system depiction was only an approximation and that the contractor was responsible for determining the “actual size and location” of the system. Although the conceptual drawings depicted a centralized system, it made clear that a centralized system was not a requirement. Thus, court affirmed ASBCA’s decision.

— Case summary by Joshua Lim, Assistant Editor.