Federal Circuit Reverses CBCA, Holds Contractor Was Not Entitled to Redesign Costs

The appellant appealed a CBCA decision finding it was not entitled to compensation for redesigns that occurred as a result of the government’s deficient designs. The Federal Circuit, sided with the appellant. The government designs were design specifications, which created an implied warranty. The Federal Circuit remanded for the board to determine whether the government breached that warranty.

Balfour Beatty Construction, LLC v. GSA, CAFC No. 2023-2299

• Appeal – The appellant appealed a CBCA decision on claims stemming from its construction contract. The appellant raised a number of issues, but the Court focused on two alleged design defects. The appellant claimed it incurred increased costs from redesigns. These redesigns arose out of deficiencies in the Bridging Design Documents provided by the government.
• CBCA Decision – CBCA found the appellant was not entitled to recover costs related to the redesign. The government’s contract drawing indicated that the appellant should “match existing building foundations,” which were 18 inches thick. The Board construed this as a performance specification in which the contractor was free to determine how to achieve the specific results.
• Decision – CAFC determined that CBCA erred in this finding. The language was sufficiently definite to constitute a design specification. For design specifications — and not performance specifications — there is an implied warranty. This was stated by the Supreme Court in United States v. Spearin (finding that if a contractor is bound to build according to specifications prepared by the owner, the contractor will not be responsible for the consequences of defects in the specifications). Thus, CAFC vacated and remanded the decision.

The appellant was represented by Thomas Henderson Dupree, Jr. of Gibson Dunn & Crutcher, LLP; and Reginald Jones, Diana Lyn Curtis Shutzer, and Nicholas Solosky of Fox Rothschild LLP. The government was represented by Bryan Michael Byrd, Brian M. Boynton, Patricia M. McCarthy, and Corinne Anne Niosi of DOJ.

— Case summary by Joshua Lim, Assistant Editor.