LEGALLY SPEAKING Contractors Do Not Assume All Risks for Satisfying Performance Specifications Perhaps more than with most construction trades and disciplines, much of geotech- nical construction is performed under performance specifications, as opposed to design, or prescriptive, specifications. Performance specifications establish objectives and/or criteria to be achieved, but give the contractor the responsibility and discretion to select the technologies, designs, means and methods for achieving that objective. Design specifications, on the other hand, describe in precise detail the materials, dimensions and manner in which the work is to be performed and give the contractor virtually no discretion to deviate from these details. The distinction between these types of specifications is not merely the discretion afforded the contractor. A contractor or subcontractor assumes much greater risk when performing under performance speci f icat ions than under design/ prescriptive specifications. Since the landmark Supreme Court decision, U.S. v. Spearin, 248 U.S. 132 (1918), courts and boards of contract appeals have consistently held that, where “the 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.” The protection afforded the contractor is based on the courts’ recognition that design specifications contain an implied warranty that, if they are followed, an acceptable result will be produced. This warranty of design, plans and specifications, however, generally does not apply to performance specifications. That is, because the contractor selects the manner of achieving the performance criteria, it is the contractor, not the owner, that assumes the risk that the selected technology, design, means and/or methods are suitable. The general rule exempting owners for liability for performance specifications is not without limitation or exception. Contractors and subcontractors can obtain relief—in the form of excused nonperformance and/or equitable adjustments to contract time and price—in contracts containing performance specifi- cations. Primarily, this occurs when (1) contract specifications are not applied as performance specifica- tions or contain a mix of design/prescriptive specification and performance specifica- tions; or (2) the performance specifications are impossible or commercially imprac- ticable to perform. The labeling or designation of plans and specifications as performance specifications does not make them so or otherwise define a contractor’s rights. Courts and boards of appeals have repeatedly recognized that contract documents often contain a mix of design and performance specifications, and that the practical effect of a given specification determines a contractor’s assumption of risk and rights to relief, not the labeling of the specifications. As the Court of Appeals for the Federal Circuit noted Blake Constr. Co. v. United States, 987 F.2d 743 (Fed. Cir. 1993), “the real issue is not whether the drawings and diagrammatic notes in their entirety should be labeled design specifications or performance specifications, but how much discretion the specifications gave [the contractor].” Courts and boards of appeals have routinely held that, by removing a contractor’s discretion in the performance of contract requirements, often by limiting means and methods or dictating excessively detailed parameters or criteria, an owner can effectively convert performance specifications into prescriptive specifications. Another way a contractor may obtain relief from performance specifications is if a performance requirement is impossible to achieve. A contractor, however, need not prove that a specification is literally or actually impossible to perform to obtain such relief. Brian Wood Attorney Of Counsel Smith, Currie and Hancock Courts and boards of appeals have held that performance may be so di ff icul t and t ime- consuming that performance is practically impossible or commercially senseless and not within the initial expectations of the parties or contemplation of the contract. In Tombigbee Constructors v. U. S., 190 Ct. Cl. 615 (1970), the U.S. Court of Claims upheld additional compensation and a time extension to a contractor who experienced difficulty achieving a performance specification calling for compaction of soils to 95 percent standard proctor densities. There, the contract required the contractor to draw fill from borrow pits designated in the contract documents. The court acknow- ledged that achievement of the 95 percent compaction criteria was not impossible but granted relief because the criteria was achieved “only after great effort and the use of a variety of special equipment” and because it caused substantial delays to the contract. To obtain relief for commercial impractica- bility, a contractor must prove that per- formance of the specification was objectively impracticable; that is, not just difficult for that contractor, but that it would be similarly difficult for any reasonable contractor. In some instances, a performance specification itself may be achievable, but the specified verification testing or accep- tance criteria may be defective. In such cases, courts and boards have allowed contrac- tors to demonstrate achievement of the performance specifications in other ways. The takeaway: the fact that a contractor or subcontractor performs work under performance specifications does not mean that the contractor or subcontractor assumes all risks of achievement of those specifications. DEEP FOUNDATIONS • MAR/APR 2018 • 109
