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DONT FORGET THE SPECIFICATIONS!

Builders by nature prefer to visually process information. As the proverb goes, A picture is worth a thousand words. However, construction prints are accompanied by a thousand words that must be read and understood to successfully complete a project. Unfortunately, many constructors entirely avoid these words. Call it what you will: specs, specifications, spec book, or project manual. The nonvisual description of work often contains information on project requirements not found on the prints, or that supplements or even contradicts directions on the prints. Considering that most builders make the mistake of simply skimming through the project manual, if they look at it at all, it may be helpful to think of this part of the contract documents as a field of monetary land mines. The project manual may contain clauses that greatly impact the profitability of a project. Such land mines may be classified under two main headings: (1) required work not noted during bidding, and (2) required work that was noted, but interpreted differently by the architect.

UNNOTED REQUIRED WORK

Too often a builder is in the midst of a project, working hard, only to have the architect or other owners representative declare that some portion of the work does not comply with the contract documents. A quick recheck of the prints indicates that everything is in order. The architect then explains that the project manual contains information not found on the drawings. Some real life examples include: 1. The general contractor was to furnish and install metal lockers in a bath and shower facility for a Park District building. The drawings showed the lockers affixed directly to the concrete floor. The project manual stated that all lockers must rest on a 2 4 base affixed directly to the concrete floor. 2. The prints called for simple, painted softwood trim around all windows and doors. The project manual declared that all wood trim should be white oak, stained and sealed. 3. The main lobby for a village center required a floor finished with Product TBD, per the prints. When bidding, the estimator assumes this means that any such work would be handled by change order. The project manual indicated that all common area floor finishes on Level 1 shall be terrazzo. 4. For an addition to an existing facility, the drawings showed all new 2-foot-by-4-foot fluorescent lights to be a prescribed, modern, energy efficient fixture. The project manual states that the general contractor must provide an older, hard-to-find fixture, since the owner carries a significant stock of bulbs that fit only that model. 5. A review of the drawings shows that the interior walls of an elementary school library shall be simple, painted concrete masonry unit (CMU). The project manual, however, indicates that a decorative glazed block must be used instead. Each of these examples represents actual incidents in which a builder was forced to dismantle recently constructed work, order additional product, wait for that product to arrive, and then perform the same task over again. Often, the originally purchased product, after dismantling, was unusable on other projects. Each of these situations could have been avoided had the builder studied the project manual. Project manuals, however, can be daunting texts often inches thick. Many construction managers, superintendents, and even estimators claim that they are simply too busy to look at every page. Often, the specifications simply restate the directions on the drawings. However, those times when they do not can prove costly to the builder.

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Even while still in the procurement phase, failure to read specifications may cost a bidder the project. Consider the case of John Carlo, Inc.1 In 2002, the U.S. Army issued a solicitation for the construction of a runway. Part of the Request for Proposals indicated that award would be based not just on price but on the bidders management qualifications. During oral interviews, the individual identified by John Carlo, Inc., as the proposed project superintendent, admitted that he had not read what the U.S. Army considered to be a key specification section dealing with military runways. With this as the primary reason, the U.S. Army excused John Carlo, Inc., from award consideration. John Carlo, Inc., protested this decision with the Comptroller Generals office claiming that the individual correctly answered questions regarding military runways. While the U.S. Army did not dispute this point, the Comptroller Generals office ruled that, . . . despite substantive knowledge, the Army was reasonable in expecting contractors to have read the Project specifications. John Carlo, Inc.s protest was denied. Failing to read the project manual often costs the builder time and money. However, sometimes faithfully following the specifications brings negative consequences as well.

DIFFERING INTERPRETATIONS, OR THE YOU SHOULD HAVE KNOWN PHENOMENON

When bidding and ultimately building a project, the constructor utilizes the prints and project manual with an implied warranty from the owner that the prints and project manual contain no defects or omissions. This concept became known as The Spearin Doctrine, named after a 1918 U.S. Supreme Court decision.2 The Court decided that by issuing plans and specifications, an owner implies a warranty to the bidders that said documents are accurate and suitable for their intended use. In other words, bidders may rely on the bid documents to (1) accurately reflect existing conditions, and (2) result in a satisfactory finished project if the builder adheres to all requirements. Of course, the owner does not actually produce the bid documents but hires a design professional, usually an architect, for this task. By extension, the result of the work of this professional reflects on the owner. Unfortunately for many builders, the impact of the Spearin Doctrine has been reduced over the decades by subsequent court decisions and the introduction of weasel clauses into contract documents. For example, standard contract language now requires bidders to visit and be familiar with all aspects of a particular site. Considering the thousands of facets to every project, even a thorough walk-through by a dedicated estimator could fail to reveal numerous intricacies specific to every project. This places an impossible burden on the bidder to know a site in detail simply by reviewing plans and taking a tour. To the chagrin of builders everywhere, standard owner-general contractor agreements also contain language indicating that all work shall be completed to the satisfaction of the architect. Many builders have argued that such an ambiguous clause leaves them at the mercy of any whim of the architect. If a constructor erects a masonry wall and one brick appears slanted, or protrudes slightly, can the architect make the builder dismantle and rebuild the entire wall? If a painter completes a faux marble finish, done professionally in every way, but the architect just doesnt like its look, can he force the subcontractor to redo it entirely? The answer, more likely than not, is yes. Even if the contractor believed it had a sound argument that such an action by the architect was arbitrary and capricious, and winnable in court, realistically the situation would never progress that far. With either of the previous examples, if the contractor refused to comply with the architects direction, the architect would simply withhold the next pay request. This may be grossly unfair, especially if the disputed works value is relatively small compared to the total value of work completed for that pay period. However, consider the contractors position. What can it do? Litigating the matter would take months, if not years. Holding up the rework would only delay the projects completion and cost the constructor even more in indirect fees. The contractor could possibly subject itself to liquidated damages. When faced with such a position, usually the only practical solution is to comply with the architects direction no matter how unjust the contractor may consider it to be. In other cases such weasel clauses may not be the issue. Design errors and omissions may lead to costly rework by the constructor. The architect will argue that not faulty designs, but faulty workmanship led to the problems at hand. Such issues usually result from one of the following deficiencies.3 1. Careless specification writing where following the directions does not result in work that meets the owners needs

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2. Ambiguous specification writing where reasonable people may have more than one, conflicting interpretation of what is to be done As a general rule, courts have used the following guidelines to deal with design deficiency claims. 1. Consider the contract as one document; examine the requirements in their entirety not just the clause(s) in question. 2. Supplementary conditions, those specific to the project, will usually take precedence over the general conditions (i.e., boiler plate provisions used verbatim for every project). 3. Large-scale drawings, generally details, take precedence over small-scale drawings (i.e., a 1 in. 1 ft. scale governs over a 1/8 in. 1 ft. drawing). 4. Specifications take precedence over drawings. 5. Handwritten, initialed provisions take precedence over typed provisions. 6. Standard industry practice may also be utilized to settle such disputes. To receive increased compensation for a design or specification ambiguity, it must be proven to be a latent ambiguity. A patent ambiguity by definition must be . . . an obvious omission, inconsistency, or discrepancy of significance.4 This places a burden on the bidder to notify the procuring authority of the issue at hand, or a concept known as the duty of inquiry. A latent ambiguity by definition is . . . neither glaring nor substantial nor patently obvious.5 The contractor shoulders a heavy burden with regards to liability for contract document compliance. Despite the ambiguous definitions in the previous guidelines, it often seems that builders face insurmountable battles to achieve reimbursement for increased costs. Consider the case of Randa/Madison Joint Venture III (RMJV) and the U.S. Army Corps of Engineers (COE).6 The COE contracted with RMJV for dewatering services for an existing foundation. The contract contained the standard by submitting a bid the contractor warrants that it is familiar with all aspects of the site clause. The contract also indicated that various geological tests were incorporated by reference and available for inspection. RMJV did inspect the site prior to bidding, but it did not review test results. Upon commencement of the work, RMJV determined that what it called latent geological conditions were leading to significant increased costs. It filed a claim for an equitable adjustment. Ultimately, a federal appellate court decided that, by submitting a proposal, the bidder warrants that it reviewed all available data, including that incorporated by reference. Even when a contractor installs a product prescribed by the architect and said product proves to be deficient for the application, the builder is held liable for any necessary corrections. Next consider the case of Newman Glass Works (NGW).7 NGW worked as a glazing subcontractor on a project that required a specific type of glass from a specific manufacturer. After installation, the product began to delaminate. Upon inspection, the architect agreed that the wrong product for that climate and facility had been specified. However, NGW was still directed to replace the glazing at its own expense because the prime contract contained language stating that all work put in place would be free from faults or defects. If not, such work would be replaced at the contractors expense. NGW refused. The trial court ruled that: It is true that here, Defendant (NGW) had virtually no discretion in carrying out its contractual obligations in light of the exacting specifications in the subcontracts. But it is also true that Defendant entered into subcontracts that require it to remove and to replace any defective materials at its own cost and expense. We conclude that the implied warranty by Plaintiff (that prints and specifications issued for bid are accurate and suitable for the implied purpose) based on the specifications of the type and manufacturer of spandrel glass must yield to Defendants express warranties against defective materials.8 In this case, the builder supplied a specific product, specified by the architect, and then properly installed it. At a later date it was determined that the specified product was not suitable for this situation. However, since the contract included sweeping language requiring the builder to guarantee that all materials were suitable, it had to replace said product at its own expense. Per other contract language that has been upheld by courts, even if an architect approves a shop drawing submittal that includes a deviation from the prints or specifications, the constructor is still liable to provide

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that which was originally required. Consider the case of Elter S.A.9 The U.S. Navy contracted with Elter S.A. to renovate a port facility. Part of that work included the provision and installation of exterior lighting poles secured with a specific type of anchor bolt. Elter S.A. provided a shop drawing submittal that clearly showed the use of an alternate anchor bolt; the Navy approved this submittal. After completion of all work, the Navy learned that the anchor bolts provided did not conform to the specifications. It instructed Elter S.A. to remove all light poles and replace the foundations so that the specified fastener would be used and then to reinstall the light poles. This represented a significant amount of work. Elter S.A. provided evidence that the anchor bolts submitted and used were satisfactory for the light poles in question. The Navy did not dispute this point. The Armed Service Board of Contract Appeals ruled that a contractor is not relieved from specification requirements by virtue of the approval of nonconforming items. The contractor has a duty to highlight to the reviewing official any deviations from the project requirements. This begs the obvious question of whether the reviewing official has a duty to closely review all submittals.

IN SUMMARY
A contractor who fails to familiarize itself with the specifications opens the door to potential losses. Even when the contractor thinks it understands the directions from the project manual, a later, alternate interpretation by the architect may cause problems. The best course of action is for the prime contractor to meet with its subcontractors and review the prints side by side with the applicable specifications. Should any questions or even possible issues be noted, they should be immediately brought to the architects attention in writing.

End Notes
1. Comptroller Generals Decision No. B-289202, John Carlo, Inc. v. U.S. Army, (2002). 2. United States v. Spearin, 248 U.S. 132 (1918). 3. Seminar on the litigious nature of modern construction projects presented by Gerald Katz, Esq., 48th Annual Construction Specifications Institute Show and Convention, McCormick Place, Chicago, IL (April 23, 2004). 4. Beacon Construction Co. of Mass. v. U.S., 814 F .2d 501, 504 (Ct. C1. 1963). 5. Mountain Home Contractors v. U.S., 425 F .2d 1260, 1264 (Ct. C1. 1970). 6. Randa/Madison Joint Venture III v. Dahlberg, 239 F .3d 1264 (3rd Cir. 2000) 7. Rhone Poulenc Rorer Pharmaceuticals v. Newman Glass Works, 112 F .3d 595 (3rd Cir. 1997). 8. Ibid. 9. Armed Services Board of Contract Appeals, No. 52327, Elter S.A. v. U.S. Navy (2001).