It Depends on the Meaning of the Word “Or” – Interpreting Brand Name or Equal Clauses

The CBCA recently published an opinion addressing the interpretation of “Brand Name or Equal” clauses in Glancy & Sons, Inc. v. Department of Veterans Affairs. In Glancy, the contract specifications identified a patient headwall system for installation on a hospital renovation project. The contract specified the system should be an “Elements of Headwall System Manufactured by Hill-Rom Co. or approved equal.” Along with naming a brand to be used, the specification section also laid out various salient characteristics for the headwall including the use of thermafoil for cabinets. The drawings for the headwall system also alluded to the use of quartz countertops.

The contractor, Glancy & Sons, Inc., bid the project using the pricing for the patient headwall system provided by Hill-Rom Co., the specified brand name manufacturer. Evidence before the CBCA reflected that the Department of Veteran Affairs or its designer was aware that the Hill-Rom Co. product did not include thermafoil for cabinets or quartz for the countertops. Specifically, memoranda and testimony from Hill-Rom employees indicated that, prior to contract execution, Hill-Rom informed the VA and its designer on multiple occasions that thermafoil for cabinets and quartz for countertops would not be included in any patient headwall product solicited from Hill-Rom.

After execution of the contract for the renovation, Glancy transmitted a submittal to the VA for the patient headwall system. Although the submittal specified that the Hill-Rom product would not include quartz or thermafoil, the VA’s designer approved the submittal. Despite this approval, the VA insisted that the headwall system should include thermafoil and quartz, and the VA’s contracting officer issued a decision that the quartz and thermafoil requirements applied to the Hill-Rom product and the “approved equal” product. Glancy then filed a timely appeal to the CBCA.

Addressing the plain language of the contract, the CBCA found that Glancy was entitled to provide “either the system as manufactured by Hill-Rom or an equal product that conforms to the various salient features designated by the VA.” The CBCA determined that once the VA specified a brand name product the contractor was entitled to use that brand name product without conforming it to other characteristics identified in the specifications. Only if the contractor had submitted an “approved equal” product would the contractor have had to provide the other salient features. To hold otherwise would have rendered the word “or” in the contract meaningless.

The CBCA further admonished the VA that:

When the Government designates a product as a brand name, the Government needs to understand that a contractor can bid on that product, notwithstanding whether the product conforms to otherwise listed salient characteristics or not. If the Government needs features that are different from those of the brand name, then the Government should not designate the brand name; or if it does, the Government must make it clear that the product will have to be modified to include certain features or it will otherwise not be acceptable. Placing features in the list of salient characteristics does not modify the brand name designated.

A contractor encountering similar contract interpretation issues with the federal government should attempt to gain as much clarification on the specified product as possible prior to bid and contract execution. Although the contractor ultimately won this appeal, the time and expense needed to get that result likely proved costly to the contractor and may have significantly damaged its working relationship with the government representatives on the project. Here, the contractor followed the wording of the contract and got an approved submittal, but still faced resistance from the VA on the requirements for the patient headwall system. Given these facts, it may be that no amount of preparedness could have saved the contractor from having to litigate this dispute, but savvy contractors may avoid uncertainty and added costs by focusing some of their project bidding and planning efforts on addressing potential conflicts such as the one in Glancy.