In Appeal of Watts Constructors, LLC, the Armed Services Board of Contract Appeals (the “Board”) held that a contractor was not excused from following contract plans and specifications despite the observation by government quality assurance inspectors of non-compliant electrical work during installation. This case is a reminder to contractors (including, of course, government contractors) that the owner is generally entitled to strict compliance with its plans and specifications, and that a contractor should obtain formal approval of alternates before varying from the requirements of those plans and specifications.
In the mid-2000s, the United States Army decided to build a facility for satellite communications at Camp Roberts, California. The Army hired Watts Constructors, LLC (“GC”), who in turn hired Helix Electric, Inc. (“Subcontractor”) to perform the electrical work on the project.
The contract plans and specifications required rigid conduit for electric power cabling. Contrary to these plans and specifications, Subcontractor installed flexible MC throughout the buildings, as was its preference. Subcontractor installed this flexible cabling in the presence of Government quality assurance personnel, who failed to raise any issue with the installation.
Ultimately, however, the Government’s Quality Assurance Electrical Engineer inspected the work already performed and determined that Subcontractor had not complied with the contract plans and specifications. The Government required Subcontractor to tear out the flexible MC throughout the building and install the rigid conduit required by contract, at a cost of over $400,000. The Subcontractor complied with this instruction and then, through a pass-through claim to the GC, sought compensation for this effort.
The Board denied Subcontractor’s claim. As an initial matter, the Board noted that Subcontractor could not identify anywhere in the drawings allowing flexible MC. Although there were “boilerplate” specifications referencing flexible MC, the Board noted that there was similar boilerplate for other products that were inapplicable under the contract, and that the Subcontractor had been unable to identify anywhere in the drawings that required or even permitted the installation of flexible MC.
The Board was unswayed by arguments that the Government’s quality assurance inspectors had observed and not objected to the installation of flexible MC, noting that none of these inspectors had the authority to alter the contract on behalf of the Government (as this authority rested with the Contracting Officer). The Board further confirmed that the Government was entitled to strict compliance with its plans and specifications, and that Subcontractor took the risk of its work being unacceptable when it decided to install in accordance with its own preferences rather than pursuant to the requirements of the Government.
This case is a reminder that contractors and subcontractors should ensure that their work complies with contract requirements, and should not rely on the presence or acquiescence of inspectors to approve work for which they do not have authority to alter. Otherwise, they might just be stuck footing the bill for a costly tear out and replacement.
This article, "Proceed at Your Own Risk: Government Entitled to Strict Compliance with Plans and Specifications" was published in the Bradley Construction and Procurement Law Newsletter for the third quarter of 2020.