A contract clause making the contractor solely responsible for any changes of whatsoever nature was not ambiguous when it came to the extra costs to change the influent pipe size and design to fit with an “or equal” equipment item submitted by the contractor in place of the specified “brand name.” The court reviewed sections of the contract making contractor responsible for reviewing all plans and specifications before bidding the project and taking responsibility for changes caused by its use of products different from those specified. Court stated that just because an equipment item is listed in the specifications, an additional manufacturer to the name brand does not make that additional brand interchangeable with the brand around which the project was designed. The court found this to be a performance specification and not a design or prescriptive specification that would have rendered the project owner responsible under an implied warranty of design. Cummins v. Bradford Sanitary Authority, 237 A.3d 584 (2020)
Gannet Fleming designed a wastewater treatment project for the City of Bardford, Pennsylvania. The invitation for bids (IFB) advised bidders that Project Manual contained the specifications for the SBR and its ancillary structures, equipment and controls (SBR Specifications), that were based on a continuous-flow SBR manufactured by ABJ Sanitaire….” But the specification also stated there would be four separate SBRs installed in 4 adjacent, contiguous tanks (Tanks 1-4) (thereby increasing the total volume of wastewater that could be treated). Tanks 1 and 2 shared a common ‘influent box’ where wastewater entered the SBR, as did Tanks 3 and 4. ‘Influent’ is the untreated wastewater, so the wastewater first entered the influent box. Each tank had its own manual gate in the influent box, and as designed the influent was to continuously and intentionally flow over the gate, which generally remained in the open position (unless a tank was being cleaned or repaired). Influent entered the influent boxes through 20-inch ductile iron influent pipes capable of supplying 13.88 million gallons per day (‘MGD’) of wastewater.
The specifications authorized bidders to select from “acceptable manufacturers” any of the following three: ABJ Sanitare, Ashbrook Simon Hartley, or Aqua Aerobics. However, the specifications also stated that whenever multiple products or manufacturers were listed in any section of the specifications, the first named product or manufacturer is the one on which the Gannet Fleming design was based.
Most importantly, the specifications stated:
“If products of manufacturers other than those named first differ from those named first in the Project Manual or on the [Contract] Drawings to the extent that their proper incorporation into the [work required by the Contract Document (]Work[)4] requires changes to the structural, piping, mechanical, electrical, instrumentation, or any other changes of whatsoever nature, the [c]ontractor shall be responsible for such changes.”
There were numerous other provisions in the specifications stating that if a product other than the one first named on the list were used by the contractor, the contractor would be responsible for all costs associated with design changes to any part of the project to make use of the equipment possible.
The contractor submitted the Ashbrook product data and shop drawings reflecting changes Ashbrook proposed to GF’s design to incorporate the Ashbrook SBR. GF determined, based on Cummins’ and Ashbrook’s assurances during the bid and submittal processes, that the proposed Ashbrook SBR would meet the SBR Specifications with regard to hydraulic and organic capacity, in particular, that it could handle up to 13.88 MGD of influent. After several meetings and some changes, GF marked Cummins’ final SBR shop drawings “Reviewed,” R.R. at 640a, 3405a, and Cummins installed the Ashbrook SBR at the Plant.
The court explains that:
“After the SBR was put into operation in 2015, the parties discovered an influent overflow problem with the SBR system, which Cummins claimed was due to the 20-inch influent piping being too small to accommodate the Ashbrook system’s sequencing. The Authority/GF disputed that the piping size was the cause, and claimed that the overflow resulted from the automatic gates not controlling the flow, and that a different piping configuration was necessary to accommodate the Ashbrook SBR. Notwithstanding, neither Cummins nor Ashbrook had previously identified to GF a need to increase the size of the 20-inch influent pipes in GF’s design or to reconfigure the piping for the Ashbrook SBR to deliver the contractual 13.88 MGD of wastewater. The parties disagreed on the solution and the cost thereof.”
In the litigation that followed, concerning who was responsible for the correction costs, the City argued that the trial court erroneous failed to grant the City’s motion to dismiss the contractor’s claim because as a matter of law, the contract placed sole responsibility on the contractor for the defective system performance related to the contractor’s installation of the Ashbrook equipment without revising the influent piping.
The appellate court agreed with the City that the contract was clear and unambiguous, containing numerous provisions making the contractor responsible for reviewing all plans and specifications and assuring itself concerning its compliance with the same, and requiring it to install equipment (with changes to other parts of the design if necessary) that would perform as required for the project.
The court’s analysis concluded:
“Contrary to Cummins’ position, the Authority’s naming of Ashbrook as an additional manufacturer did not make the Ashbrook SBR interchangeable with the ABJ Sanitaire SBR around which the Project was designed. Nor did the Contract Documents make any tacit guarantee that the Ashbrook SBR would fit and function without design changes. Rather, this Court has explained:
It is well settled that where the government orders a structure to be built, and in so doing prepares the project’s specifications prescribing the character, dimension, and location of the construction work, the government implicitly warrants, nothing else appearing, that if the specifications are complied with, satisfactory performance will result.
If [a] court finds the cause of faulty construction to be a deficiency in a design specification the government would bear the risk, and consequently be liable for reasonable costs incurred by the plaintiff. Defective design specifications may entitle a contractor to an equitable adjustment of the contract for the reparative work required to build a satisfactory end-product.
But not all contract specifications are design specifications – some are merely performance specifications:
Design specifications explicitly state how the contract is to be performed and permit no deviations. Performance specifications, on the other hand, specify the results to be obtained, and leave it to the contractor to determine how to achieve those results.
The government does not implicitly warrant performance specifications for complete accuracy or adequacy. Typical performance type specifications set forth an objective or standard to be achieved, and the successful bidder is expected to exercise his ingenuity in achieving that objective or standard of performance, selecting the means and assuming a corresponding responsibility for that selection.”
***
“Of particular import here, the mere identification of a product or manufacturer does not create a design specification. Where a government agency identifies a particular product or manufacturer by name, but permits substitution of ‘an approved equal,’ such a specification is ‘performance’ in nature and, as a result, carries no implied warranty.” (bold wording emphasis in original decision).
Based on what it deemed to be unambiguous language of the contract, the appellate court concluded that the trial court should not have allowed the dispute to go to the jury, but should have decided in favor of the City.
About the author: Article written by J. Kent Holland, Jr., a construction lawyer located in Tysons Corner, Virginia, with a national practice (formerly with Wickwire Gavin, P.C. and now with ConstructionRisk Counsel, PLLC) representing design professionals, contractors and project owners. He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects. He is publisher of ConstructionRisk Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932. This article is published in ConstructionRisk Report, Vol. 22, No. 9 (Dec 2020).
Copyright 2020, ConstructionRisk, LLC
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