This article is an excerpt from Government Procurement, which is available for purchase.
As the following examples illustrate, the failure to set sound specifications prior to contract award raises the risk of project failures and legal claims. Institutions should therefore establish clear accountabilities for the drafting of specifications within their project teams.
For example, in its decision in Coady Construction and Excavating Ltd. v. St. John’s (City), the Newfoundland and Labrador Supreme Court found the municipality liable for $68,000 in extra contractor costs due to faulty project specifications. Notwithstanding the inclusion of a typical tender call disclaimer warning bidders to inform themselves of existing conditions, the municipality was found liable since its design specifications failed to accurately reflect the complex nature of the required work.
As the court stated, it is “one thing to install an extra catch basin as part of a contract where the drawings are reliable and the work simply involves the acquisition and installation of the unit. It is entirely another thing when the existing underground installation is a double catch basin joined together which has to be busted apart and two new ones installed requiring new holes to be busted into the unit to accommodate the piping which was not shown on the drawings.” The court found that “the unpredictable and difficult circumstances found in the field by Coady on this job” entitled the contractor to its extra cost claim.
By way of another example, in its decision in Greenslade’s Construction Co. v. Conception Bay South (Town), the Newfoundland Supreme Court – Trial Division found a municipality liable for inadequately designed specifications. The case dealt with the construction of a baseball field for the Newfoundland Summer Games. The mayor took a direct interest in the project and overrode engineering advice with respect to both site selection and design specifications. As the court noted, in directions to staff the mayor “specifically instructed them to keep the details of the project to the minimum amount possible. The Mayor was keenly interested in obtaining the lowest possible tender which the town could obtain, and he felt that by keeping the details to the minimum, this could be achieved.” The town ultimately issued a tender call with designs based on a rudimentary hand-drawn sketch. As the court noted, this led to significant problems during the construction phase of the project:
On three separate occasions during November the Town changed the orientation of the field. During this period of time a considerable amount of fill was relocated. Because the reorientation twisted the Pad to the west, the side of the field closest to the tennis courts would move up to the west by 7. The result was that the right outfield corner was moved further into the area where there were problems with rock. These sets of changes constituted a fundamental change in the Contract. Greenslade says he told the Town that these changes were not the contract he agreed to. He has been consistent in his position on this ever since. At no time during this process did the Town request an estimate for this work from Greenslade. As a result of the Town’s instructions, a considerable amount of fill was removed from the left infield line and replaced behind the pitcher’s mound. This fill ultimately became the catcher’s sections and was the deepest fill of the whole project. Extra fill was also placed towards the swimming pool area. As a result of the reorientation, Greenslade’s were pushed to work in an area which Greenslade’s had assumed it would not have to cut or excavate when the project was originally bid. When it became necessary to blast the rock where the right outfield line had been moved to the west, concerns were raised again about the proximity of the houses on Rideout’s Road and the nature of the rock. Because of these two problems it was necessary to use very small blasts with a lot of matting in order to avoid fly-rock and also not to cause damage to the concrete bottom of the adjacent swimming pool. This was slower, labour and equipment intensive, and expensive.
The contractor eventually walked off the field in frustration and sued. It was awarded damages by the court. As this case illustrates, to establish clear performance standards and avoid post-award project disputes, institutions should ensure that project specifications are prepared by competent subject-matter experts.
As these cases demonstrate, to mitigate against specification-based project risks, institutions should ensure that their specifications accurately capture performance conditions and are properly aligned with the pricing structures in the tendering documents.
