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The Spearin Doctrine: Public owners do not shed all design risk by contracting for design- build if there are specified criteria upon which the design-builder is to rely. Is there a doctrine in the house? (Part 2)
O n government projects you may sometimes hear a lawyer or contractor talk about implied warranties and “the Spearin Doctrine,” and wonder what the heck they are talking about. The name comes from a contractor named George B. Spearin who, in 1905, contracted with the U.S. government to build a dry dock at the Brooklyn Navy Yard.
William Quatman GENERAL COUNSEL
Unbeknown to Mr. Spearin was a concealed structure on the site which caused internal pressure to build inside a new sewer line, breaking the line and flooding the construction site after a heavy rainstorm. Spearin had visited the site prior to bidding, but was not told by the government that the site was prone to flooding, nor about the hidden structure. Mr. Spearin was upset over the delays and damage, and he wrote a stern letter to the Navy Secretary. “We know now beyond a shadow of a doubt that this sewer is insufficient in size and strength for the work that it must do, and that it will be a constant menace to my plant, to the dry dock itself, and to the government’s surrounding property,” he wrote. “I am therefore unwilling to resume work until this menace has been removed.”
The estimated cost of restoring the sewer was only $3,875, but the government insisted that the responsibility for remedying existing conditions rested solely with the contractor. After 15 months of investigation “and fruitless correspondence,” the Navy Secretary terminated Mr. Spearin’s contract and hired other contractors to finish the work under “radically changed” plans, to remove all risk of the sewer line breaking again. Spearin sued the government for $250,767, which included the unpaid contract balance plus his lost profits. The government rejected the claim and offered just $7,908. The Court of Claims awarded Mr. Spearin $141,181, including lost profits and both parties appealed to the U.S. Supreme Court.
See WILLIAM QUATMAN, page 10
THE ZWEIG LETTER April 9, 2018, ISSUE 1243
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