Government Contracts Government’s Warranty Claim Denied
Tuesday, February 11, 2020

Government’s Warranty Claim Denied

By Government Contracts Editorial Staff

The government was not entitled to repair costs, according to the Civilian Board of Contract Appeals, because it failed to prove the elements of a warranty claim. The dispute arose from a contract to renovate an “historic art deco structure” with an emphasis on “environmental sustainability and historic preservation.” The work included installation of a cistern system to support a “green roof” garden courtyard on the building’s fourth floor. Both parties sought to recover repair costs related to a system leak that occurred during a major storm. Citing the contract’s FAR 52.246-21 Warranty of Construction clause, the government argued the contractor had to “remedy … any damage to [g]overnment-owned or controlled real or personal property” resulting from the contractor’s “fail[ure] to furnish and install [c]ontract compliant systems.” To prevail under a warranty of construction provision, the government must prove that the contractor was responsible for the defective materials or workmanship at issue, that it notified the contractor within the time period prescribed by the warranty clause, and that it did not cause or contribute to the alleged defects.

Elements Not Proven. The board concluded the government failed to prove these elements. First, the government failed to show that the contractor’s work did not comply with contract requirements. The government also failed to establish a defective condition. In addition, the government had inspected and approved the cistern system and did not identify any concerns. Regarding the second element, the government’s ability to recover under the clause was limited to one year from either the date of final acceptance of the work or the date the government took possession. The record showed the government failed to notify the contractor of the alleged defects within one year from the date that the government accepted and took possession of the cistern system. As to the third element, the government failed to show its conduct did not contribute to the alleged defective condition of the cistern system. The cistern system design was a collaborative process between the design team and the contractor’s team, the government declined to add floor drains in the cistern mechanical area, and the government inspected and accepted the system as collaboratively designed. As a result, there was no basis to find the government did not contribute to the subsequent failures of the cistern system. Finally, since the government failed to prove its claim under the Warranty of Construction clause, the contractor should not have been denied payment for repairs made in connection with the storm. (Suffolk Construction Co. v. GSA, CBCA, ¶95,922)

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