The Government Refused to Accept Responsibility for a Design Defect and Receives a Bench Slap for the Judge
Martin Construction v. United States involved the construction of a marina in a state park near a small town in North Dakota. The US Army Corps of Engineers ("Corps") awarded a contract of $6.9 million to Martin Construction, Inc. ("Martin"). The contract required that the project be completed by October 11, 2008.
A crucial step in the project was the construction of a cofferdam - an enclosure in a body of water such that the water inside the enclosure could be pumped out and foundation work could be performed in a dry environment. The project design specified that, after the cofferdam enclosure walls had been erected, the contractor was to lay down an underwater granular fill, pump out the water, and lay down a compacted earth fill and woven synthetic textile layer so that the enclosure would be dry and construction of the marina could then proceed. The underwater granular fill was supposed to stop the seepage of water back into the enclosure during the pumping (dewatering operations). The design specified that the underwater fill was to be State of North Dakota Type 7 aggregate. As it turned out, this was a design flaw because the No. 7 aggregate particles are too large and allowed water to seep back into the cofferdam faster than the water could be pumped out. The government's design engineer calculated the water seepage rate through the No. 7 aggregate to be 0.3' per minute, but the correct calculation would have been 23' per minute! As it turned out, the government’s design engineer's calculation was 7 times too low. The specification of the No. 7 aggregate and the seepage rate calculation error led to almost everything that happened afterward.
The contractor, following the government's design, began dewatering operations in April 2011, but was unable to lower the water level within the cofferdam enclosure even after bringing in much larger pumps then it planned to use. Neither the government nor the contractor were aware of the source of the problem and so devised a workable design fix. The fix was to place a clay wedge against the inside the cofferdam to slow the inflow water down. Unfortunately, as is often the case, the fix itself became a source of instability in the cofferdam structure and made working conditions within the cofferdam unsafe. While slowing the influx of water enough to permit the presumption of dewatering operations, the wedge material became saturated and turned into a muddy quagmire, too soft to hold up the dam walls. To make matters worse, unexpectedly heavy rains began in June 2008, stopping the work for two weeks. The rain raised the surface of the lake higher than the expected levels, for which the cofferdam was not adequate. It also increased the rate of water seepage back into the cofferdam enclosure, making the water problem inside the dam even worse.
More design changes were implemented and the difficulties accumulated, and not unexpectedly, wore on the party's relationship. The contractor and the government might have been able to developed a better design fix and finish the project on time had they recognized the design defect and understood its effect right away. That, however, would have required that the government admit that its design was defective, which it failed to do.
The contractor eventually was able to remove the water from the cofferdam, but that the design fix made the cofferdam unstable and unsafe. The government criticized the contractor for not implementing the design fix properly and directed it to complete the construction of the cofferdam "quickly."nbsp; In July the contractor notified the government it considered the design of the cofferdam to be defective, asked for a new design, and then notified the government that the higher than expected surface level of the lake was a differing site condition and created a work safety hazard. The government denied that the design was defective. It further denied that the rising level of the lake was a differing site condition even though it twice raised the design height of the cofferdam enclosure to accommodate the rising waters. A few days later, the cofferdam almost failed. The contractor again notified the government the cofferdam was unsafe, but the government denied the contractor’s assertions and directed the contractor to proceed with the construction within the cofferdam. The contractor hired an expert to review the stability and safety of the cofferdam and the expert, in August 2008, reported that the cofferdam was unstable and posed a risk of "incipient failure." The government told the contractor that the cofferdam was stable and directed continuation of the work.
The next month, September 2008, the government sent the contractor a show cause notice based on the contractor's failure to make progress on the project. The contractor, in response to the show cause notice, sent a letter attributing the project delays to unforeseeable causes beyond its control claiming the defective designs and heavy rain (the contract completion date was October 11, 2008). The government responded that there were no excusable delays and requested a new schedule from the contractor. The government made some contract modifications in late October, at which point the contractor then projected the completion date of April 2009. The government, unhappy with the contractor’s progress, terminated the contractor for default on January 13, 2009. The contractor challenged the termination for default on grounds that (1) the defective design, rains and contract modifications had caused excusable delays; and (2) the government had waived the October 11, 2008 completion date and had established a new date of completion. In court, the government did not even try to defend its design; it ultimately reluctantly admitted its design had been defective. Regardless, the government argued that the defective design had not been the cause of the contractor's failure to complete the work by October 11, 2008 and did not constitute an excusable delay.
The court quickly and with evident disgust, rejected the government’s arguments and found that the defective design had been the main cause of the delay. Troubling in this case is the fact that the Corps adamantly refused to accept any responsibility for its defective design, even while the contractor made every effort to comply with it. The crux of the problem, according to the court, was the government's unwillingness to acknowledge the design error and take responsibility for it. Had the government stopped the work and investigated as soon as the contractor’s difficulty with the dewatering became apparent, the government probably would have discovered the mistake in specifying No. 7 aggregate and been able to do something simpler, quicker, and less expensive than the clay wedge fix that made the problems worse. Instead, the government blamed the contractor for everything, hindered instead of helped, and ended up with consequences not of the design error, but also of its own unreasonableness and intransigency.
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