The government may provide performance workload estimates during the solicitation phase to assist offerors in preparing their bids or proposals. If due care is not exercised in preparing these estimates and the contractor relies on them, the government may be liable for breach of contract. Due care requires the government to base its estimates on all relevant information reasonably available at the time. If the government fails to base its estimate on the latest available data or is otherwise negligent in preparing it, the contractor may recover any resulting damages. To prevail in such a claim, the contractor must show that it is more likely true than not true that the government’s estimate, on which it relied to prepare its offer, was inadequately or negligently prepared. In a typical case, the contractor must prove that the government’s negligent estimate misled it into submitting an unfairly low bid. The contractor may also need to demonstrate that the government had exclusive control over the information used in developing the estimate, which was unavailable to the contractor from other sources.

In Agility Defense & Government Services, Inc. v. United States, 847 F.3d 1345 (2017), the United States Court of Appeals for the Federal Circuit held that the government was in breach of contract because it negligently estimated its requirements and the contractor relied on the government’s estimates. The Defense Logistics Agency (DLA) awarded the underlying contract for the disposal of surplus military property at Defense Reutilization and Marketing Offices (DRMOs) upon the military’s departure from an area of operations. While the DLA usually handled the requirement internally, it became aware of planned troop movements, which were expected to cause a surge in workload that it was not equipped to handle without contracting out the requirement. During the solicitation phase, DLA issued several amendments relating to anticipated workload and costs. Under one such amendment, DLA provided offerors with a website that showed historical workload, including the number of military property items received for processing and the amount of scrap processed for each DRMO. In a later amendment, the DLA provided offerors with a workload chart that projected a stable workload for the first two years of the contract, followed by a progressive decline of 75%, 50%, and 30% in the option years three to five, respectively. The government also provided the contractor a workload baseline for each DRMO which utilized the same historical data.

Contractors may recover their increased costs of performance attributable to government-supplied defective specifications, provided they are design specifications rather than performance specifications. However, most government-furnished specifications contain both design and performance requirements. To recover under the Spearin doctrine, a contractor must prove that the requirement adversely affecting its performance relates to an area in which the government has expressly described how to perform. On the other hand, the contractor will be denied recovery if the government can show that the dispute concerns requirements that granted the contractor discretion to develop its own performance methodology to achieve necessary contractual objectives. Since it is not always clear whether the government has supplied a design or performance specification, the contractor may have to determine the amount of discretion granted by the specification. Such an analysis must be conducted by viewing the contract in its entirety and assessing the contractor’s overall discretion, along with the obligations imposed by the specification, before the requirement may be categorized as a design or performance specification. In this regard, the relevant inquiry may be the degree to which the contractor can exercise its ingenuity to achieve the contractual objectives and its ability to select the appropriate methodology to do so.

The government may provide design specifications to the contractor for the performance of a government contract, directing work and implying a warranty that the supplied specifications are free of defects. Under the Spearin doctrine, if the government’s design specifications are then found defective or result in unsatisfactory performance, the contractor is permitted to recover its increased costs of performance attributable to the defective specifications. To obtain such recovery, the contractor must prove a causal connection between the defective specifications and the additional costs incurred to resolve the issue. Significantly, however, to recover under the Spearin doctrine, a contractor must demonstrate that it substantially complied with the government-furnished plans and specifications and that, despite its compliance, the end result was unsatisfactory. On the other hand, if the contractor does not comply with the government’s specifications, it may not recover its increased costs of performance under the Spearin doctrine, even if the government's design specifications are ultimately found defective.

In Armed Services Board of Contract Appeals (ASBCA) No. 62627, a decision issued on February 13, 2024, the Board determined that the contractor could not recover under the Spearin doctrine because it had failed to demonstrate compliance with the government-supplied specifications. The Naval Facilities Engineering Systems Command (NAVFAC) Southwest (SW) awarded a task order for roughly $4.3 million under a previously issued indefinite delivery, indefinite quantity (IDIQ) contract for the renovation of Building 53423 at the Marine Corps Base Camp Pendleton in California. Among other things, the project required the contractor to remove and dispose of all existing hazardous materials, including asbestos, and to perform abatement and cleanup services as necessary. The project also required the removal and replacement of non-load-bearing partition walls to support potential space reconfiguration. The order noted that the removal of any additional walls during construction would be handled as a modification. As relevant to the interior walls, the government stated in RFI 20, a pre-award request for information (RFI), that there may be small amounts of asbestos tiles under the wall framing where interior walls were being demolished.