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.

Under the Spearin doctrine, when the government furnishes design specifications directing the contractor on how to undertake performance on a contract, it provides an implied warranty that the contractor will be able to perform the contract satisfactorily if it adheres to the government’s specifications. The doctrine allows contractors to transfer to the government the risk of increased costs resulting from defective specifications. Notably, however, the Spearin doctrine only applies when the defective specifications are design specifications as opposed to performance specifications. Design specifications expressly describe how contract performance must be undertaken and do not permit the contractor to make any deviations. Meanwhile, performance specifications state the overall objectives that must be achieved but leave the decisions on how to achieve those objectives at the discretion of the contractor. Since design specifications do not allow deviations or grant the contractor discretion in achieving contractual objectives, the government implicitly warrants that design specifications are free from defects. Consequently, when the government’s design specifications are defective or result in unsatisfactory performance the government is deemed to have breached its implied warranty of specifications under the Spearin doctrine. In such cases, the contractor may recover all proximate costs stemming from the government’s breach.