Is the contractor liable for payment of the new AHU's because of the above statement in the SOW? Or is the Government liable for payment because they approved the AF 3000?
In accordance with the FAR 52.236-5, Material and Workmanship clause the Contractor shall obtain the Contracting Officer’s approval of the machinery and mechanical and other equipment to be incorporated into the work. However, the response to this question would be different depending on whether this contract is design-build or design bid build.
Open full Question Details
If the contract is design build, the contractor or their architect will be the designer of record. Therefore, under this scenario the contractor would be responsible for designing the system to be appropriate for the building. Even if the contracting officer “approved” their submittal the contractor is still required to meet the standards of the contracts and the overall design.
If the contract is design bid build, the assumption is that it was 100% design and the government’s architect is the designer of record. This means the government would have dictated to the contractor in the specifications the exact type of equipment needed for the air handling units. Was it was the government’s intention of having the contractor “verify” the design and transfer responsibility to the construction contractor by putting in the language "CONTRACTOR will conduct a detailed field survey to verify the existing conditions. Verify that existing air cooled chillers, AHU's, water pump system, and new Building Automation Systems control?” The government cannot not use exculpatory language to transfer responsibility for a bad design or failure to fully design a project. In this instance, I would say that the contractor in not liable and would rest squarely on the government.
However, if this was 100% design and in accordance with the FAR 52.236-5, Material and Workmanship clause, the Contractor submitted and obtained the Contracting Officer’s approval of the air handling units to be incorporated into the work and upon delivery the units were not correct in accordance with the specifications then the contractor is liable for all costs to make it in compliance. The contracting officer’s approval does not relieve the contractor from liability. The contractor must still comply with all the terms of the contract.