In Sauer, Inc. (September 29, 2021), the Armed Services Board of Contract Appeals discussed the limits of authority that a Government representative had to utilize substitute materials in lieu of materials specified in a task over. The contractor alleged that it was entitled to the cost of removal and replacement of PVC pipe it had installed in lieu of cast iron piping specified in the contract.
The contractor first argued that there was an error in the final design, which "inadvertently" eliminated the use of PVC, and that a Government engineer used his implied authority to verbally and in writing assure the contractor that the use of PVC was acceptable. The Board rejected this argument, noting that regardless of any alleged error, the task order required cast iron piping and only the contracting officer had the authority to change the terms of the task order.
The contractor next argued that decisions regarding plumbing materials for the project did not require Government approval but could be submitted to the designer of record for approval. The Board responded to this argument by noting that while a design change could be approved by the designer of record and brought to the attention of the Government, the contracting officer's approval was still required for variations in the task order requirements.
The contractor's third argument was that the Government constructively accepted the substitution of materials through their continuous presence and observation of the contractor's work, which included incorporating the PVC pipe into the project. Once again, the Board rejected the contractor's argument on the basis of the contracting officer's authority, stating that "[e]ven assuming governed personnel on site may have observed the installation and use of PIVC pipe, there is no evidence that the contracting officer knowingly waived the task order requirement."
The contractor's final argument was that the replacement of the PVC piping violated the FAR's Inspection of Construction clause and therefore violated the economic waste doctrine. While acknowledging the doctrine, the Board rejected application of the doctrine to the facts of this dispute since it found the contractor did not substantially comply with the specifications and that the Government had a legitimate concern regarding the use of PVC pipe.
The lesson learned from this case is that a contractor should take care to ensure it has obtained approval from the appropriate Government official rather than hope that the Government will ultimately accept a specification non-compliant product. In other words, Government contracting is not an arena where it is better to ask for forgiveness in lieu of asking for permission.