Import Points With FAR Latent Defects in Construction Federal Contracts 

Latent Defect Definition -- Avoid Costly Mistakes With Latent Defects in Construction Government ContractsThe FAR 52.246 latent defect definition in federal government contracting is a hidden defect in the purchased material or the quality of the services (including construction) and worked performed.  Latent defects in construction government construction projects for remedial work are common.

A huge problem with getting paid when performing federal government contracts is when the agency rejects payment due to final acceptance of the material or service. The contracting officer, with the advice of her technical representatives, will allege that there is are latent defects in construction.

How to deal with allegations of construction under the FAR latent defect definition can be problematic for government contractors. 

  • To claim that merely because the agency has accepted and paid for the work would not bar a government claim or an adverse action against a contractor.
  •  Final acceptance of the material or work does not prevent the contracting officer from pursuing your company.

As a federal contractor or even a subcontractor, you must promptly give written notice to the contracting officer or prime contractor of subsurface or latent physical conditions at the site which differ materially from those indicated in the awarded contract. You should not disturb the conditions until someone responds in writing.

You must also provide written notification of unknown physical conditions at the site, of an unusual nature, which differ
materially from those ordinarily encountered and generally recognized as· inhering in work of the character provided for in the

FAR  Latent Defect Definition

“Latent defect” means a defect that exists at the time of acceptance but cannot be discovered by a reasonable inspection.

Per the Armed Services Board of Contract Appeals, acceptance of work by the government is not conclusive if there were latent
defects. See Northrop Grumman Corporation, ASBCA Nos. 52178, 52784, 52785, 53699 . A latent defect is a defect not discoverable by observation made with ordinary care; The defect must have existed at the time of acceptance by the federal government; A testing procedure for establishing the defect may not be more stringent than that set forth in the contract; and the proponent of a latent defect claim must show liability, causation and resultant injury.

The question and resolution turn to whether or not there was a hidden defect. Embedded in the latent defect definition there is a requirement that defect was not, and could not have been, discovered during the final inspection.

  • Defects that are substantial and obvious most likely will not meet the “latent defect definition.”
  • If the government was aware of the defect at the time of final acceptance, then it may be precluded for litigating latent defects in construction issue.

FAR 52.246-1  Construction Contract Inspection Requirements

Under FAR 52.246-1, government contractors are responsible for performing inspections and tests to support its position that services and supplies furnished to the federal government meet the demands of the contract.

 This also includes any applicable technical requirements for specified manufacturers’ parts. FAR 52.246-1 will take precedence over any Government inspection and testing required in the contract’s specifications, except for specialized examinations or tests specified to be performed solely by the Government.

Legal Rights and Remedies

When a dispute arises in a federal construction project, your immediate concern is what rights do you have? What are the legal remedies of the contracting officer denies your request for equitable adjustment or Contract Disputes act claim?  The immediate answer is that it depends on the facts of your case.

  • Did you submit a timely notification to the government?
  • Did you properly inspect the site?
  • Were the drawings and specifications correct?
  • These are all issues that must be addressed in detail by your latent defects attorney.

Appealing a Contracting Officer’s Denial of Latent Defects in Construction Claim?

When you submit a request for equitable adjustment or government contract claim for a latent defect in construction, you must also be mindful of the legal requirements and how you must submit a claim that meets the statutory guidelines. Without it,  you will meet the expensive landmine of litigating jurisdictional arguments from the government attorneys. You want to avoid this at all costs.

What Gives the Appellate Court Jurisdiction to Hear Your Federal Construction Latent Defect Appeal?

The Tucker Act grants the United States Court of Federal Claims subject matter jurisdiction “to render judgment upon any claim against the United States founded either upon the Constitution, or any Act of Congress or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated damages in cases not sounding in tort.” 28 USC 1491(a).

The Court of Federal Claims also can hear an appeal of the contracting officers’ final decision because it  “jurisdiction to render judgment upon any claim by or against, or dispute with, a contractor arising under section 7104(b)(1) of title 41 [i.e., the Contract Disputes Act].” Id. § 1491(a)(2).

The Contract Disputes Act applies to, inter alia, “the procurement of construction, alteration, repair, or maintenance of real property.” 41 USC 7102(a)(3). To hear your appeal, the Act requires you as the contractor to have:

  1. submitted to the contracting officer a valid claim within the meaning of FAR 2.101,
    certified if the amount requested is more than $100,000, and
  2. received from the contracting officer a final decision on that claim.  See 41 USC 7103; M. Maropakis Carpentry, Inc. v. United
    States, 609 F.3d 1323, 1327 (Fed. Cir. 2010). 

 It is important to realize that even with remedial work there are some defenses and approaches to dealing with the government allegations of latent defects in federal government contracts. Companies should be mindful that the government’s approach may also turn to allegations of fraud and may also turn to allege gross mistakes, fraud, or merely claiming that it has rights under a warranty or guarantee clause.


To Avoid Costly Mistakes, Get a Free Government Claims Checklist

For help dealing with FAR latent defects in construction federal contract and with mistakes in remedial work and government construction under FAR 52.246-1, materials or services call Watson’s construction defect attorneys at 1-866-601-5518.