A good example of a recent design-assist project is Little Caesars Arena, the home of the Detroit Red Wings of the NHL and the Detroit Pistons of the NBA. This arena, which replaced the Joe Louis Arena and the Palace, is the anchor of the new entertainment and sports district in Detroit’s downtown. The arena is a multi-use facility for sports, tradeshows, concerts and conventions. The construction was reportedly completed through a design-assist process that allowed contractors to play a large role in finalizing the Arena’s design.
“Design-assist” is a term and a concept that has been gaining popularity in the construction industry in recent years, but what does it actually mean, and what are the rights and obligations of parties entering into these agreements? Indeed, only a handful of reported cases even reference the concept of design-assist. Joel D. Heusinger, Ambiguity Breeds Conflict: The Importance of Defining ‘Design-Assist” in the Construction Industry, 11 Journal of the ACCL 1, n.2 (2017). None of those cases was decided under New Jersey law.
“Design-build” and “design-assist” are not interchangeable terms. These project delivery methods are, in fact, very different. A design-build contract is defined in the New Jersey Administrative Code (N.J.A.C. 13:27-7A.1) as:
A written contract, entered into between a contractor and an owner or developer, which provides both for the construction or alteration of a building, group of buildings, structure, or group of structures within the State of New Jersey and for the performance of architectural services by an architect retained by the contractor pursuant to a separate written contract.
On the other hand, “design-assist” has no generally accepted definition. Various secondary sources, however, have defined it as a cost saving trend in the construction industry, where a construction contract is awarded to a contractor to provide design assistance to the project’s design professionals during the design development process. In a design-assist project, the design professionals, architect, structural engineer, landscape architect, civil engineer, etc. coordinate closely with the other team members, such as the construction manager, general contractor, trade contractors and, possibly, suppliers, to ensure that each individual system is designed to meet the intent of the project. As one commentator has noted, “design-assist as that term is currently used, is unique in requiring significant design and engineering evaluation and input from multiple project participants throughout the project’s design preparation phase.” Heusinger, 11 Journal of the ACCL at 3.
The ConsensusDocs 300 provides that the lead design professional, known as the “Designer,” remains responsible for the overall design and that “the Designer shall draw upon the assistance of the Constructor and others in developing the design, but the Designer shall retain overall responsibility for all design decisions” (see ConsensusDocs 300, Standard Tri-Party Agreement for Integrated Project Delivery, at Art. 3.6), and that “while retaining overall responsibility for the Project design, the Designer must work collaboratively with the other members of the CPD Team….” Id. at Art. 6.1. Similarly, the AIA Best Practices adds that design-assist is most commonly used with specialty trades requiring a unique solution, citing examples of reproducing historic windows or finishing plaster walls. See David Hart, The Basics of Design-Assist Contracting, AIA Best Practice (October 2007).
One example of a design-assist contract provision is:
The Contractor shall furnish design-assist services with respect to the curtainwall and elevators. Such design-assist services shall not constitute the professional practice of architecture or engineering. For such design-assist services, the Contractor shall assist the Architect by providing specific information to be incorporated into the design documents within the Instruments of Service, as such term is defined herein. At the completion of the design, the Architect shall sign/seal its Instruments of Service that may incorporate information furnished by the Contractor. The Contractor shall not be required to provide professional services in violation of the applicable law. If the professional design services or certifications by a design professional related to systems, material or equipment are specifically required of the Contractor by the Contract Documents, the Owner and the Architect will specify all performance and design criteria that such services must satisfy. The Contractor or subcontractor(s) shall cause such services or certifications to be provided by a properly licensed design professional, whose signature and seal shall appear on all drawings, calculations, specifications, certifications, Shop Drawings and other submittals prepared by such professional.
The plain language of this provision specifically states that the architect remains responsible for signing and sealing the documents, but that the contractors may be required to retain a licensed design professional to design component parts of the project. A contractor who signs on to a design-assist project may well be deemed to have crossed into professional territory, facing additional obligations and risks.
Applicability of the Spearin Doctrine to Design-Assist Contracts
Many consider the United States Supreme Court’s landmark case, United States v. Spearin, 248 U.S. 132 (1918), to be the most significant construction law case, even though it was decided more than 100 years ago. In Spearin, the Supreme Court found that:
If the contractor is bound to build according to plans and specifications prepared by the owner, the contractor will not be responsible for the consequences of defects in the plans and specifications. This responsibility of the owner is not overcome by the usual clauses requiring builders to visit the site, to check the plans, to inform themselves of the requirements of the work, … and to assume responsibility for the work until completion and acceptance.
248 U.S. at 136. Stated simply, if the project is built to specification by a contractor, the contractor is not responsible for the consequences or failures caused by defects in the plans and specifications.
The Supreme Court’s holding must be considered in its factual context. George B. Spearin was a utility contractor who entered into a contract with the federal government to build a dry dock and relocate a storm sewer at the Brooklyn Navy Yard. The plans and specifications of Spearin’s contract with the Government set forth the dimensions, materials, and location of the sewer, impliedly warranting that, if followed, the sewer would be adequate. It was not. A year after the sewer was relocated, a heavy rain storm during high tide caused a backup in the sewer system that, because of an unforeseen blockage upstream from the relocated sewer, caused the internal pressure in the sewer to increase until it broke in several sections, flooding the dry dock.
The Government took the position that Spearin was responsible for repairing the relocated sewer. Spearin disagreed, insisting that the Government change the design of the sewer and either repair or pay Spearin to repair the sewer. The Government declined to do so. After 15 months of discussions, the Government terminated Spearin’s contract and hired different contractors to change the plans and complete the work. Spearin sued the Government for wrongful termination. The Supreme Court determined that Spearin was excused from continuing performance on the contract because the Government breached its implied warranty to Spearin that the plans and specifications were adequate, and repudiated responsibility for remedying the sewer after it broke.
Today, the Spearin doctrine is recognized in public and private settings in nearly every jurisdiction of the United States. See Buckner Hinkle, Jr., James F. Nagle, & Robert J. MacPherson, Still Spearin After All Those Years, 12 Journal of the ACCL 1, 27-49 (2018). The Spearin doctrine has evolved to recognize that the implied warranty may be asserted both defensively, as it was in Spearin, to avoid responsibility for an unacceptable project, and offensively, where the contractor can show that its work was made more costly, timely, or difficult by defects in the plans and specifications provided by the owner. Id. In New Jersey, for a contract disclaimer to absolve an owner of liability for its representations and impute liability on the contractor, such disclaimer must be specific, and specifications in the contract decidedly unambiguous. See Sasso Contracting Co. v. State, 173 N.J. Super. 486 (1980); P.T. & L. Constr. Co. v. State of N.J. Dept. of Transp., 108 N.J. 539 (1987).
Although no published decisions or cases have directly applied the Spearin doctrine in the design-assist context, it is reasonable to presume that a contractor who actively participates in the design process will lose some of the protections that Spearin provides to a contractor whose obligation is to build according to a design furnished by others. Contractors considering entering into design-assist relationships should understand that they are likely to be held to a professional standard of care, with their obligations not necessarily limited to what is required by the contract documents.
Robert J. MacPherson and Robert C. Brady are directors at Gibbons P.C. in Newark. MacPherson is a fellow of the American College of Construction Lawyers and a former chair of the ABA Forum on Construction Law. Brady regularly litigates construction matters in various courts throughout New Jersey and New York.