Liability of Designers to Contractors for Proposal-Related Claims in Design-Build Contracts

Design-build (DB) project proposals generally require the designer on the DB team to advance the level of design provided by the owner in the request for proposals (RFP) to a stage where a firm fixed price can be proposed. The construction contractor on the team uses the designer’s work product to prepare the proposed bid price. Issues can arise if there are errors in the proposal designs that cause the contractor to spend more money than planned. The standards for determining a designer’s liability for errors in completed, signed, and sealed design documents are well understood. However, the standards for determining a designer’s liability to contractors for errors in proposal designs are neither clear nor well understood. This paper reviews several published cases addressing disputes between contractors and designers with respect to design errors arising from these proposal-based designs. It concludes that the question of whether a contractor can recover losses due to errors found in proposal-related design documents is largely dependent on what the agreement for proposal-related services provides as a standard of care and whether the contractor can adequately demonstrate that the losses are attributable to the proposal-related errors. This paper provides several recommendations on what issues should be covered when contractors and designers enter into a teaming agreement or other contract for proposal-related services.