Sole Source Specifications for the Contractor's Soul

If a project owner specifies the use of a proprietary product, a particular brand and model, the contractor often finds herself dealing with a sole-source supplier. If that supplier proves unable or unwilling to deliver the product in a timely manner, who is responsible for the resulting delay on the project? The project owner who mandated the product, or the contractor who has a contract with the supplier?

A California court recently grappled with this issue. The contract in question, like most public works contracts, allowed the contractor to propose substitute products that were “equal” to the specified proprietary product. From that, the court concluded the provision was not a sole-source specification.  The result?  The contractor – not the project owner – was responsible for the delay caused by late delivery. This was a great argument for the lawyers in the courtroom, but doesn’t necessarily reflect the real-world goings-on in the field.  Substitution requests deviating from the specified proprietary product are frequently rejected.  Interestingly enough, the appellate court did not question the trial court’s ruling that if in fact the provision in the contract was deemed a sole-source products clause, then the owner bears the risk of late delivery.

It is not always clear when project owners bear the risk of late delivery of specified sole-source products. On federal contracts, the federal project owner warrants only that the sole-source supplier is capable of providing the specified product. The federal project owner does not warrant the supplier will be willing or able to provide the product in conformance with the project schedule. The theory, of course, is the contractor was capable of conducting a pre-bid investigation of the availability of the specified product, and is on the hook for securing a timely delivery.

What do you think? If a project owner insists on one particular product for its project, shouldn’t the owner bear the risk if there are delivery problems? If you have concerns about what you can do to protect yourself when faced with sole-source specifications, give me a call and let’s talk about it!

Nothing in this blog is intended to create an attorney-client relationship.  This article is intended to provide a general overview of the current status of the law for informational purposes only, and is not intended to constitute, or serve as a substitute for, a professional legal consultation.  Laws change every day; please consult an attorney regarding the current status of the law, and how the law affects your specific circumstances. Thank you.