Government Contracting Database
Order of Precedence
A typical Order of Precedence clause provides:
In case of a difference between drawings and specifications, the specifications shall govern. In case of discrepancy either in the figures, in the drawings, or in the specifications, the matter shall be promptly submitted to the Contracting Officer, who shall promptly make a determination in writing. Any adjustment by the Contractor without such a determination shall be at his own risk and expense.
The decisions of the United States Claims Court and the Boards of Contract Appeals have clearly established that where a contract contains an Order of Precedence clause governing the interpretation of contract provisions which conflict with each other, the contractor may read the clause at face value and rely on those provisions which are given higher authority. Hensel Phelps Const. Co. v. United States, 886 F.2d 1296, 1299 (Fed. Cir. 1989) (citing Franchi Const. Co., Inc. v. United States, 609 F.2d 984 (Ct. Cl. 1979)); Ryan Electrical Company, ASBCA No. 32381, 87-3 BCA 20,121. As long as the discrepancies are between the contract drawings and specifications, the Order of Precedence Clause does not impose a duty to inquire upon the contractor, but instead automatically resolves the apparent conflict between the contract drawings and specifications. In this regard, the Court of Claims in Franchi, 609 F.2d at 989-990:
The government authored the order of precedence clause as a mechanism to automatically remove conflict between specifications and drawings by assigning preeminence to the former. As an additional initiative, the clause imposes an affirmative duty of inquiry on the contractor who is confronted with a particular dilemma, viz, discrepancies within, as opposed to between the separate categories of, inter alia, drawings, and specifications.
Glen N. Allen, ASBCA No. 12728, 68-1 BCA 6807, at 31,467.
In Hensel Phelps Construction Co. v. United States, 886 F.2d 1296 (1989), the court determined that a contractor may rely on an order of precedence clause to resolve a discrepancy between the specifications and drawings, even if the contractor recognizes the discrepancy prior to bidding.
In this contract for the construction of a jet engine blade repair facility at Tinker Air Force Base, the specifications called for a minimum of 18 inches of non-expansive fill under the concrete floor slabs, while a note on the drawings required 36 inches of fill. The order of precedence clause provided that the specifications governed in the event of a conflict with the drawings. Relying on this clause to resolve the obvious discrepancy, the excavation subcontractor based its bid on the specification requirement of 18 inches of fill, and the prime, in turn, incorporated the subcontractor’s price into its own bid to the government.
During performance, the contracting officer directed the placement of 36 inches of fill under the concrete floor slabs as indicated by the drawings. The Armed Services Board of Contract Appeals rejected the contractor’s claim for the resulting additional work, ruling that given the obvious discrepancy, the contractor had a duty to seek clarification despite the clear statement of the order of precedence clause.
Relying on the decision in Franchi Construction Co. v. United States, 609 F.2d 984 (Ct.Cl. 1979), where the Court of Claims held that a contractor could rely on the order of precedence clause to resolve a patent discrepancy between the specifications and drawings, the Federal Circuit reversed the Board’s ruling. In reaching its decision, the court reemphasized that the order of precedence clause is a mechanism to remove conflict between different parts of the contract and thus eliminates the obligation to report an obvious (patent) inconsistency prior to bidding. The court, therefore, determined that where the contract has an order of precedence clause, a contractor must seek clarification only where there exists an obvious, internal discrepancy within the drawings or specifications.
Recognizing that a strict application of the order of precedence clause in this manner could lead to inequitable results in some circumstances, the court noted that equitable principles would apply to ensure that contractors do not profit or otherwise benefit by application of the clause. In essence, the court will require a contractor to establish reliance on its application of the order of precedence clause in the bidding process.
The Armed Services Board of Contract Appeals has applied the holding in Hensel Phelps. Concerning a situation which arose at Ellsworth Air Force Base in North Dakota, the Board stated:
Following the foregoing precedent, we hold that Appellant was within its rights to prepare its bid in accordance with the specifications and without regard to the drawings which clearly and patently conflicted with those specifications; and, further, that appellant had the right to rely on the accuracy of the quantities prescribed in the specifications even though they were stated as “approximate,” just as the Court ruled in Hensel Phelps, that the contractor had the right to rely on specifications which stated the quantity as “a minimum.”
Appeals of Hills Materials Company, ASBCA No. 42410, 92-1 BCA 24,636.
Update: July 2, 2018