The past few decades have seen a dramatic increase in the use of the "design-build" method of procurement. Assigning responsibility to a single source for both design and construction offers several advantages to project owners. There is a widespread belief - based largely on anecdote - that it reduces claims during the construction phase. But, it also shifts risk to the design-build contractor.

A recent case illustrates this risk. A standard federal contract clause says the contractor's design-build proposal becomes a term of the contract, but with an important caveat. To the extent the proposal does not meet the government's project description and design requirements, the contractor must upgrade the project at no additional cost to the government. A design-build contractor was forced to absorb a significant equipment upgrade on a fixed-price contract.

Other cases this week involved an owner's right to keep a defaulted contractor off the site and altered rating sheets discovered after a technical evaluation. Once a performance surety took over a project, the surety could elect to hire the defaulted contractor to complete the work. The owner's refusal to allow the contractor back on the site discharged the surety of its bond obligation. And, the altered rating sheets did not prove that the "best value" evaluation process had been tainted.