By Bruce Jervis
Construction contracts universally state that specified equipment and materials must be new. Used or refurbished goods are contrary to the concept of constructing a new facility or renovating an existing one. In federal construction contracts, the mandate is found in the “Materials and Workmanship” clause. Virtually all contracts – public and private – include the same requirement.
It seems unnecessary to ask what constitutes “new” equipment. Everyone has a common sense, dictionary understanding of the term. Yet this was the question recently before the esteemed U.S. Court of Appeals for the Federal Circuit.
The court ruled, surprisingly, that neither previous ownership nor the need for refurbishment disqualified equipment from being “new.” If the components are unused and any damage can be readily cured, the equipment could qualify. This created the possibility of forcing a public project owner to accept four-year-old, previously owned, improperly stored electrical generators as new equipment.
This ruling, based in part on language found in the Federal Acquisition Regulation, seems outrageous. A dissenting judge scoffed at the idea that four-year-old equipment, encrusted with rust and grime, and with field burns at the mounting holes could be considered new. It seems unfair to the public project owner and the taxpayers. What is your opinion?
