The Corps of Engineers was held liable for design defects in concrete specifications and poor project management on the Montgomery Point Lock and Dam Project in Arkansas. The contractor's surety completed the work after the contractor went bankrupt, and the court found the Corps responsible for the higher labor costs the contractor incurred due to flawed specs and labor market disruption. This case shows that government agencies can be held accountable when their design errors and mismanagement force contractors to spend more money than anticipated.
Document all design specification issues in writing immediately and notify the government in detail—flawed specs are a basis for cost recovery even if your bid was low
Track labor cost increases separately and correlate them to government actions or market disruptions caused by the government's other contracts
Sureties can pursue claims on behalf of bankrupt contractors, so maintain clear records of all extra costs incurred during performance