Background:

• AGC supports establishing a six-year federal Statue of Repose for latent defect claims. Current law allows the federal government a never-ending claim against Federal construction contractors for any defects in construction completed. Over thirty states have statute of repose provisions restricting the liability of a contractor after a specified period of time. The Federal government should have one as well.

AGC Message:

• A Statute of Repose Provides Finality in the Contractor’s Obligation Toward the Owner. Without a federal statute of repose, if a problem surfaces as the result of a latent defect 15 or 20 years after acceptance of a project, the contractor could face liability for repairs or reconstruction. The government inspects properties before taking ownership.
• It is Unreasonable to Allow the Government to Reopen A Contract in Perpetuity. Under the Federal Acquisition Regulations (FAR), should the government believe latent defects exist, it can revoke previous acceptance of ownership, reopening a contract with all of the contractual obligations that existed prior to acceptance. If a contractor refuses to fix the alleged defect, the company can be subject to termination for default, which could lead to debarment or exclusion from other competitively negotiated or bid projects.
• Contractors Should Have No Liability for Inadequate Facility Maintenance. A statute of repose generally starts at project acceptance, whereas a statute of limitations begins when a condition is known or should have been known by the owner. Often, the government fails to keep up with proper building maintenance, which leads to failures years later.
• There is Congressional Precedent for a Statute of Repose for Construction. A statute of repose for general aviation aircraft was enacted in 1994 because unlimited liability had put nearly every domestic aircraft manufacturer out of business. Congress recognized the unfairness of unlimited and uncontrollable liability when it passed the act. A similar situation exists for federal construction contractors.