AI PART THREE: RISK REVISITED

According to the rules of contract interpretation, an exception to contra proferentem applies if the ambiguity is patent rather than latent. States Roofing Corp. v. Winter, 587 F.3d 1364, 1372 (Fed. Cir. 2009). A “patent ambiguity” is “obvious, gross, glaring, so that plaintiff contractor had a duty to inquire about it at the start.” Id. (quoting H & M Moving, Inc. v. United States, 499 F.2d 660, 671 (Ct. Cl. 1974). 

Where the ambiguity is patent, the non-drafting party must inquire, and a failure to do so will result in the ambiguity being resolved against it. Id. Where the ambiguity is not glaring or obvious, no patent ambiguity exists. Id. The bar to proving patent ambiguity is necessarily high. Metro Mach. DBA Gen. Dynamics Nassco-Norfolk, ASBCA No. 61817, 20-1 BCA. ¶ 37,633 at 182,717 (quoting LAI Services, Inc. v. Gates, 573 F.3d 1306, 1315-16 (Fed. Cir. 2009). 

Contractors are not required to seek clarification of “any and all ambiguities, doubts, or possible differences in interpretation.” States Roofing Corp. v. Winter, 587 F.3d 1364,1372 (quoting WPC Enters., Inc. v. United States, 323 F.2d 874, 877 (Ct. Cl. 1963)). Contractors “are not expected to exercise clairvoyance in spotting hidden ambiguities in the bid documents, and they are protected if they innocently construe in their own favor an ambiguity equally susceptible to another construction . . . .” Blount Bros. Const. Co. v. United States, 346 F.2d 962, 973 (Ct. Cl. 1965). “[T]he basic precept is that ambiguities in contracts drawn by the Government are construed against the drafter.” Id. 

Here is the issue. AI gives the contractor the ability to spot hidden ambiguities. In fact, AI provides the contractor with an almost perfect report on the problems, which allocates the risk of obscurity to the contractor. At least, that is an argument the government is likely to make. 

This raises other questions. Is a contractor reasonably required to use AI in bidding on government contracts? If so, which program? What are the recognized exceptions to the requirement to use AI? Will the judicial tribunals effectively cede their total control over interpretation issues to AI? If not, will they defer to AI at all?

AI will influence the rules of contract interpretation and the allocation of risk on solicitation and contract errors, conflicts, omissions, and inconsistencies. The issue will arise regarding whether the contractor faces a greater risk of responsibility for defects in the government-drafted documents. We would argue it is the government's responsibility to use AI to prevent defects; therefore, all risk must be allocated to the government. In other words, failure to use AI would automatically assign responsibility for defects to the government.

Stay tuned. This will really get heated.