Tag Archives: differing site conditions

CONSTRUCTIVE SUSPENSION (SUSPENSION OUTSIDE OF AN EXPRESS ORDER)

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In the federal procurement arena, there is a concept known as “constructive suspension.” Constructive suspension, while known in the federal arena, should reasonably apply to all projects when work is stopped outside of an express order to stop the work based on the law below.  An unreasonable suspension is an unreasonable suspension and an express order to stop the work does not negate the effects of what really amounts to a suspension.

“Constructive suspension occurs when work is stopped absent an express order by the contracting officer and the government is found to be responsible for the work stoppage.”  P.R. Burke Corp. v. U.S., 277 F.3d 1346, 1359 (Fed. Cir. 2002).  The government delay must be unreasonable to support a constructive acceleration claim. Id.

“To demonstrate such a constructive suspension of work, the contractor must show that the delay (1) was for an ‘unreasonable length of time,’ (2) was proximately caused by the government’s actions, and (3) resulted in some injury to the contractor.” Fireman’s Fund Ins. Co. v. U.S., 2001 WL 36415627, *6 (Fed.Cl. 2001) (citation omitted). “Relative to proving that the delay was directly caused by the government, the contractor must concomitantly show that it was not delayed by any concurrent cause that would have independently generated the delay during the same time period even if it does not predominate over the government’s action as the cause of the delay.” Beauchamp Const. Co. v. U.S., 14 Cl.Ct. 430, 437 (Cl.Ct. 1988).

“A constructive suspension has the same effect and consequences as an actual suspension, and relief should be granted as if an actual suspension order had been issued.”  K-Con Bldg. Systems, Inc. v. U.S., 100 Fed.Cl. 8, 27 (Fed.Cl. 2011) (quotation omitted).

Beauchamp Construction illustrates a constructive suspension situation.  Here, a prime contractor was awarded a fixed price contract to construct several federal buildings in Miami within 365 days.  The contract included representations of soil conditions. The contractor received a notice to proceed.  Shortly after it proceeded, the contractor discovered muck which prevented the contractor’s from installing foundations (footings) in two of the buildings.  This muck was a differing site condition. The contractor notified the government, but the government did not expressly issue a stop work order. The contractor did some other work that it could do since there was no stop work order. Thereafter, the government gave the contractor new specifications and asked for a cost proposal for demucking. The contractor submitted its cost proposal which the government did not approve until about two months after the contractor submitted the cost proposal and three months after furnishing notification of the muck. About two months later, the contractor addressed the differing site condition (muck) and submitted a claim to the government for 137 days of delay along with its delay damages.  The government agreed to 54 days but disputed 83 days.  The court found that a constructive suspension did apply to justify the contractor’s entitlement to the disputed 83 days of delay:

In the case at bar, the parties agree that the original specifications did not include demucking and that the specifications had to be changed to include this additional work. The parties also agree that certain aspects of the construction of buildings 10c and 12 were postponed until the demucking was completed. This postponement of progress under the original contract would necessarily include the time prior to authorization of the demucking work since plaintiff could not proceed until it received the authorization to remove the differing site condition. The court finds, therefore, that on the record before it there is specific evidence of interference with the progress in a part of the contract performance caused by the admitted differing site condition and the resulting and subsequent 83–day delay on defendant’s [the government] part in issuing Modification No. 4. The court, on these facts, can and does reasonably infer the existence of compensable delay damages to [the contractor] as a result of the unjustified interruption of performance.

Beauchamp Construction, supra, at 439.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

FOUR ELEMENTS TO PROVE TYPE 1 DIFFERING SITE CONDITIONS CLAIM

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There are two types of differing site conditions claims.  A Type 1 claim and a Type 2 claim.  The Federal Acquisition Regulations (FAR) describes these claims, which are often described similarly in any construction contract that has a differing site conditions clause. (Most construction contracts will have a differing site conditions clause.).  It is important to understand the distinction between a Type 1 differing site conditions claim and a Type 2 differing site conditions claim.

A Type 1 claim is “subsurface or latent physical conditions at the site which differ materially from those indicated in this contract.”  F.A.R. 52.236-2(a).

A Type 2 claim is “unknown physical conditions at the site, of an unusual nature, which differ materially from those ordinarily encountered and generally recognized as inhering in work of the character provided for in the contract.” Id.

The United States Court of Federal Claims in Marine Construction, LLC v. U.S., 158 Fed.Cl. 158 (Fed.Cl. 2022), explained a contractor’s burden to support a Type 1 differing site conditions claim. This burden requires the contractor to prove four elements to demonstrate entitlement to a Type 1 differing site conditions claim:

First, plaintiff must prove “a reasonable contractor reading the contract documents as a whole would interpret them as making a representation as to the site conditions.”  Whether the contract makes a representation as to the disputed site conditions is a matter of contract interpretation and a question of law.  The contractual representation must be affirmative.  “A contractor cannot be eligible for an equitable adjustment for a Type I differing site condition unless the contract indicated what that condition would be.”  “[A] proper technique of contract interpretation is for the court to place itself into the shoes of a reasonable and prudentcontractor and decide how such a contractor would act in interpreting the contract documents.” 

 “Second, [plaintiff] must prove … the actual site conditions were not reasonably foreseeable to the contractor, with the information available to the particular contractor outside the contract documents, i.e., that the contractor  ‘reasonably relied’ on the representations.”  “In other words, … it must be ‘reasonably unforeseeable on the basis of all the information available to the contractor at the time of bidding.’ ” “[C]onditions which are discoverable by a reasonable site visit and review of the contract documents [are] chargeable to the contractor.” 

 “Third, [plaintiff] must prove … [it] in fact relied on the contract representation.”

“Fourth, [plaintiff] must prove … the conditions differed materially from those represented and [it] suffered damages as a result.” Relying on a “total time theory” to prove excusable delay  is impermissible because it assumes the government is responsible for all the claimed delay.

Under the “total time theory,” a contractor asserts that wrongful government action contributed to delayed contract completion and “simply takes the original and extended completion dates, computes therefrom the intervening time or overrun, points to a host of individual delay incidents for which defendant was allegedly responsible and which ‘contributed’ to the overall extended time, and then leaps to the conclusion that the entire overrun time was attributable to defendant.”

Marine Industrial, supra, at 188-89 (internal citations omitted).

A contractor that encounters differing site conditions needs to understand its burden in substantiating the claim. A contractor’s burden is challenging so it should not take its burden for granted.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

TYPE I DIFFERING SITE CONDITIONS CLAIM IS NOT EASY TO PROVE

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shutterstock_397981669A differing site condition claim will almost universally result in both a cost and time impact.    There will be additional, unanticipated costs incurred.  And there will likely be a delay requiring additional time to perform.

 

A Type I differing site condition claim is when the contractor encounters conditions at the site different than those indicated in the contract documents.  That seems easy enough to prove, right.  Nope.  And, I mean nope!  If you don’t believe me, consider the recent decision in Meridian Engineering Co. v. U.S., 885 F.3d 1351 (Fed.Cir. 2018).

 

To prevail on a Type I DSC claim, a contractor must prove that: (1) a reasonable contractor reading the contract documents as a whole would interpret them as making a representation as to the site conditions; (2) the actual site conditions were not reasonably foreseeable to the contractor, with the information available to the particular contractor outside the contract documents (i.e., reasonable foreseeability); (3) the particular contractor in fact relied on the contract representation; and (4) the conditions differed materially from those represented and … the contractor suffered damages as a result.  

 Meridian Engineering Co., 885 F.3d at 1356 (internal quotations and citation omitted).

 

In this case, the contractor entered into a contract with the government to build flood control structures.  During construction, the contractor encountered subsurface unsuitable saturated soils.  The contractor notified the government and modifications were issued as a result of the unsuitable soils.  However, the government eventually suspended the work following structural failures and then terminated the project.

 

An issue pertained to the contractor’s Type I differing site conditions claim that the subsurface unsuitable saturated soil caused delays and increased costs.  The trial court found that the existence of the subsurface saturated soils was reasonably foreseeable.  (If the site conditions were reasonably foreseeable, there is not a Type I differing site conditions claim.)

 

First, the specifications stated “[w]ater in varying quantities may be flowing in natural washes throughout the length of the project,” and “[t]he work site may be inundated because of [water] runoff.”  Meridian Engineering Co., 885 F.3d at 1357.  Based on these specifications, the court found that a reasonable contractor would interpret the specifications as a representation of water as a site condition.  Remember, the very first element in a Type I differing site conditions claim requires a reasonable contractor interpreting the contract as a whole would interpret them as making a representation about the site conditions. This kills the Type I differing site conditions claim.

 

Next, the original drawings showed the potential presence of saturated soil and the job was on a floodplain.  Based on this, a reasonable contractor would have performed a site inspection which, in turn, would have informed the contractor of the subsurface saturated soil conditions.   

 

Moreover, boring logs that accompanied the contract stated that variations may exist between boring locations.  Certain geotechnical information did indicate there would be hard unyielding material in excavation areas.  “[E]ven though the Contract indicated ‘hard unyielding material’ found at parts of the site, a reasonable and prudent contractor would not have understood the [C]ontract documents as providing an affirmative indication of the subsurface conditions to be nonsaturated at the site.  Meridian Engineering Co., 885 F.3d at 1357 (internal citations omitted).  Had the contractor undertaken a pre-bid site inspection, it reasonably would have foreseen a saturated soil condition.

 

This case demonstrates that Type I differing site conditions claims are not simple to prove. If the site conditions were reasonably foreseeable, perhaps with a pre-bid site visit, then there goes the claim.  And, presumably, the contract and accompanying geotechnical information will warrant a reasonable contractor to undertake a pre-bid site inspection (according to the Meridian court’s reasoning).  

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

 

DIFFERING SITE CONDITIONS: TYPE I & TYPE II CLAIMS

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It is not uncommon for contractors, especially foundation and civil contractors, to encounter unanticipated site conditions.  These conditions are known as “differing site conditions.”    In government contracting, there is a differing site conditions clause (F.A.R. 52.236-2 shown at the bottom of this posting that is routinely incorporated into prime contracts and subcontracts through flow-down provisions) that identifies two types of differing site conditions.

 

Type I differing site conditions are “subsurface or latent physical conditions at the site which differ materially from those indicated in the contract.”  F.A.R. 52.236-2.  Type II differing site conditions, on the other hand, are “unknown physical conditions at the site, of an unusual nature, which differ materially from those ordinarily encountered and generally recognized as inhering in work of the character provided for in the contract.”  Id.

 

If a contractor complies with the differing site conditions clause and proves the differing site condition, it should be entitled to an equitable adjustment from the government.  The objective behind the differing site conditions clause is to prevent contractors from including fluff in their prices to account for contingencies and unknown conditions since the government will equitably adjust the contract based on these conditions.  In reality, though, the contractor still bears the burden of proving the differing site condition which is oftentimes more challenging than it sounds.  It is important for contractors to understand the difference between Type I and Type II differing site conditions so that they know what is necessary to support an appropriate adjustment to their contract (from a dollar and time standpoint).

 

 

I. Type I Differing Site Condition (subsurface or latent conditions differing materially from contract):

 

There are six elements to a Type I differing site conditions claim that a contractor must prove:

 

“(1) that the contract affirmatively indicated subsurface conditions upon which the contractor’s claims are based; (2) that the plaintiff acted as a reasonably prudent contractor in interpreting the contract documents; (3) that the contractor reasonably relied on the indications of subsurface conditions in the contract; (4) that the subsurface conditions actually encountered differed materially from subsurface conditions indicated in the contract; (5) that the subsurface conditions encountered were reasonably unforeseeable; and (6) that the contractor’s claimed excess costs were solely attributable to the materially different subsurface conditions.”

Weston/Bean Joint Venture v. U.S., 115 Fed.Cl. 215, 218 (Fed.Cl. 2014).

 

These conditions are in addition to the initial notice requirement that the contractor must give the contracting officer before proceeding with the alleged additional work.  See Id. at 218, n.2 citing F.A.R. 52.236-2.  Timely notice should always be given, especially notice before the work commences, to take away any argument that notice was not properly or timely provided to the government.

 

The contractor should also submit any request for equitable adjustment or claim based on the six elements.  This means the contractor needs to point out the subsurface or latent conditions that were indicated in the contract documents and the reasoning / factual basis supporting the different subsurface conditions that the contractor encountered.  This is important because a contractor will not succeed with its Type I differing site conditions claim without showing what the contract indicated. As the United States Court of Federal Claims explained:

 

“A contractor cannot prevail on a claim for a Type I differing site condition unless the contract indicated what that condition would be.  However, the indication in the contract need not be explicit or specific if it provide[s] sufficient grounds to justify a bidder’s expectation of latent conditions materially different from those actually encountered. There must be reasonably plain or positive indications in the bid information or contract documents that such subsurface conditions would be otherwise than actually found in contract performance ….  Determining what the contract indicated requires contract interpretation performed by stepping into the shoes of a reasonable and prudent contractor and decid[ing] how such a contractor would act in interpreting the contract documents.”

All Power, Inc. v. U.S., 60 Fed.Cl. 679, 684 (Fed.Cl. 2004) (internal citations and quotations omitted).

 

The contractor should also endeavor to separately cost code and track its costs (manpower, equipment, subcontractor(s), etc.) solely relating to the differing site condition.

 

 

 

 II. Type II Differing Site Condition (unknown physical conditions at the site differing materially from those ordinarily encountered and generally recognized): 

 

There are three elements to a Type II differing site conditions claim that a contractor must prove: “(1) the condition must be unknown to the contractor; (2) unusual; and (3) materially different from comparable work.”  All Power, 60 Fed.Cl. at 685.  Type II claims are harder to prove because the contractor carries a heavier burden “since there is a greater duty to conduct pre-bid inquiries or reasonable site inspections inasmuch as recovery is available only if the condition is unknown, which means it would not have been revealed upon inquiry or during a reasonable site investigation.”  Totem Construction, ASBCA 35985, 1990 WL 224243 (1990).

 

Similar to a Type I claim, the contractor must provide timely notice and endeavor to separately cost code and track the additional work it incurs in furtherance of supporting a request for equitable adjustment or claim.

 

 

52.236-2 Differing Site Conditions.-                                                                                                                                                                                               
(a) The Contractor shall promptly, and before the conditions
are disturbed, give a written notice to the Contracting
Officer of—
(1) Subsurface or latent physical conditions at the site
which differ materially from those indicated in this contract;
or
(2) Unknown physical conditions at the site, of an
unusual nature, which differ materially from those ordinarily
encountered and generally recognized as inhering in work of
the character provided for in the contract.
(b) The Contracting Officer shall investigate the site conditions
promptly after receiving the notice. If the conditions
do materially so differ and cause an increase or decrease in the
Contractor’s cost of, or the time required for, performing any
part of the work under this contract, whether or not changed
as a result of the conditions, an equitable adjustment shall be
made under this clause and the contract modified in writing
accordingly.
(c) No request by the Contractor for an equitable adjustment
to the contract under this clause shall be allowed, unless
the Contractor has given the written notice required; provided,
that the time prescribed in paragraph (a) of this clause for

giving written notice may be extended by the Contracting Officer.

(d) No request by the Contractor for an equitable adjustment
to the contract for differing site conditions shall be
allowed if made after final payment under this contract.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.