A 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.