Government Contracting Database

“To prevail on a claim for differing site conditions, the contractor must prove, by a preponderance of the evidence, “that the conditions ‘indicated’ in the contract differ materially from those it encounters during performance.” The conditions actually encountered must have been reasonably unforeseeable based on all the information available to the contractor at the time of bidding. The contractor also must show that it reasonably relied upon its interpretation of the contract and contract-related documents and that it was damaged as a result of the material variation between the expected and the encountered conditions.” Stuyvesant Dredging Co. v. United States, 834 F.2d 1576 (Fed.Cir.1987) 

“What is “indicated” by contract documents “is a matter of contract interpretation and thus presents a question of law” to be decided by the court To determine what is “indicated,” a “proper technique of contract interpretation is for the court to place itself into the shoes of a reasonable and prudent contractor and decide how such a contractor would act in interpreting the contract documents.” Renda Marine, Inc. v. United States, 66 Fed. Cl. 639, 652 (2005) (internal citations omitted). 

Part of this analysis is whether the contractor could reasonably have anticipated the conditions encountered from a knowledgeable interpretation of the contract documents, its inspection of the site, and its general experience as a contractor. See Renda Marine, Inc. v. United States, 509 F.3d 1372, 1376 (Fed. Cir. 2007); H.B. Mac, Inc. v. United States, 153 F.3d 1338, 1345 (Fed. Cir. 1998). This requires demonstrating, “that the conditions encountered were not reasonably foreseeable in light of all information available to the contractor when bidding.” Renda, 509 F.3d at 1376 (citing H.B. Mac, 153 F.3d at 1345; and Stuyvesant, 834 F.2d at 1581). 

Moreover, express representations regarding the nature of conditions to be encountered during performance are not essential to establishing entitlement to an equitable adjustment if the indications provide, “sufficient grounds to justify a bidder’s expectation of latent conditions materially different from those actually encountered.” All Power, Inc. v. United States, 60 Fed. Cl. 679, 684 (2004) (citing P.J. Maffei Bldg. Wrecking Corp. v. United States, 732 F.2d 913, 916 (Fed.Cir.1984); Pacific Alaska Contractors, Inc. v. United States, 193 Ct.Cl. 850 (1971)). “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 ….” Pacific Alaska, 436 F.2d at 469. Indeed, a contract indication may be proven by inferences or implications, which is determined by the “stepping into the shoes” test described above. All Power, Inc. v. United States, 60 Fed. Cl. at 684 (citing Shank–Artukovich v. United States, 13 Cl.Ct. 346, 350 (1987). The implications in the contract need only be sufficient “to impress or lull a reasonable bidder.” Travelers Cas. & Sur. Co. of Am. v. United States, 75 Fed. Cl. 696, 712 (2007) (quoting Stock & Grove, Inc. v. United States, 204 Ct.Cl. 103 (1974)). 

It is well-settled that “a contractor may rely exclusively on the indications of subsurface conditions contained in the contract and is not required to make additional investigations of his own” to verify the accuracy of the boring information. Western Contracting Corporation, ENGBCA 3835 et al., 82-1 BCA ¶ 15,486 (citing Foster Construction C. A. v. United States, 193 Ct.Cl. 587 (1970). Therefore, a contractor is not required to hire its own geologist or make extensive engineering or scientific investigations prior to bidding. Appeal of Richard P. Murray Co., Inc., AGBCA No. 77-152-4 B, 86-2 BCA ¶ 18804 (citing Minnis & Wright & Garn L. Moody, AGBCA 332, 74-2 BCA ¶ 10,685); Slattery Associates, Inc., ENGBCA 3922, 80-2 BCA ¶ 14,489 (1980). To do so would place an onerous burden on the small contractor which the procurement regulations do not envision. John Murphy Construction Co., AGBCA 418, 79-1 BCA ¶ 13,836 (1979). Moreover, it is well-settled that the reasonable bidder is not required to anticipate the worst possible conditions in evaluating the contract documents. See In Re Appeal of Fed. Ins. Co., IBCA No. 3236, 96-2 BCA ¶ 28415 (citing Redman Service, Inc., ASBCA 8853, 1963 BCA ¶ 3897). 

It is also well-settled that a contractor is entitled to rely on the contract indications regarding subsurface conditions and is not obligated to make a “scientifically educated and skeptical analysis of the contract.” Stock and Grove, Inc. v. United States, 204 Ct.Cl. 103 (1974); Southern Paving Corporation, AGBCA 74-103, 77-2 BCA ¶ 12,813 (1977). 

The court in Roscoe-Ajax Construction Co. v. United States, 198 Ct.Cl. 133, 458 F.2d 55 (1972), has noted that a contractor may establish the “material difference” required by the differing site conditions clause through evidence that it employed methods to accomplish the contract work different from those it anticipated. See also Dunbar & Sullivan Dredging Company, ENGBCA 3165 et al., 73-2 BCA ¶ 10,285; Maitland Brothers Company, ASBCA 24032, 84-2 BCA ¶ 17,463 (use of different, more powerful equipment); Roger J. Au & Son, Inc., IBCA 1303-9-79, 84-1 BCA ¶ 17,094. 

The Court of Claims has recognized that contract indications of subsurface or latent physical conditions may be implied from the specification requirements and project design. See Foster Construction v. United States, 435 F.2d 873, 881, 889-90 (Ct.Cl. 1970); Stock & Grove, 493 F.2d at 645. For example, in a case where the measures required to remove rock exceeded the methods indicated as necessary in the specifications, a differing site condition was found to exist. Bick-Com Corporation, VACAB No. 1320, 80-1 BCA ¶ 14,285. See also S&M – Traylor Brothers, ENGBCA 3878, 82-1 BCA ¶ 15,484 (contract specifying use of heavy equipment implied that soil was sufficiently stable to support the weight of the equipment). As the Board noted in Titan Atlantic Construction Corp., ASBCA 23588, 82-2 BCA ¶ 15,808, a contractor is entitled to use “a simple logical process” in evaluating all of the information in the contract documents to evaluate subsurface conditions. 

Updated: September 10, 2017