Differing Site Conditions and Were They Differing After All?
A contractor was unsuccessful in appealing a denial of its claim for equitable adjustment based on differing site conditions, commercial impractibility, undisclosed superior knowledge, and failure to cooperate theories in front of the Armed Services Board of Contract Appeals (ASBCA No. 50521, February 15, 2008).
Contractor Tri-State Consultants, Inc. (Tri-State) hired subcontractor Hendry Corp. (Hendry) to complete dredging work for the U.S. Army Corps of Engineers (Corps). The Corps bid solicitation described the borrow area as dynamic with strong currents and waives. When Hendry started experiencing significant difficulties, Tri-State submitted a certified claim to the contracting officer (the CO) asking for an equitable adjustment: time extension and an additional $1.6 million. The Corps denied the request, and Tri-state appealed to the Armed Services Board of Contract Appeals (the Board).
The contract between Tri-State and the Corps had a provision entitled "Differing Site Conditions". The provision required that the contractor give prompt written notice of physical conditions that differ from those indicated in the contract or unknown physical conditions different from the initial ones or from conditions generally recognized as inherent to the type of work the contract called for. Tri-State's claim for more time and money was based on five theories: Types I and II Differing Site Condition ("DSC-I" and "DSC-II"), commercial impracticability, undisclosed superior knowledge, and failure to cooperate.
To get equitable adjustment under a DSC-I theory, a contractor must show by a preponderance of evidence that: the conditions described in the contract differ materially from those onsite, the onsite conditions were not reasonably foreseeable at the time of bidding, and the contractor relied on the contract language and suffered damages. Tri-State claimed that the subsurface or bottom currents differed from the expected conditions. Appellant claimed it based its expectations of the site conditions based on the 12" dredge limit. The Board pointed out, however, that Tri-State actually used 16" and 20" dredges. In addition, dredge specifications had nothing to do with bottom currents. In addition, Tri-State did not provide enough evidence to prove that bottom currents, and not dredge problems or severe weather conditions caused the sand movement. The Corps also pointed to the "strong tidal currents" warning in the contract. The Board, therefore, dismissed this theory.
A successful DSC-II claim requires that there be an unknown physical condition that the contractor cannot reasonably anticipate based on contract terms, site observations, and own experience, if any. The Board found that the Tri-State's DSC-II claim fails. First, the Board noted that the Corps had warned upon bid solicitation that the borrow area was dynamic. Also, appellant did not show that it was not the strong tidal currents mentioned in the contract that caused the problems. Also, Hendry only found out about the typical conditions on sites of this nature after it submitted its bid. Hendry also did even make a reasonable site investigation to start with.
The Board then rejected Tri-State's claim that specifying a 12" dredge made performance impracticable. The Corps presented evidence that similar wedges had been used on the site before. Tri-State's fourth theory was that the Corps had undisclosed newspapers from 1974, 1984, and 1996, discussing the area's hazardous and dangerous conditions. Again, the Board sided with the Corps who argued that the conditions had changed by 1999 when the contract was entered into. The papers, therefore, did not provide vital knowledge about performance cost and duration. Finally, because of lack of allegations, the Board abandoned the non-cooperation theory.
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