DIFFERING SITE CONDITION RULES

The Government Accountability Office Contract Appeals Board (GAO CAB) has just reminded us of the rules for determining whether a contractor has a claim for differing site conditions on a construction project.  The GAO CAB denied the contractor's claim for an equitable adjustment for costs incurred to fabricate and install replacement windows in the United States Supreme Court.  The window subcontractor encountered unanticipated conditions at the site.  The Board denied the claim finding that the drawings put the contractor on notice of the requirements and the subcontractor failed to conduct a meaningful investigation of the site.  Theories of recovery discussed include type 1 and 2 differing site conditions, defective specifications and superior knowledge.

The contractor contended the trapezoidal shape of the windows constituted a type 1 differing site condition because the contract drawings listed dimensions that were rectangular in shape.  But the Board noted the drawings gave clear warnings that "some windows will be tapered."  This note, said the Board, put the contractor on notice that the windows might not be rectangular and the contractor should have inquired about the obvious conflict between the dimensions provided and the note that some windows might be tapered.

Now to the rules.  To prevail on a claim for type 1 differing site condition, the contractor must prove that: 1) the contract documents indicate the site conditions which form the basis of the claim; 2) the contractor reasonably interpreted the contract documents and reasonably relied on the indicated site conditions; 3) the site conditions actually encountered differed materially from those indicated in the contract; 4) the site conditions encountered were not reasonably foreseeable from all the information available at the time of proposal submission; and 5) the contractor suffered damages as a result of the materially different site conditions.

The contractor also lost on its type 2 claim.  Again, the rules.  To prevail on this claim, the contractor must prove that the physical condition was both unusual and unknown.  An unusual condition is one that differs materially from that ordinarily encountered and generally recognized as inhering in the work of the character provided for in the contract.  An unknown condition is one that could not have been reasonably anticipated from a site inspection, a review of the contract documents, or the contractor's general experience prior to submitting its proposal.  Merely being unaware of an unusual condition does not, alone, constitute a type 2 differing site condition. (The shape of the windows was not hidden.  You could see the shape from the street if you looked closely.)

The other theories of recovery were also denied mainly because the contractor was warned of the possibility of a problem, failed to inquire, and therefore assumed the risk.  Another rule.  Assumption of risk based on a failure to inquire about a patent (or obvious) ambiguity in the solicitation documents defeats a contractor's claim based on any theory of recovery.

The lesson learned is one we've repeated over and over again.  Scour the solicitation documents for obvious ambiguities.  Raise them with the contracting officer.  If he refuses to amend the solicitation to clarify, protest to GAO or assume the risk and forget about possibly filing a claim.  What's obvious?  It's a dangerous game.  The answer is elusive as the line between hidden and obvious is in the eye of the beholder.

bill@spriggslawgroup.com            www.spriggslawgroup.com