Geotechnical Report in Solicitation Bars Federal Contractor’s Recovery for Unfavorable Soil Conditions

Construction and Procurement Law News, Q4 2015

Client Alert

In Old Veteran Construction, Inc. v. United States, the U.S. Court of Federal Claims dismissed a federal contractor’s claim for damages, which the contractor contended were due because of unexpected soil conditions encountered during its construction of an Army Reserve Center. The Court rejected the contractor’s differing site conditions claim on the basis that the actual soil conditions encountered were not materially different from those described in the Government’s solicitation, because a geotechnical report included with the solicitation had adequately informed the contractor about the likelihood of varying seasonal soil conditions.

In April 2011, the U.S. Army Corps of Engineers (“Corps”) issued a solicitation for the construction of an Army Reserve Center in Quincy, Illinois. The Government’s solicitation included a “Report of Geotechnical Investigation,” which contained information regarding the engineered fill to be used for the building pad. This Report stated that the “on-site lean clay will not be suitable for use as engineered fill during the colder and wetter months of late fall, winter, and spring” and recommended “using an imported granular fill if earthwork operations are performed during these months.” The Report also recommended that the earthwork operations be performed during the summer, if possible, “to limit the costs associated with importing granular fill and/or stabilizing the on-site lean clay.”

OVC, the successful bidder, submitted a schedule projecting that the excavation and fill work would take place from December 24, 2011 through January 22, 2012. OVC commenced work January 13, 2012.

Shortly after starting, OVC submitted a Request for Information to the contracting officer, requesting approval to use three-inch gravel for the building pad because of the wet, frozen conditions of the site clay. The contracting officer’s representative sent a reply indicating that OVC’s proposal was acceptable “but only if performed at no additional cost to the Government.”

OVC used three-inch gravel for the engineering fill, and submitted a Request for Equitable Adjustment, based on the “fact [that it had] bid the project anticipating favorable weather conditions, given that the award date was never identified.” OVC claimed that, because the contract was not awarded until September 20, 2011, it had no option but to perform the excavation and fill work during the winter months, leading to “substantial cost impacts.” The contracting officer denied this claim on the basis that OVC had “unreasonably assumed that if awarded the Contract [it] would start work … during the summer months of 2011” and that OVC “should have calculated [its] proposal to include the likelihood of a winter start date instead of assuming a definite summer start date.”

OVC filed its complaint, and the Government responded by filing a motion for a summary decision, asserting that, as a matter of law, OVC could not prevail on its claim because the soil conditions encountered by OVC were fully anticipated in the geotechnical report provided to OVC during the bid process.

The Court agreed. It characterized the claim as a Type I differing site conditions claim under FAR 52.236-2, and stated that, to prevail on this type of claim, “a contractor must prove … that the conditions encountered at the project site materially differed from those represented in the contract documents, the conditions must have been reasonably unforeseeable to the contractor based on the information available to the [contractor] at the time it submitted its bid, and the [contractor] must show that it reasonably relied upon its interpretation of the contract and the contract-related documents.” In dismissing OVC’s claim, the Court relied heavily on the Geotechnical Report in the Government’s solicitation, which had specified that the soil conditions would likely vary between the seasons and stated that performing the earthwork during the winter months would likely require the contractor to use imported granular fill in lieu of the on-site lean clay. Thus, according to the Court, the wet soil conditions that OVC encountered in January 2012 were not “at odds” with the conditions represented in the contract documents.

The Court rejected OVC’s argument that it expected to perform the site work in the summer, deeming it unreasonable. When OVC submitted its bid on June 30, 2011, there was a known 90 day period for the award (the Government in fact awarded on September 20), meaning that OVC should have known that summer excavation was unlikely.

In short, OVC “could have projected that it would not have been able to begin work during the summer and could have adjusted its bid accordingly, prior to its final submission on June 30, 2011.” OVC, however, did not adjust its bid at any time prior to that final submission date.

Differing Site Conditions, including the impact of winter weather, are often in play in private and public contracts. Prudent bidders must gauge the award date in providing firm prices. In a private context, a bidder might qualify its bid as contingent on a certain award date or construction window. In public contracts, that choice is usually not available, so the final bid should reflect the most likely actual construction period and conditions, or the company should “no bid.”