Reprinted from November 2005 ohioconstructionlaw.com

Many times in this column I have explained a Type I differing site condition as one where actual conditions in the field are different from what was represented in the contract documents. I have also written about cases where contractors have made claims for Type I conditions based upon alleged discrepancies between boring logs furnished by the owner and the subsurface conditions found during construction. A recent case out of the United States Court of Federal Claims took 83 pages to explain how the analysis of a Type I claim is much more complex than merely comparing the boring logs to actual field conditions. 

In Renda Marine, Inc. v. The United States (2005), 66 Fed. Cl. 639, a contractor sued the U.S. Army Corps of Engineers for nearly $10 million and a contract extension, alleging damages from six separate differing site conditions on a project to dredge portions of the Houston-Galveston Navigation Channel in Texas and construct a  levee around the disposal area for the dredged spoils.

The court performed a painstaking review of the federal case law for proving a Type I differing site conditions claim, and reduced the analysis to a list of six "indispensable elements" that, in addition to following the contract’s claim notice requirements, needed to be proven by a preponderance of the evidence. The elements are worth reviewing. 

Federal courts have held that "contract documents" include the bidding documents and documents mentioned in the bidding documents, as well as minutes of pre-bid conferences, if distributed to bidders. Whether these contract documents affirmatively represent certain conditions is a matter of law, something that the court will determine.

These contract documents must affirmatively represent field conditions but need not do so expressly. As long as the court agrees that a reasonable contractor would have interpreted actual field conditions to be a certain way based on inferences in the contract documents, there can be a Type I differing site condition claim.  Conversely, where the contract documents are dead silent regarding a difficult condition, there necessarily cannot be a Type I claim.

This requirement is another way of stating the doctrine of patent ambiguity—the contractor has a duty to inquire about obvious omissions and inconsistencies in the contract documents. Failure to do so usually means that the contractor will be prevented from later making a claim that could have been prevented had the ambiguity been cleared up before the bid.

However, the contractor’s interpretation need only be reasonable—it need not be correct. To decide this point, courts expect a contractor to do more than review the contract documents and inspect the work site. A reasonable contractor is supposed to draw upon previous experience in the industry and in the particular geographic area of the work. Also, attending the pre-bid conference, although often not a legal requirement, goes a long way towards convincing the court that a contractor’s interpretation of the contract documents is reasonable. 

3. The Contractor Must Reasonably Rely Upon Contract Indications.

In addition to making a reasonable interpretation of the contract documents, the contractor must reasonably rely upon that interpretation to be able to prosecute a Type I claim successfully. In other words, a contractor must prove not only that it examined the contract documents and reasonably interpreted them, but also that it relied on the interpretation when calculating its bid. 

This is the heart and soul of a Type I differing site conditions claim. What was actually encountered is a question of fact—something for a jury to decide.  Not just any old difference will do. The difference must be material—a contractor has to prove that there turned out to be a larger amount of work than initially contemplated or that alternative means and methods had to be implemented to complete the contract. 

Where there is smoke, there must be fire. A contractor who wishes later to make a differing site conditions claim for fire must show that it looked for smoke before it bid the job, and explain why it did not see any smoke. Following this analogy, courts have shot down a Type I claim for buried boulders when rock outcroppings were visible across the site, and a claim for peat bogs when the boring logs showed conditions conducive to peat bog formation. 

For a more detailed discussion of what constitutes a reasonable site investigation, see Defining a Reasonable Site Investigation.

A contractor making a Type I differing site conditions claim must prove that its increased performance costs were solely attributable to the materially different subsurface conditions. Key here is the word "solely."  Expenses that a contractor would have been required to expend anyway even if no differing site condition had occurred are not recoverable. 

The list of six indispensable elements of a Type I differing site claim may seem like common sense. Contractors may consider it to be merely dotting I’s and crossing T’s. But these elements require serious attention—each one must be proved by a preponderance of the evidence. And as in almost any construction claim, contemporaneous project documents are indispensable for establishing proof. Just ask the dredging contractor in Renda Marine, who failed to satisfy all the elements in each of its differing site conditions claims and collected nothing on its claims for $10 million.