B-171941, JUL 28, 1971

B-171941, JUL 28, 1971

CONTRACTS - CHANGED CONDITIONS - CONTRACTOR'S ACTUAL KNOWLEDGE DECISION DENYING APPEAL FROM AN ADVANCE RULING BY THE ENGINEERING BOARD OF CONTRACT APPEALS ON CONTRACTOR'S CLAIM FOR ADDITIONAL PAYMENTS OF $4,190.08 UNDER THE DIFFERING SITE CONDITIONS CLAUSE OF A CONTRACT WITH THE CORPS OF ENGINEERS FOR CONSTRUCTION OF ADDITIONAL WATER SUPPLY AND SEWAGE FACILITIES FOR THE HERMITAGE PUBLIC USE AREA OF THE POMME DE TERRE RESERVOIR IN MISSOURI. BECAUSE THE CORPS OF ENGINEERS MADE NO REPRESENTATION AS TO THE SUBSURFACE CONDITIONS, CONTRACTOR CANNOT RECOVER UNDER PART "A" OF THE DIFFERING SITE CONDITION CLAUSE WHICH COVERS CONDITIONS AT THE SITE DIFFERING MATERIALLY FROM THOSE INDICATED IN THE CONTRACT. FURTHER, THE COMP. GEN. BELIEVES THAT THERE CAN BE NO RECOVERY UNDER PART "B" BECAUSE THE ROCKY CONDITIONS WERE NOT "UNKNOWN." IN FACT, THE RECORD INDICATES THAT SOUTHWEST HAD ACTUAL KNOWLEDGE OF THE SUBSURFACE CONDITIONS, HAVING PERFORMED A CONTRACT AT THE SAME SITE THREE YEARS EARLIER.

TO SOUTHWEST ENGINEERING COMPANY, INCORPORATED:

THIS OFFICE HAS CONSIDERED YOUR APPEAL OF FEBRUARY 11, 1971, FOR REVIEW OF THE DECISION DATED JUNE 29, 1970, OF THE ENGINEERING BOARD OF CONTRACT APPEALS NO. 3070 WHICH DENIED YOUR CLAIM FOR ADDITIONAL PAYMENTS UNDER THE DIFFERING SITE CONDITIONS CLAUSE OF CONTRACT NO. DACW41-68-C-0177.

THE CONTRACT WAS AWARDED JUNE 28, 1968, TO SOUTHWEST ENGINEERING COMPANY, INCORPORATED (SOUTHWEST), WHICH SUBMITTED THE LOWER OF TWO BIDS IN RESPONSE TO AN INVITATION FOR BID FOR CONSTRUCTION OF ADDITIONAL WATER SUPPLY AND SEWAGE FACILITIES FOR THE HERMITAGE PUBLIC USE AREA OF THE POMME DE TERRE RESERVOIR IN MISSOURI. PREVIOUSLY, IN 1965, SOUTHWEST BUILT THE ORIGINAL FACILITIES AT THIS LOCATION, A LATRINE-SHOWER BUILDING, A WATER WELL, A SEPTIC TANK, ROADWAYS, AND SIDEWALK. THE AMOUNT OF THE 1968 CONTRACT FOR THE ADDITIONAL FACILITIES WAS $19,298; THE PROJECT WAS COMPLETED AND ACCEPTED BY THE CORPS OF ENGINEERS DECEMBER 12, 1968.

SOUTHWEST HAS SUBMITTED A CLAIM FOR AN EQUITABLE ADJUSTMENT OF $4,190.08, UNDER CLAUSE 4 (DIFFERING SITE CONDITIONS) OF THE CONTRACT. THE CLAIM WAS MADE FOR WORK UNDERTAKEN BY SOUTHWEST WHEN IT ENCOUNTERED ROCK WHILE DIGGING TRENCHES FOR WATER AND SEWER LINES. ON ACCOUNT OF THIS SUBSURFACE CONDITION MORE COSTLY EXCAVATION BY BLASTING AND BY PICK AND SHOVEL WAS NECESSARY RATHER THAN EXCAVATION BY BACKHOE. THE CLAIM WAS DENIED BY THE CONTRACTING OFFICER AND THEN BY THE BOARD ON THE GROUND THAT SOUTHWEST DID NOT ENCOUNTER A DIFFERING SITE CONDITION WITHIN THE MEANING OF CLAUSE 4 OF THE GENERAL PROVISIONS OF THE CONTRACT.

SOUTHWEST ALLEGES THAT IT HAS A RIGHT TO AN EQUITABLE ADJUSTMENT BECAUSE THE CORPS OF ENGINEERS GAVE NO INDICATION EITHER IN THE INVITATION FOR BIDS OR IN PRE-BID SURVEYS THAT THERE WERE UNUSUAL SUBSURFACE CONDTIONS ON THE CONSTRUCTION SITE WHICH WOULD REQUIRE MORE EXPENSIVE EXCAVATING TECHNIQUES. SOUTHWEST ALSO INSISTS THAT IT JUSTIFIABLY RELIED UPON THE SPECIFICATIONS WHICH SHOWED NO TEST BORINGS FOR THE LOCATION WHERE THE SUBSURFACE ROCK WAS ENCOUNTERED, ALTHOUGH THEY DID SHOW TEST BORINGS FOR A SEWER CONSTRUCTED UNDER THIS CONTRACT. THE BORING NEAREST TO THE AREA WHERE THE SUBSURFACE ROCK WAS ENCOUNTERED WAS APPROXIMATELY 100 FEET AWAY. SOUTHWEST ALLEGES THAT THESE SPECIFICATIONS LED IT TO BELIEVE THAT NO UNUSUAL SUBSURFACE CONDITIONS WOULD BE ENCOUNTERED WHERE NO BORINGS WERE NECESSARY.

EVIDENCE WAS PRESENTED TO THE BOARD THAT REPRESENTATIVES OF THE CORPS OF ENGINEERS THEMSELVES HAD ACTUAL KNOWLEDGE BEFORE THE 1968 CONTRACT WAS AWARDED THAT THERE WAS SUBSURFACE ROCK AT THE SITE OF THE EXCAVATIONS. THIS EVIDENCE IS BASED ON THE RECORD OF THE 1965 CONTRACT WITH SOUTHWEST FOR CONSTRUCTION OF THE HERMITAGE PUBLIC USE AREA. THE RECORD CONTAINS DAILY LOGS DESCRIBING ROCK EXCAVATION, PHOTOGRAPHS OF ROCK EXCAVATED, AND A MODIFICATION OF THE SPECIFICATIONS MADE IN ORDER TO AVOID ADDITIONAL EXPENSE FOR ROCK EXCAVATION.

BUT THE CORPS OF ENGINEERS PRESENTED EVIDENCE TO THE BOARD THAT SOUTHWEST ALSO HAD ACTUAL KNOWLEDGE OF THE SPECIFIC SUBSURFACE CONDITIONS WHICH CAUSED THE EXTRA WORK IN EXCAVATING THE TRENCHES UNDER THE 1968 CONTRACT. EVIDENCE IN THE RECORD OF THE 1965 CONTRACT, MENTIONED ABOVE, SHOWS THAT MR. P. H. ANDERSON, THE PRESIDENT OF SOUTHWEST WHO PERSONALLY SUPERVISED THE PERFORMANCE OF BOTH CONTRACTS AT THE HERMITAGE PUBLIC USE AREA, ACTUALLY KNEW ABOUT THE SUBSURFACE ROCK CONDITIONS WHEN HE SUBMITTED SOUTHWEST'S BID FOR THE 1968 CONTRACT. THE DAILY LOGS OF THE 1965 CONTRACT SHOW THAT EMPLOYEES OF SOUTHWEST ENCOUNTERED ROCK DURING EXCAVATION FOR A SEPTIC TANK AND SEWER LINE 20-40 FEET FROM THE AREAS WHERE ROCK WAS ENCOUNTERED DURING EXCAVATIONS FOR THE 1968 CONTRACT. PHOTOGRAPHS OF THE SITE TAKEN DURING PERFORMANCE OF THE 1965 CONTRACT ALSO SHOW ROCK WHICH WAS PRESUMABLY EXCAVATED AT THE SITE. FURTHERMORE, REPRESENTATIVES OF THE CORPS OF ENGINEERS AND MR. ANDERSON AGREED TO THE MODIFICATION OF THE SPECIFICATIONS MENTIONED ABOVE. THIS MODIFICATION RAISED THE ELEVATION OF A SIDEWALK AND DRIVEWAY IN ORDER TO AVOID SUBSURFACE ROCK NEAR THE LATRINE-SHOWER BUILDING WHICH WOULD OTHERWISE HAVE RESULTED IN ADDITIONAL EXCAVATION COSTS TO SOUTHWEST. IT IS MOST SIGNIFICANT THAT AS A RESULT OF THIS MODIFICATION SOUTHWEST PUT A CONCRETE SIDEWALK AND CRUSHED ROCK DRIVEWAY DIRECTLY ON TOP OF SOLID ROCK IN PLACES WHERE IT LATER ENCOUNTERED ROCK WHILE EXCAVATING TRENCHES FOR THE NEW CONTRACT. FINALLY, THE SWORN STATEMENTS OF SEVERAL EMPLOYEES OF THE CORPS OF ENGINEERS WHO DEALT WITH MR. ANDERSON ATTESTED TO THE FACT THAT HE ACTUALLY OBSERVED THESE SUBSURFACE CONDITIONS ON MANY OCCASIONS. SOUTHWEST ENCOUNTERED THE SAME CONDITIONS IN THE SAME LOCATION WHILE EXCAVATING WATER AND SEWER TRENCHES UNDER THE 1968 CONTRACT. THE CLAIM NOW BEING CONSIDERED IS FOR ADDITIONAL COSTS INCURRED IN THESE EXCAVATIONS.

THE CONTRACT BETWEEN SOUTHWEST AND THE CORPS OF ENGINEERS INCLUDED A GENERAL PROVISION ALLOWING AN EQUITABLE ADJUSTMENT IN CONSIDERATION FOR COMPENSATING THE CONTRACTOR FOR COSTS INCURRED ON ACCOUNT OF AN UNFORESEEN SITE CONDITION. CLAUSE 4 (DIFFERING SITE CONDITIONS) READS IN PART, AS FOLLOWS:

"THE CONTRACTOR SHALL PROMPTLY, AND BEFORE SUCH CONDITIONS ARE DISTURBED, NOTIFY THE CONTRACTING OFFICER IN WRITING OF: (A) SUBSURFACE OR LATENT PHYSICAL CONDITIONS AT THE SITE DIFFERING MATERIALLY FROM THOSE INDICATED IN THIS CONTRACT, OR (B) UNKNOWN PHYSICAL CONDITIONS AT THE SITE, OF AN UNUSUAL NATURE, DIFFERING MATERIALLY FROM THOSE ORDINARILY ENCOUNTERED AND GENERALLY RECOGNIZED AS INHERING IN WORK OF THE CHARACTER PROVIDED FOR IN THIS CONTRACT *** ."

THE BOARD CONCLUDED THAT SOUTHWEST COULD NOT CLAIM AN EQUITABLE ADJUSTMENT UNDER SECTION (A) ON THE GROUND THAT THE CONTRACT MADE NO REPRESENTATION ABOUT THE SUBSURFACE CONDITIONS OF THE SPECIFIC AREA NEAR THE LATRINE-SHOWER BUILDING WHERE SOUTHWEST ENCOUNTERED ROCK WHILE EXCAVATING. WE FIND THAT THIS POSITION IS SUPPORTED BY THE FOLLOWING LANGUAGE OF THE COURT OF CLAIMS:

"THE CHANGED CONDITIONS CLAUSE PROVIDES, IN THE DISJUNCTIVE, TWO SEPARATE BASES FOR THE REIMBURSEMENT OF UNANTICIPATED COSTS. THE FIRST ALTERNATIVE ALLOWS RECOVERY IF THE CONTRACTOR DISCOVERS 'SUBSURFACE CONDTIONS' 'MATERIALLY DIFFERING FROM THOSE SHOWN ON THE DRAWINGS OR INDICATED IN THE SPECIFICATIONS.' THIS CLAUSE CANNOT BE INVOKED IF THE PLANS AND SPECIFICATIONS DO NOT 'SHOW' OR 'INDICATE' ANYTHING ABOUT THE ALLEGED UNFORESEEN CONDITION, I.E., IF THEY SAY 'NOTHING ONE WAY OR THE OTHER ABOUT SUBSURFACE WATER'." UNITED CONTRACTORS V UNITED STATES, 368 F. 2D 585 (1966). SEE ALSO RAGONESE V UNITED STATES, 120 F. SUPP. 768 (1954).

THE BOARD ALSO FOUND THAT SOUTHWEST COULD NOT MAKE A VALID CLAIM UNDER SECTION (B) OF CLAUSE 4. WE AGREE. THE EVIDENCE IN THIS CASE INDICATES THAT SOUTHWEST NOT ONLY KNEW ABOUT SUBSURFACE ROCK CONDITIONS IN THE GENERAL AREA BUT ALSO HAD ACTUAL KNOWLEDGE THAT THERE WAS SUBSURFACE ROCK IN THE SPECIFIC AREA WHERE IT CLAIMS IT ENCOUNTERED "UNKNOWN PHYSICAL CONDITIONS." IT HAS ONLY SOUGHT TO SHOW THAT THE CORPS OF ENGINEERS MUST BE CHARGED WITH THE SAME KNOWLEDGE AND THAT SOUTHWEST HAD A RIGHT TO RELY SOLELY ON THE SPECIFICATIONS WHICH GAVE NO INDICATION OF THE SUBSURFACE CONDITIONS WHICH CAUSED ADDITIONAL EXCAVATION COSTS FOR SOUTHWEST. THIS OFFICE BELIEVES, HOWEVER, THAT SOUTHWEST'S ACTUAL KNOWLEDGE OF THE SPECIFIC SUBSURFACE CONDITIONS OF THE HERMITAGE SITE PREVENTS IT FROM QUALIFYING FOR AN EQUITABLE ADJUSTMENT UNDER CLAUSE 4 OF THE CONTRACT. THE "CONSISTENT HOLDING" OF THE COURT OF CLAIMS FOR DECIDING WHAT IS AN UNKNOWN PHYSICAL CONDITION OF AN UNUSUAL NATURE DIFFERING MATERIALLY FROM THOSE ORDINARILY ENCOUNTERED IS "ONE THAT COULD NOT BE REASONABLY ANTICIPATED BY THE CONTRACTOR FROM HIS STUDY OF THE CONTRACT DOCUMENTS, HIS INSPECTION OF THE SITE, AND HIS GENERAL EXPERIENCE, IF ANY, AS A CONTRACTOR IN THE AREA." PERINI CORPORATION V UNITED STATES, 381 F. 2D 403, 410 (CT. CL. 1967).

WE THEREFORE AGREE WITH THE DECISION OF THE CORPS OF ENGINEERS BOARD OF CONTRACT APPEALS DENYING THE CLAIM BY SOUTHWEST ENGINEERING COMPANY, INCORPORATED, FOR AN EQUITABLE ADJUSTMENT UNDER CLAUSE 4. WE HAVE ENCLOSED THAT PORTION OF THE RECORD WHICH SOUTHWEST SUBMITTED FROM ITS OWN FILES.