The government often blames construction contractors for shortcomings in its own design and unanticipated difficulties encountered at the site. “You’re supposed to be the expert!” “You should have known what to expect because of the magic language on page 97 of the geotechnical report.” “You’re the design-builder!”
At first glance, these arguments seem persuasive. But when they are presented to a judge at the Court of Federal Claims or a Board of Contract Appeals, their limitations become apparent. Contractors are not ordinarily expected to have the expertise of a designer or geotechnical engineer. And even when contractors have design-build responsibilities, they are entitled to rely on the design components that the government has furnished to them. And that single reference on page 97 of the geotechnical report? It doesn’t override the interpretation that a reasonable contractor may draw from the boring logs and the geotechnical report as a whole.
The Board’s recent decision in Drennon Construction & Consulting, Inc. v. Department of the Interior, CBCA No. 2391 (Jan. 4 2013) [pdf] illustrates how these issues are normally resolved.
The work in the Drennon case involved widening a road by excavating a hillside and installing a retaining wall. The hillside was an “esker,” which geotechnical engineers in Alaska know is composed of rock-flower with no fines and thus cannot support itself in an excavation. The contractor had difficulty completing the excavation and submitted a differing site conditions claim to recover its additional construction costs.
A reasonable contractor’s interpretation
The government pointed out the use of the term “esker” in the geotechnical report, but the Civilian Board of Contract Appeals rejected the government’s argument and sustained the claim. According to the testimony of the contractor’s geotechnical engineering expert, a contractor would not be expected to know the technical meaning or the significance of the term “esker.” There was nothing in the geotechnical report that would have alerted the contractor to the difficulties of constructing a road in esker. In addition to stating that the esker soil could be expected to be similar to the soil identified in the boring logs, the geotechnical report stated that the esker was a “sinuous ridge of assorted, somewhat stratified sand and gravel believed to represent fillings of superglacial, englacial, or subglacial stream channels.”
The question is not what a local geotechnical engineer might be able to glean from a careful reading of the geotechnical report, but what a reasonable contractor would anticipate. The purpose of the differing site conditions clause is to allow contractors to rely on government-furnished data about the site. As the Drennon case explains, “broad exculpatory language does not relieve the agency, which provided the [geotechnical] report to prospective bidders with the expectation that they would rely on it, from liability resulting from conditions which are materially different from those described specifically.” This is good policy.
Applying the Spearin doctrine to design-build contracts
The Civilian Board also rejected the government’s reliance on the fact that the contract required the contractor to design and build a retaining wall made out of gabion baskets. In the government’s view, design-build responsibility meant that the contractor bore the entire risk of the additional costs incurred during construction. But that is not the rule. Even when a contractor has design responsibility, the government retains liability for errors in the specifications that the government provides under the Spearin doctrine. Here, the government’s specifications included the number of gabion baskets and the expected basket dimensions. The contractor reasonably relied on this data in developing its own design. Under the contract, the contractor “had to design the wall within the confines of the [government’s] design for the entire project . . . .”