FOUR ELEMENTS TO PROVE TYPE 1 DIFFERING SITE CONDITIONS CLAIM

There are two types of differing site conditions claims.  A Type 1 claim and a Type 2 claim.  The Federal Acquisition Regulations (FAR) describes these claims, which are often described similarly in any construction contract that has a differing site conditions clause. (Most construction contracts will have a differing site conditions clause.).  It is important to understand the distinction between a Type 1 differing site conditions claim and a Type 2 differing site conditions claim.

A Type 1 claim is “subsurface or latent physical conditions at the site which differ materially from those indicated in this contract.”  F.A.R. 52.236-2(a).

A Type 2 claim is “unknown physical conditions at the site, of an unusual nature, which differ materially from those ordinarily encountered and generally recognized as inhering in work of the character provided for in the contract.” Id.

The United States Court of Federal Claims in Marine Construction, LLC v. U.S., 158 Fed.Cl. 158 (Fed.Cl. 2022), explained a contractor’s burden to support a Type 1 differing site conditions claim. This burden requires the contractor to prove four elements to demonstrate entitlement to a Type 1 differing site conditions claim:

First, plaintiff must prove “a reasonable contractor reading the contract documents as a whole would interpret them as making a representation as to the site conditions.”  Whether the contract makes a representation as to the disputed site conditions is a matter of contract interpretation and a question of law.  The contractual representation must be affirmative.  “A contractor cannot be eligible for an equitable adjustment for a Type I differing site condition unless the contract indicated what that condition would be.”  “[A] proper technique of contract interpretation is for the court to place itself into the shoes of a reasonable and prudentcontractor and decide how such a contractor would act in interpreting the contract documents.” 

 “Second, [plaintiff] must prove … the actual site conditions were not reasonably foreseeable to the contractor, with the information available to the particular contractor outside the contract documents, i.e., that the contractor  ‘reasonably relied’ on the representations.”  “In other words, … it must be ‘reasonably unforeseeable on the basis of all the information available to the contractor at the time of bidding.’ ” “[C]onditions which are discoverable by a reasonable site visit and review of the contract documents [are] chargeable to the contractor.” 

 “Third, [plaintiff] must prove … [it] in fact relied on the contract representation.”

“Fourth, [plaintiff] must prove … the conditions differed materially from those represented and [it] suffered damages as a result.” Relying on a “total time theory” to prove excusable delay  is impermissible because it assumes the government is responsible for all the claimed delay.

Under the “total time theory,” a contractor asserts that wrongful government action contributed to delayed contract completion and “simply takes the original and extended completion dates, computes therefrom the intervening time or overrun, points to a host of individual delay incidents for which defendant was allegedly responsible and which ‘contributed’ to the overall extended time, and then leaps to the conclusion that the entire overrun time was attributable to defendant.”

Marine Industrial, supra, at 188-89 (internal citations omitted).

A contractor that encounters differing site conditions needs to understand its burden in substantiating the claim. A contractor’s burden is challenging so it should not take its burden for granted.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

 

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