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Geotechnical, Saturated Soil, Geotechnical Report, Metcalf Construction

During site excavation, a design-build contractor encountered a large quantity of unsuitable soils, and this required remediation before foundation work could commence for a building. In this appeal the Armed Services Board of Contract Appeals (ASBCA) from the U.S. Army Contracting Officer’s Final Determination, the appellant, Tetra Tech Facilities Construction, LLC (“design-builder” or “contractor”), argued it was entitled to equitable adjustment under its contract due to soupy clay that differed materially from the medium to stiff clay shown in the government’s geotechnical report that was provided to bidders. The ASBCA opinion, written by Judge O’Sullivan, agreed with the design-builder. The government attempted to argue that the geotechnical information it provided with the contract documents should not have been relied upon by the contractor because the contract obligated the contractor to satisfy itself as to the character and quality of the subsurface materials, and also required the contractor to perform additional site investigation after award of the contract before it would be permitted to construct the building. The Army also argued that its geotech report adequately disclosed the site conditions.

The ASBCA rejected virtually all arguments by the government, and found that the government’s soils report told bidders to expect medium to stiff constructible soils with close to idea moisture content for compaction and did not warn of the conditions actually encountered. The Board found that the design-builder reasonably relied on the subsurface conditions indicated in the soils report. “The fact that the contract labeled its representations as to subsurface conditions as ‘for information only’ or that the contract contains a requirement that the contractor perform further subsurface investigation after award does not deprive the contractor of the right to rely on those representations. Metcalf Construction Co.. v. United States [citation omitted].” The ASBCA wisely noted, “The government does not explain how it thinks [Design-Builder] could have ‘adjusted its proposal’ after contract award based on [it’s own post-contract award geotechnical study]….”

Comment: After the Metcalf Construction case, it was hoped by government contract attorneys like myself who represent government contractors in differing site condition claims, that contracting officers would cease their attempts at using broad contract disclaimer language in their efforts to avoid payment of differing site condition claims. Unfortunately, there is still a learning curve, especially where it appears that some contracting officers believe a greater burden should be imposed on design-builders since their own post-award site investigation is required anyway in order to determine the extent of site conditions necessary to finalizing the design and constructing the project. This current decision helps further lay to rest these spurious arguments. Appeals of Tetra Tech Facilities Construction, LLC, 16-1 BCA 36562, ASBCA 58568, 2016 WL 7025999.

 

The facts of this case, and the import of the legal conclusions, can perhaps be easiest understood by quoting at length from several key passages in the well-written and analyzed 27-page decision.

Key findings of fact by the Board included the following:

“Contract Indications Regarding Site Conditions

5. Included with the Phase Two solicitation as Attachment B was a document entitled “Geotechnical Engineering Exploration and Analysis” dated 11 February 2009 and prepared by Giles Engineering Associates, Inc. for the Maryland Military Department2 (Giles Report) (R4, tab 74 at 488-523). The Giles Report was included in the solicitation documents to provide the bidders with geotechnical information about the project site to allow them to develop proposals (id. at 111, 491). The Executive Summary of the report summarized its findings as follows:

Six geotechnical test borings were performed at the subject site to evaluate subsurface conditions. Topsoil consisting of silty clay and sandy clay with trace organic matter was at the surface at the test borings. The topsoil was measured to be between about 4 and 8 inches thick. The native soil below the topsoil generally consisted of firm silty sand and stiff to very stiff silty clay and sandy clay. It is estimated that the water table was about 7 to 11 feet below-ground at the test borings with perched water at about 1½ feet below-ground when the [exploration] was conducted.

The proposed building will be a two-story structure. It is assumed to be a masonry structure that will not have a basement or other below-ground spaces. Based on the assumed first floor elevation…a spread footing foundation designed for a 3,000 pound per square foot (psf) maximum, net, allowable soil bearing capacity is recommended for the proposed building.

(Id. at-491)

6. Giles reported Material Conditions in Section 6 of its report. The topsoil was characterized as consisting of silty clay and sandy clay with trace organic matter in layers 4 to 8 inches deep. Below that:

The native soil below the topsoil at Test Boring No. 1 generally consisted of firm silty fine sand to at least the 16 foot test boring termination depth. The native soil at Test Boring No. 2 generally consisted of stiff silty clay to at least the 21 foot test boring termination depth. The native soil at the remaining test borings generally consisted of stiff to very stiff silty clay and sandy clay and firm clayey sand, silty sand, and sandy silt to at least the 16 and 21-foot test boring termination depths.

Giles also addressed groundwater:

7.0 GROUNDWATER CONDITIONS

It is estimated that the water table was about 7 to 11 feet below-ground at the test borings with perched water at about 1½ feet below-ground….Groundwater conditions will fluctuate and groundwater may become perched above the water table.

The estimated water table depth is only an approximation based on the colors and water content of the retained soil samples, and water levels that were encountered at the test borings. The actual water table depth may be higher or lower than estimated. If a more precise depth estimate is needed, groundwater observation wells are recommended to be installed and monitored at the site.

7. The Giles Report was the only source of information provided by the government about subsurface conditions on which bidders could base their proposals (tr. 4/31-32). While a site visit was conducted prior to bid, Tetra Tech and the other bidders were limited to visual observations-no invasive investigation was allowed (tr. 1/52,298-99).”

The Board explained the significance of the Report’s characterization of the soils was testified to by several witnesses, including Tetra Tech’s design manager, who said that after looking at the report and soil boring logs and the description of soils as “firm or stiff,” he had no concerns about the project from a design perspective. The design-builder’s senior project manager testified that the Report described the soils as being “firm, stiff soils that we could work off of and build off of, that there was nothing out there that would indicate that we had to remove soils or replace soils due to unsuitable conditions.”

He also testified that the prominent description of the soil conditions was something like “medium to stiff,” which generally “exhibits good engineering behavior [-] the soils tend to be stronger, they tend to be less compressible and so when we put load on them they are less likely to fail, they are less likely to move [and]they have good engineering characteristics.”

The government’s expert testified to the contrary and asserted that the government’s soil report put the design-builder on notice that it would encounter soils at or near saturation.   The Board was not persuaded by the government’s expert but instead found that the government report did not warn of soils “at or near saturation” and that the borings logs and geotechnical evaluation thereof told bidders on the project to expect (and thus the contract indicated) medium to stiff constructible soils with close to ideal moisture content for compaction.

The Board explained the essence of the government’s argument as follows:

The government contends that Tetra Tech has not established either a “Type 1 or Type 2 differing site condition existed because it should have known before it bid, from the raw boring data contained in the Giles Report, that the site was saturated by groundwater at very shallow depths. Having known that, the government continues, Tetra Tech should have engaged in extensive dewatering before beginning excavation, and it cannot recover for expense that it incurred because it failed to do so. The government also disputes Tetra Tech’s breach of warranty, superior knowledge, and breach of implied duty arguments.

* * *

In this appeal it is undisputed that the contractor actually encountered a large volume of saturated, unsuitable soils during excavation of the project site. It is also undisputed that the only information on subsurface conditions that the government made available to Tetra Tech and the other bidders before bidding was the Giles Report, which was Appendix B to the Phase 2 solicitation and was incorporated into the contract upon award (findings 2, 5). The parties disagree on what the Giles Report indicated about the soils at the site.

The Board has found that the Giles Report told bidders on the project to expect medium to stiff constructive soils with close to optimum moisture for compaction (finding 17). This finding is based on not only the characterization of the soils by the government’s geotechnical engineers (Giles) but also on the data contained in the boring logs themselves (findings 5-16).”

As noted above, the Board found the evidence did not support the government’s arguments against a differing site condition claim based on the content of the Report.

The government also argued that that the conditions actually encountered at the site were reasonably foreseeable based on the contents of the government Report, because:

“(1) the “very moist” soil conditions Tetra Tech encountered were as reported by Giles, which characterized the soil as “moist” or “moist to wet” (gov’t br. at 45); (2) the Giles Report warned against the effects of adverse weather which Tetra Tech encountered when it excavated in December of 2010 (id. at 46-47); and/or (3) the Giles Report data warned of soil at or near the liquid limit, “dangerously close to saturation” so that a reasonable contractor would expect soil instability (id. at 48).

The Board rejected all three of the government’s propositions concerning what a reasonable bidder would determine from reviewing the government’s soil report.

The government made one last-ditch effort to avoid honoring the bona fide differing site condition claim. “The government asserts that the soils conditions encountered by Tetra Tech were ‘entirely foreseeable’ given the site’s close proximity to the Chesapeake Bay and the fact that excavation commenced in the winter.” The Board stated that, “This assertion is not further explained or supported….”

Final Comment: One can only hope that contracting officers will, in future determinations regarding differing site conditions claims, apply the lessons learned from this excellent decision as well as the decision of Metcalf Construction cited therein.

 

About the author: Article written by J. Kent Holland, Jr., a construction lawyer located in Tysons Corner, Virginia, with a national practice (formerly with Wickwire Gavin, P.C. and now with Construction Risk Counsel, PLLC) representing design professionals, contractors and project owners.  He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects.  He is publisher of ConstructionRisk.com Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932.  This article is published in ConstructionRisk.com Report, Vol. 19, No. 5 (May 2017).

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