Back in January of 2006, this column discussed proving a Type II differing site conditions claim, one for costs attributable to site conditions that differ from the known and usual. I noted that Type II claims are fact-intensive and difficult to prove, making successful Type II claims rare. For an example of a successful claim (albeit only partially successful), I summarized a case from the U.S. Claims Court where an earthen dam contractor was able to recover for some of its costs when the soils it was handling behaved unexpectedly after becoming wet.

It has happened again. This month the Armed Services Board of Contract Appeals gives us that rarest of gems, a case where a contractor vindicated its entitlement to whatever it could prove as damages on a Type II differing site conditions claim. The case, Appeal of Parker Excavating, Inc., 2006 ASBCA LEXIS 18, arose out of the construction of several miles of underground electrical conduits at Fort Carson, Colorado.

There were no soil borings or other type of underground investigation to determine exactly what the contractor could expect in the subsurface, which is most likely why this was not a Type I differing site conditions case—there was nothing in the contract documents to compare actual conditions to. But it was known that hard rock existed in the area, generally making subsurface work difficult.

Instead of open trench methods, the contractor was using directional boring to advance a six-inch diameter conduit. For several months, the contractor was hampered by slower-than-expected production and frequent boring machine breakdowns. It fell behind schedule. The contractor attributed its problems to construction debris in the subsurface, which consisted of concrete foundation pieces, rebar, asphalt and other waste material. The contractor informed the contracting officer of these conditions and documented them in its crews’ timesheets, foreman’s diary and daily superintendent reports. Sometimes samples of the debris were retrieved as the drillhead was retrieved back through the borehole. Other times the debris was discovered when the drillhead became stuck and had to be rescued through an open excavation.

The contracting officer denied the contractor’s $74,000 claim, stating that the claim was not timely made, that the contractor’s problems were attributable to operator error, and that the contractor should have anticipated difficult boring conditions because the presence of hard bedrock was well known in the area.

The Armed Services Board of Contract Appeals thought more than hard bedrock was involved. It overruled the contracting officer, declaring that the contractor was entitled to a Type II differing site conditions claim under Federal Acquisitions Regulation 52.236-2. The Board remanded the case back to the parties to negotiate a value on the claim.

The Board noted that the contractor, too, was concerned that its problems could be attributable to operator error. It brought in a new operator, who experienced the same problems—slow production and frequent equipment breakdowns. The Board also found numerous instances where the contractor voiced its concerns with the problems it was having with the construction debris.

The Board even noted the government’s own documents acknowledging the contractor’s complaints and requests for guidance early on in the project. Finally, the Board held that even though hard bedrock and construction debris can both make horizontal boring more difficult, they are distinctly different phenomena. It would be fundamentally unfair to assume that they would cause identical problems for the contractor.

This case holds several obvious, yet important lessons. Owners who forego a subsurface investigation before bidding subsurface work are asking for trouble. On the contractor’s side, underground projects on older, redeveloped sites run a higher risk of subsurface interferences from abandoned foundations and demolition debris. When facing a bid on a project like that, a contractor needs to be sure that the contract protects it from differing site conditions.