Recent headlines about lead containing toys remind us about the health hazards of lead. These hazards have been known for some time, but there remain countless structures that contain lead contamination, mainly from lead based paint.

When rehabilitating, adding to, or demolishing structures with lead contamination, great care must be taken to protect workers and the environment not just from the lead containing materials, but from lead contaminated dust that may have accumulated over the years as lead based paint gradually weathered from the effects of sunlight and other causes of oxidation. This can sometimes pose problems from a differing site conditions perspective. A recent case from the Armed Services Board of Contract Appeals illustrates the point.

The case, Appeal of Martinez International Corp., 2007 ASBCA LEXIS 4, arose out of the $3 million renovation of an Air Force hangar. The government indicated in the contract documents that only the exterior of the hangar and interior permanent structures were lead contaminated.

The contract, however, also included line items for sampling and testing non-lead containing interior elements of the hangar for the presence of lead contaminated dust, which presumably originated from lead paint that coated the exterior of the hangar as well as some interior structural elements. There also were line items for reimbursing the contractor for the abatement of lead contaminated dust.

The contract incorporated Federal Acquisition Regulation 52.236-2, granting the contractor relief for site conditions “which differ materially from those indicated in this contract.” It also required prompt notice of differing site conditions, before conditions were disturbed.

A problem arose when the contractor identified unanticipated lead contamination in the form of dust on the surfaces of several unpainted parts of the hangar, after demolition was partially completed. At that point it was impossible to determine if the source of the lead-containing dust was previously identified leadcontaining materials or from a previously unsuspected source. But one thing was clear—the contractor failed to conduct a pre-demolition survey for items contaminated with lead dust, as directed by the contract.

The contractor cleaned up all the lead, but its job was made much harder because the lead contamination became much more dispersed during demolition activities. The contractor made a claim for $188,000, its cost of remediating all lead contamination, under the contract’s differing site conditions clause. The contractor claimed that it found lead in places where the contract indicated there was none.

The government’s contracting officer based his rejection of the contractor’s claim on the contractor’s failure to conduct the pre-demolition lead survey called for in the contract. On appeal, the Armed Services Board of Contract Appeals (ASBCA) agreed with the contracting officer and upheld the rejection of the differing site conditions claim.

But the ASBCA granted the contractor a chance at some relief. It held that because there were contract line items to pay for lead abatement, the contractor was entitled to some portion of its cost of cleaning up the lead, just not the portion attributable to the extra difficulty caused by performing the work after the demolition had been partially completed. The Board remanded the case back to the parties to determine the extra cost. So, it is entirely possible that the parties could continue to disagree and end back in front of the Board again.

This case illustrates the importance of performing environmental survey work included in a contract and giving prompt notice once a suspected differing site condition is found. It’s not like the contractor had to pay for the lead sampling and analysis out of pocket—it had bid $15,000 for this part of the work. Had the contractor performed the pre-demolition lead survey and promptly notified the government that there was lead contaminated dust in the hangar, the cost of remediating the contamination surely would have been much less, and the cost of making and litigating a claim could have been avoided.