Knowing the Different Types of Unforeseen Differing Site Conditions Claims Can Help You Get Paid Faster

Federal Construction Differing Site Conditions Claims FAR 52.236 2When submitting claims against the federal government for additional costs on the project site, or litigating in appeal cases involving differing site condition claims in government construction contracts, companies, quickly find out that the agency fights back due to procedural rules and sometimes timeliness of the notification from information available to the contractor.

Under Federal Acquisition Regulation FAR 52.236 2, an equitable adjustment without the proper notifications or documentation to show that the company has experienced differing site conditions on a federal construction project, the courts will more than likely rule in favor of the government.

Tips

  • Always review drawings and specifications carefully before submitting a bid for a federal construction project.
  • Immediately notify the contracting officer of the differing site conditions (courts have ruled against companies or late notification.
  • Never take directions from the contracting officer representative without written permission from the contracting officer.
  • Avoid costly mistakes of not following strict requirements of the Contract Disputes Act when submitting a claim to the government.
  • Filing a claim against the government starts at the agency level. The best way to address differing site conditions is to promptly notify the contracting officer.

Waiting to address the issue later can increase your chances of the government disputing your claim. If your company misses any on the legal requirements, the contracting officer’s final decision will not be in your favor. Below are the basic requirements for dealing with differing site conditions in construction.

FAR 52.236-2 Various Types of Differing Site Conditions

 The Differing Site Conditions clause in government construction differentiates two distinct types of differing site condition claims:

Type I claims:  these types of differing site condition claims in government contracts involve subsurface or latent physical conditions at the site which differ materially from those indicated in the contract.

Type II claims: involve 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.” See 48 CFR 52.236-2(a); see also Renda Marine, Inc. v. United States, 509 F.3d 1372, 1376 (Fed. Cir. 2007) (differentiating Type I and Type II differing conditions).

In federal construction projects, any misstatement as to differing site conditions in government contracts can support a claim for breach of contract. See Hollerbach v. United States, 233 U.S. 165, 172 (1914).

  • The same requirements apply whether the contractor asserts such a common law breach of contract claim or a Type I claim under the Differing Conditions clause, a clause which is common in government construction contracts but was not included in your contract with the government.

Required Legal Proof for Differing Site Conditions Claims in Government Contracts

 In order to prevail in differing site condition claims against the federal government under FAR 52.236-2, you must establish four legal elements:

1. You must prove that a reasonable contractor reading the contract documents as a whole would interpret them as making a representation as to differing site conditions. See Renda Marine, 509 F.3d at 1376

2. You must prove that the actual differing site condition was not reasonably foreseeable, with the information available to your company outside the contract documents, i.e., that you “reasonably relied” on the representations. See Renda Marine, 509 F.3d at 1376

  • This issue is factual in nature, and review is deferential.

3. You must prove that you, in fact, relied on the contract representation.

  • Courts review these facts under a deferential standard.

4. You must prove that the conditions differed materially from those represented and that the contractor suffered damages as a result, which is again a fact question.

If you fail to satisfy these legal requirements, you claim, or appeal case will fail.  As mentioned earlier, it is important to establish a sound legal record at the claims submission stage. This includes claims for quantum meruit.

  • You generally cannot introduce new evidence on appeal.

Litigating differing site condition claims under FAR 52.236-2 in government contracts without counsel can sometimes cause more damage than good. There are simply too many nuances where court decisions show that construction contractors are not held to a lower standard during litigation.  Read more about the risk of appearing pro se and latent defect disputes.

How Do Submit Differing Site Condition Claims or Requests for Equitable Adjustment?

Under the Contract Disputes Act, a contractor must  submit a “valid claim,” which is defined by regulation as a demand seeking “as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to the contract.” See M. Maropakis, 609 F.3d at 1327 (quoting 48 C.F.R. § 33.2013). Therefore, if you are submitting a claim for differing site conditions on a federal contract, the Contract Disputes Act by itself does not create a cause of action to which money damages may accrue; it is the claim asserted pursuant to the Act that is the source of potential damages and review by the trier
of fact. See Northrop Grumman Computing Sys., Inc. v.United States, 709 F.3d 1107, 1112 (Fed. Cir. 2013) (explaining the statutory requirements for a valid claim brought under the CDA, which is a jurisdictional requirement to obtain relief). 

What is the Legal Standard for Submitting a Differing Site Conditions Claim?

A Type I [DSC claim] arises when the conditions encountered on the construction project or government contract differ from what was indicated in the contract documents.” Renda Marine, Inc. v. United States, 509 F.3d 1372, 1376 (Fed. Cir. 2007); see also FAR 52.236-2(a)−(b) (“The Contractor shall promptly . . . give a written notice to the Contracting Officer [CO] of (1) subsurface or latent physical conditions at the construction site which differs materially from those indicated in this contract. . . . The [CO] shall investigate the site
conditions promptly after receiving the notice. If the differed conditions do materially differ and cause an increase or decrease in the Contractor’s cost of, or the time required for, performing any part of the work under this contract, whether or not changed as a result of the conditions, an equitable adjustment shall be made under this clause . . . .”).

To prevail on a Type I DSC claim, you must prove that:

(1) “a reasonable contractor reading the contract documents as a whole would interpret them as making a representation as to the site
conditions”;

(2) “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., reasonable foreseeability);

(3) “the particular contractor in fact relied on the contract representation”; and

(4) “the conditions differed materially from those represented and . . . the contractor suffered
damages as a result.” See Int’l Tech. Corp. v. Winter, 523 F.3d 1341, 1348−49 (Fed. Cir. 2008).

What Can You Do at the Agency Level to Properly Preserve Your Rights on Appeal

When you decide to submit a Contract Disputes Act claim to the contracting officer for payment, you must at least provide the following:

  • A reasonable interpretation of the contract. This means more than just how you see it. How would a reasonable person with the drawings or specs given interpret the contract? 
  • The existence of any alleged differing site conditions or  any existence of subsurface saturated soil conditions in a construction project were “reasonably foreseeable.” See Meridian Engineering Co. v. United States, No. 2017-1584 (Mar. 20, 2018)

For help with filing for additional costs, submitting an equitable adjustment or questions regarding filing unforeseen construction differing site conditions claims under FAR 52.236-2, call our government claims attorneys at 1-866-601-5518. FREE INITIAL CONSULTATION.

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