Appeal of the agency’s denial of a claim for compensation for additional work under a construction contract is granted, where a reasonable review during a site visit was not likely to have uncovered a partially hidden gas line leading through the building to be demolished into an adjacent facility. While the agency disclaimed the accuracy of its information about the location of utilities in the area, the board held this statement alone was insufficient to shift the risk to the contractor.
GSI & Whitesell-Green JV appealed the contracting officer’s denial of its claim for additional compensation under its contract for building renovations.
The Air Force awarded the appellant a contract to renovate an aircraft hangar, which required the contractor to demolish the building down to the frame and foundation and to design and rebuild it with a new foam fire suppression system.
The solicitation described the location of the existing utilities, but the Air Force disclaimed the accuracy of this information. The contract stated that the government provided information to the best of its knowledge, but cautioned that vendors would be required to verify all existing utility locations prior to starting work.
After demolition began, the appellant identified a short section of pipe that exited the wall at the corner of a small mechanical room attached to the hangar, which led into an adjacent building. This pipe was a gas line that began at the gas meter, ran through the hangar to be demolished, and into the adjacent building. The line provided gas to both buildings.
The bid documents/contract did not show a gas line or other utility in this location. The appellant explained that it failed to notice the gas line due to the size of the pipe, the fact that the pipe had been painted the same color as the rest of the two buildings, and the fact that the pipe was a different color from the gas meter. There was no indication in the record that the Air Force knew that the pipe was a gas line. The board concluded that the only way for a bidder to have ascertained whether it was a gas line would have been to cut a piece out of the wall, which would have been impracticable on a short site visit and almost certainly would have been barred by the Air Force.
GSI-WG agreed that the contract required it to demolish the line and cap it. However, the appellant objected to the CO’s request that it provide temporary gas service to the adjacent building and then relocate the gas meter to provide permanent service to that building. Nonetheless, GSI-WG performed the work and later submitted a claim, which was denied. This appeal followed.
First, the board considered whether the agency could escape liability by disclaiming the accuracy of its information about the location of utilities and requiring the contractor to verify them. The board acknowledged that a contract may shift a specific risk to a contractor, but explained that an agency may not transfer risk by merely asserting that information provided may be inaccurate.
The board held that the situation fell into the latter category. While the Air Force clearly put GSI-WG on notice that the information provided pre-bid might not accurately identify all utilities, it did not go beyond that. The contract did not clearly convey that the Air Force intended the disclaimers to override the Differing Site Conditions and Changes clauses with respect to undisclosed utilities. Thus, an offeror would not have been aware that, if it found an unidentified utility line that necessitated work on the gas supply to a different building, then it would bear the financial consequences. Absent clear language to this effect, the board declined to interpret the disclaimer clauses in the agency’s favor.
However, the board noted that both the gas meter and pipe were visible on the site visit, and therefore considered whether a reasonable contractor would have noticed the pipe and discerned it connected to an undisclosed utility.
In support of its position, the appellant noted that none of the 28 site visit attendees asked the Air Force about the pipe, even though they collectively submitted 146 questions about the work. According to the appellant, had any of the attendees identified the pipe as a potential issue, some sort of query would have been submitted. While this argument is speculative, the board agreed that it suggested that none of the other visitors were concerned about the pipe.
The appellant also noted the hangar to be demolished was a nearly half-acre in size and was filled with miles of struts, supports, pipes, conduits, ducts, conductors and hoses, all of which crisscrossed throughout the structure. Further, Bidders had only a few hours to inspect the entire facility, inside and out. The court agreed that finding this pipe during a relatively short site visit would have been like finding a needle in a haystack. While an observant person might have spotted the pipe, that person would have also needed to discern that the pipe was a gas line, even though it was painted a different color than the gas meter and while both other contractors and base personnel went about their duties. The board found the appellant convincingly demonstrated that identifying the pipe as a gas line went beyond the bounds of a reasonable site visit inquiry.
The board granted the appeal.
GSI & Whitesell-Green JV is represented by Josh Owens, President. The government is represented by Jeffrey P. Hildebrant, Air Force Deputy Chief Trial Attorney, and Lieutenant Colonel Byron G. Shibata, USAF, Trial Attorney.
