ASBCA Finds that Even if a Site Condition is Inherently Variable, A Contractor Can Recover Under Differing Site Conditions if it Varies More than the Parties Anticipated; ASBCA 58791, Appeals of John C. Grimberg Co. Inc.

Appeal of a claim for differing site conditions is sustained, where the type of geologic formation at the site, which by its nature is irregular, varied more than the government had represented in a geological report given to offerors. A separate appeal of a claim for contract acceleration, however, is denied where the contractor cannot establish that it was ordered to accelerate by the agency. Additional appeals of various alleged contract changes are also denied where the contractor ignored contract requirements.

John C. Grimberg Co. had a contract with the U.S. Army Corps of Engineers to design and build a Biological Defense Research Lab in Maryland. After it completed construction, Grimberg submitted claims for differing site conditions, delay, acceleration, and contract changes. The Corps denied the claims, and Grimberg appealed to ASBCA.

Grimberg’s differing site condition claim concerned the karst geologic formation undergirding the construction site. As the board explained, kasrt geology is renowned for variable and inconsistent rock formations over even short distances. Thus, when building over a karst formation, it is inherently difficult to predict the quality of subterranean rock and soil. The Corps prepared a geological report for the Biolab site, which was included with the RFP. The survey included logs with photos of borings into the soil around the Biolab site. Based on these boring samples, Grimberg’s proposal assumed it would need to drill through about 240 feet of rock for foundational piers. It turned out that Grimberg had to drill through 923 feet of rock—a 375 percent increase. This difference, the company contended, amounted to a differing site condition. The Corps countered that given the capricious nature of karst geology, Grimberg’s 240 feet assumption was unreasonable.

The board was not really persuaded but either party’s position. The board characterized Grimberg’s argument as assuming perfection—namely, that all of the rock below a certain level was competent; the Corps, on the other hand, assumed a worst-case scenario, i.e., that Grimberg should have anticipated exactly what it encountered. The board articulated a middle ground.

First, the board reasoned, the borings the Corps selected for the geological report failed to include sufficient borings from the actual site of the Biolab’s foundation. Only two boring were from the actual Biolab site; others were from hundreds of feet around the site. What’s more, the board found there was a “gross disparity” between the amount of incompetent rock encountered and the quantity of incompetent rock that was reasonably indicated in the geological report. Even accounting for other borings around the Biolab site, the amount of incompetent rock was simply not foreseeable. Thus, Grimberg was entitled to some allowance for a differing site condition.

Nevertheless, the board did not believe that the company was entitled to recover the full cost of drilling 923 feet. The board found that Grimberg had over-relied on the two borings that were actually take from the Biolab site. The board found that Grimberg’s conclusion that it could estimate rock drilling quantity with accuracy from two borings was overly optimistic and simplistic.

After reviewing the geological report, expert opinion, and foundation work done on other proximate buildings, the board concluded that the contract reasonably indicated that 360 feet of rock drilling would be required. While the board found that the karst geology amounted to a differing site condition, it would only permit Grimberg an allowance for an extra 120 feet of drilling. The board also found that Grimberg was entitled to an equitable adjustment for the delay caused by the differing site condition.

Grimberg also asserted a claim for acceleration—that is, that it encountered delays on the project due to the installation of utilities and other factors—and had to expend extra resources to finish the project on schedule. The board noted that an acceleration claim requires an effective order to accelerate; that is, the government must insist on completion of the contract within a period of time shorter than the period to which the contractor would be entitled due to the delay. To satisfy this element, Grimberg pointed to a letter from the Corps, which it interpreted as an order to accelerate. The board, however, found that the letter was simply a preliminary information request that was intended to allow the government to consider acceleration options. Moreover, Grimberg never even complied with the letter to provide the government with an acceleration plan; instead, the company simply accelerated its performance without giving the government the any role is deciding how to manage the project. The board denied the acceleration claim.

Grimberg also asserted several claims for contract changes, alleging the Corps had changed its requirements for fire hydrants, asphalt pavement, card readers, and temporary power. The board denied all of these claims, finding that Grimberg had ignored detailed design requirements and instead relied on a single drawing or specification, which it interpreted as permitting a lesser requirement. Grimberg attempted to shift the burden of these claim onto the government, contending the Corps should have known how the company was interpreting the requirements from its proposal. The board, however, concluded that the Corps had no duty to decipher the implicit bidding assumptions tucked away in Grimbersg’s multi-million dollar proposal.

John C. Grimberg Co. Inc. is represented by Edward J. Parrott and Stephanie M. Rochel of Watt, Tieder, Hoffar & Fitzgerald, LLP. The government is represented by Michael P. Goodman, Scott C. Seufert, and David B. Jerger of the U.S. Army Corps of Engineers.