A recent case from the Court of Federal Claims provides us instruction on differing site conditions and superior knowledge claims. The case arose out of a maintenance dredging contract issued by the United States Army Corps of Engineers (“USACE”). In North American Landscaping, Construction and Dredge Company, Inc. v United States, 17-903C (March 15, 2019), the contractor failed to timely complete its dredging contract and was assessed liquidated damages. In response, the contractor filed a claim for an equitable adjustment and requested a time extension for excusable, compensable delay. The Contracting Officer denied the contractor’s claim and the contractor then filed its lawsuit in the Court of Federal Claims.
The contractor and USACE each moved to dismiss or obtain summary judgment dismissal of several of the other party’s claims. In ruling on the cross-motions, the Court observed that the contractor’s claims relied principally upon the theory that the tug and barge traffic was far greater than indicated in the solicitation documents (a Type I Differing Site Condition), with a secondary emphasis on the theory that the government withheld critical information from it (the superior knowledge doctrine).
With respect to the Type I differing site condition claim, the Court stated that the solicitation documents gave no indication of the amount of tug and barge traffic that the contractor would experience during its dredging operations. Consequently, the Court held as a matter of law that the contractor could not prove that the conditions encountered were materially different from those indicated in the contract, and dismissed the contractor’s differing site condition claim.
The Court then turned to the contractor’s superior knowledge claim. The Court noted that the four elements of proof required to obtain relief on a superior knowledge claim are: (1) a contractor undertook to perform without vital knowledge of a fact that accts performance costs or duration; (2) the government was aware the contractor had no knowledge of and had no reason to obtain such information; (3) any contract specification supplied misled the contractor or did not put it on notice to inquire; and (4) the government failed to provide the relevant information. In this case, the Court held that the contractor made no showing that USACE was aware that the contractor was unaware of the frequency of barge traffic at the project locale. Accordingly, the contractor failed to prove the second element of a superior knowledge claim as a matter of law.
The Court then stated that more importantly, the solicitation noted the existence of barge traffic and periodic performance delays due to barge traffic, so the contractor was on notice that it had a duty to inquire as to the conditions of performance and was expressly invited to do so in the solicitation (site investigation clause). Because the solicitation provisions did not mislead the contractor, and because the solicitation put the contractor on notice to inquire as to conditions of performance, the contractor could not establish a breach of contract claim under the superior knowledge doctrine.
The Court also dismissed the contractor’s claim for excusable delay for unusually severe weather on the basis that it was time-barred due to its untimeliness. Finally, the Court held issues of fact precluded summary disposition of the contractor’s re-dredged quantity costs claim.
The teaching point from the decision is that contractors should conduct site investigations when they are invited to do so pursuant to the terms of the solicitation. Failure to do so can undermine both a differing site conditions claim and a superior knowledge claim. If you have any questions about this article or claims for differing site conditions or superior knowledge, please don’t hesitate to contact us.