Hard Hat Case Notes

AuthorBy Christopher M. Burke and Lauren P. McLaughlin
Published in
The Construction Lawyer
, Volume 41, Number 2, Season 2021. © 2021 American Bar Association. Reproduced with permission. All rights reserved. This information or any portion
thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.
Contracting Ocer’s
Acknowledgment of
Diering Site Conditions
Not Binding on Government
In August 2016, the U.S. Army
Corps of Engineers (Corps)
issued a Request for Proposal
(RFP) to procure the services
of a construction contractor to
repair and improve a military
airstrip at the Selah Aireld,
located at the Yakima Training
Center in Washington State. Six
weeks after the release of the
RFP, the Corps issued Cherokee
General Corporation (CGC) a
$7.2 million fixed-price task
order for the work, which task
order was awarded under a mul-
tiple award task order contract (MATOC) between the
parties. The task order required performance to be com-
pleted in 240 calendar days, by May 27, 2017.
Once work started, the project experienced numerous
delays. The parties disagreed about who was responsi-
ble for the delays, as well as whether some of the work
the Corps directed CGC to perform was required by the
task order contract or was additional work that should
have been the subject of change orders. While the par-
ties were at odds about the extent to which various delays
affected the critical path of performance, the Corps issued
a change order that extended the contract completion
date 49 days, to July 15, 2017.
By mid-May 2017, the Corps concluded that CGC
would not be able to meet the deadline for completion
of the runway in time for an event called “the Mobility
Guardian exercise,” which was a high-prole combat-
readiness exercise scheduled for the summer of 2017. The
Corps’s contracting ofcer issued a show cause notice
to CGC on June 8, 2017, and, after considering CGC’s
response, the contracting ofcer terminated the contract
for default.
CGC argued that the default termination was improper
and led a claim seeking payment for work performed,
along with damages, amounting to over $4 million. CGC
alleged, among other things, that project delays were
excusable because they resulted from design changes
imposed by the Corps, differing site conditions, and other
circumstances not within CGC’s control. CGC ultimately
led a lawsuit in the U.S. Court of Federal Claims ask-
ing that the court convert the termination for default to
a termination for convenience and that CGC be awarded
payment on its claims.
The Corps counterclaimed for almost $7.5 million,
which included: (a) $3.5 million attributable to hiring a
replacement contractor; (b) $3.2 million for repairs to the
project site allegedly necessitated by CGC’s over-excava-
tion and placement of improper ll material in certain
areas; and (c) $641,190 in liquidated damages based on
435 days of delay in the completion of the contract.
The court’s decision was based on several motions for
summary judgment led by the Corps to dismiss claims
by CGC. One motion related to CGC’s differing site con-
dition (DSC) claim, where CGC alleged that the presence
of wet soils at the site constituted either a Type I or Type
II DSC. The Corps moved to dismiss this claim on the
basis that CGC failed to provide any evidence that could
establish the elements of either type of DSC.
As to the Type I DSC, the court noted that CGC had
to establish, at a minimum, that a reasonable contrac-
tor reading the contract documents as a whole would
interpret them as making a representation as to the site
conditions. In addition, the court cited long-standing
precedent that the contractual representation had to
afrmatively represent a condition (e.g., that only hard
material would be encountered). The court found that
CGC failed to identify any afrmative representation in
the contract documents regarding the condition of the
soils at the airstrip. To the contrary, the court found that
the contract explicitly “placed the onus on CGC to deter-
mine the condition of the site itself, by conducting its own
geotechnical investigation and preparing its own report.”
As for the Type II DSC, the court noted that CGC
was required to demonstrate that there existed unknown
physical conditions at the site, of an unusual nature, that
differed materially from those ordinarily encountered and
generally recognized as inhering in work of the character
provided for in the contract. The court found that CGC
failed to meet such requirements. CGC presented no evi-
dence that it could not have reasonably anticipated that
there would be a signicant amount of wet soils at the
site shortly after the winter season or that the conditions
of the soil differed materially from what would ordinarily
be encountered and generally recognized when undertak-
ing similar work in the region.
The court found that CGC’s DSC claim relied in large
measure on the contracting ofcer’s show cause notice
stating that “the Government recognizes [the drain-
age system, material quantity overruns, and saturated
soils] as either changes to the Contract or differing site
conditions.” The court found CGC’s reliance on this “con-
clusory observation” to be unavailing:
Even where a contracting ofcer’s legal opinion is
fully explained (unlike here), it is not binding on
Christoph er M. Burke
Lauren P. McLaughlin
By Christopher M. Burke and Lauren P. McLaughlin

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