Contractor’s Differing Site Condition claim on project with a Geotechnical Baseline Report, by Hugh Anderson

Issue: Contractor’s Differing Site Condition claim on project with a Geotechnical Baseline Report. King County v. Vinci Construction Grands Projets. Court of Appeals of Washington (2015).

Summary: $200 million project that included 13 miles of tunnels for wastewater conveyance. Contract included a Geotechnical Data Report (GDR) and a Geotechnical Baseline Report (GBR). The contractor, a joint venture led by Vinci, encountered difficult subsurface conditions that damaged its two boring machines and substantially impeded the contractor’s progress. The work fell behind schedule and ultimately King County replaced the contractor and sought recovery from the performance bond sureties. One defense was a differing site conditions claim focused on an unexpected number of transitions from plastic to non-­‐plastic soils (“plastic” referring to the soil’s consistency, which affected the operations of the boring machines). Although the GBR identified soil groups that the contractor should expect to encounter, on a percentage basis, the GBR did not attempt to quantify, or specifically locate, the transitions between soil groups.

The case included several other issues, and had a complicated procedural history. Among other points, at a trial the contractor was awarded $26 million in damages for differing site conditions arising from deviations from GBR baseline expectations for subsurface pressure conditions and soil abrasivity. At the same time, the jury found that the contractor had defaulted under the contract, and awarded the county $155 million in damages and $14 million in prevailing party attorneys fees. Both parties appealed.

Decision: The court of appeals held as follows regarding the soils-­‐transition differing site conditions claim: (a) The GBR and other contract documents did not indicate the number or frequency of soil transitions, or make location-­‐specific commitments, nor did the GBR or contract documents imply any information about transitions. (b) The County could not be held liable for a differing site condition arising from the difference between the contractor’s interpretation or interpolation of data, and actual conditions. (c) the contractor had not relied on contract indications regarding transitions in making its bid—in fact, even contractor’s own geotechnical analysts had not predicted or located soil transitions, deeming this to be “difficult, if not impossible” to do; and pre-­‐bid contractor had concluded that knowing the number of transitions was not important to the bid. The court also rejected various “defective specifications” assertions by the contractor, relating to the County’s specification of the type of boring machine, finding that these assertions were in essence the same as the differing site conditions claims.

Comment: The EJCDC 2013 Supplementary Conditions (C-­‐800) contains an optional contract clause for using a GDR and GBR. The clause recognizes that a GBR may not baseline all subsurface features. Here, the GBR did not baseline the soil transitions. Given that the contractor’s own pre-­‐bid geotechnical advisors did not consider transitions to be significant, this appears to have been a reasonable omission.

The part of the decision addressing the contractor’s reasonable reliance (or in this case lack of reliance) on contract indications during bid formation is of interest. This is a basic element of differing site conditions claims, and the standard general conditions (EJCDC C-­‐700) as well as the GDR/GBR option in C-­‐800, establish what information the contractor (bidders) may rely on. This could perhaps be supplemented with a direct statement about the necessity of actual reliance as an element of recovery