The U.S. Court of Federal Claims recently issued a decision
arising from work at an Oklahoma dam that contains two holdings on
Type I differing site condition claims ("DSC claims")
helpful for contractors asserting such claims.1 Type I
differing site conditions are site conditions which differ in a
material way from the site conditions indicated in the
contract.2 The decision indicates that a contractor will
nearly always survive a motion to dismiss a Type I DSC claim where
the contract documents contain technical information about the site
conditions and indicates such a claim will survive a motion to
dismiss based on a contract term providing for local variations in
the site conditions.
The spillway for an Oklahoma dam was deemed inadequate and to
resolve the issue, the U.S. Army Corps of Engineers planned a two
phase project. Phase I was the construction of an auxiliary
spillway, and Phase II was the construction of improvements to
stabilize the existing spillway. The contractor performing Phase I
encountered higher than expected, flowing groundwater, made a DSC
claim, and settled with the Corps. The Corps then issued a request
for proposals for Phase II which included an engineering report
with a site description and geotechnical testing data, but which
did not mention the groundwater encountered by the contractor that
performed the Phase I work.
ASI Constructors, Inc. was awarded the Phase II contract and
alleges it asked about, but was never told of, any unexpected
condition encountered during Phase I. ASI began performing the work
but encountered two unexpected conditions: fissured rock and
flowing ground water. The fissured rock caused the failure of
tiebacks, and ASI had to modify the drilling method for installing
the tiebacks resulting in additional time to complete the work. The
flowing groundwater was the same condition encountered by the Phase
I contractor and caused ASI to perform additional, unanticipated
dewatering. ASI sought an equitable adjustment, the Corps denied
the request, and ASI filed suit.
The Corps moved to dismiss ASI's DSC claim on the basis that
the contract did not make representations about site conditions.
Specifically, the government asserted that the contract documents
did not explicitly represent that the rock was not fissured and
that the groundwater was not flowing. The Court looked to the 212
page engineering report included in the contract documents and
denied the government's motion to dismiss. While the
interpretation of a contract's terms is a legal question that
can be resolved through a motion to dismiss, the Court found that
determining the meaning of technical specifications in a contract
and whether those specifications can give rise to a DSC claim is a
question of fact that cannot be resolved through a motion to
"Interpreting the text and the test results set forth in
the [report] manifestly involves more than legal analysis; as
described below, it requires factual determinations for which
expert testimony would likely be needed. Such determinations cannot
be made in the context of a motion to
In other words, reading the technical information about site
conditions provided in a contract and determining what that
information should cause a reasonable contractor to understand is a
factual issue, not a legal issue that can be resolved through a
motion to dismiss. As a result, contractors can use this to argue
that whenever a contract provides any information about site
conditions, a contractor's DSC claim survives a motion to
dismiss because of the need to make factual determinations.
Additionally, the decision addressed an argument by the
government that a disclaimer provision in the contract
specifications barred ASI's reliance on the contract's site
condition descriptions and any resulting DSC claim. The
specifications provided that the information was only
"representative of subsurface conditions," there may be
"local variations in the characteristics of the subsurface
materials," and such variations do not constitute material
differences from the contract descriptions of the site conditions
and therefore cannot give rise to a DSC claim. The Court rejected
the government's position that the DSC claim should be
dismissed based on this provision on the basis that factual
development was necessary to determine whether any condition
encountered at the site was only a "local variation" or
was a differing site condition.
 ASI Constructors, Inc. v. US, 129 Fed. Cl. 707 (Dec.
 A Type I differing site condition is distinguished
from a Type II differing site condition which is a condition
different from the conditions normally expected for the work being
 ASI Constructors, Inc., 129 Fed. Cl. at
This Client Alert is intended to inform readers of recent
developments in the field of government contracts law. It should
not be considered as providing conclusive answers to specific legal
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