It’s Friday morning and there are probably better things you would like to do with your remaining day than read a 22-page government contracts decision.
But if you have ever experienced a differing site condition on your project, then here is why you should read pages 17-20 of the recent decision in Metcalf Construction Company v. United States (pdf). On February 11, 2014, the Federal Circuit released its decision in the Metcalf Construction case, which addressed in part a differing site condition claim.
Although the appeal was based primarily on the standard for a breach of duty of good faith (and the opinion talks mostly about that issue), there is some good language in the second part of the opinion about how the trial court wrongly interpreted the differing site conditions provision in the public contract (pages 17-20).
As is traditional, the contract required Metcalf to conduct its own investigation of the site during performance. Although there was a pre-bid site inspection report, the government warned that the report “for preliminary information only.” (…I wonder if the decision would have been different if it said “for information purposes only… ) The trial court concluded that the site representations could be used for bidding purposes, but not for establishing a claim for a different site condition.
The appellate court reversed, stating that the trial court had misinterpreted the differing site condition clause: “The natural meaning of the representations was that, while Metcalf would investigate conditions once the work began, it did not bear the risk of significant errors in the pre-contract assertions by the government about the subsurface site conditions.”
Metcalf Construction is a long opinion on the duty of good faith, but what also remains clear from the Federal Circuit’s analysis is that the pre-bid representations by an owner or its engineer and the responses during the Q&A period are entirely relevant to the contractor’s inquiry and treatment of a differing site conditions claim. I have highlighted some key statements in the decision that you may find interesting.