Differing Site Conditions

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Pursuant FAR 52.236-2, a contractor is entitled to an equitable adjustment to a government contract when the contractor encounters “differing site conditions”. This FAR contract clause sets forth two types of differing site conditions, known as Type I and Type II. A Type I differing site condition arises when the conditions encountered differ from what was indicated in the contract documents. See FAR 52.236–2, 48 C.F.R. § 52.236–2(a)–(b) (2006). A Type II differing site condition arises when the conditions encountered are of an unusual nature and differ materially from those normally encountered in the kind of work contemplated by the contract.

The purpose of the Differing Site Conditions clause is to allow contractors to submit more accurate bids by eliminating the need for contractors to inflate their bids to account for contingencies that may not occur. H.B. Mac, Inc. v. United States, 153 F.3d 1338, 1343 (Fed. Cir. 1998). This clause:

makes it clear that bidders are to compute their bids, not upon the basis of their own preaward surveys or investigations, but upon the basis of what is indicated and shown in the specifications and on the drawings. The clause should induce the bidder not to consider such contingencies as the latent or subsurface conditions, for which the Government has assumed responsibility.

Foster Constr. C.A. v. United States, 435 F.2d 873, 887 (Ct. Cl. 1970) (quotations omitted) (discussing history and purpose of differing-site-conditions clause).

Type I Differing Site Conditions

“In order to be eligible to recover for a Type I differing site condition, a contractor must first prove, as a threshold matter, that the contract contained some identification of the conditions to be encountered at the site. The contractor must then prove by a preponderance of the evidence that the conditions encountered during the contract performance differed materially from the conditions indicated in the contract. To carry this burden, the contractor must demonstrate that the conditions encountered were not reasonably foreseeable in light of all information available to the contractor when bidding, that the contractor reasonably relied upon its original interpretation of the contract, and that the contractor suffered damages as a result of the material variation between the conditions expected and those encountered.” Renda Marine, Inc. v. United States, 509 F.3d 1372, 1376 (Fed. Cir. 2007) (citing H.B. Mac, 153 F.3d at 1345; Stuyvesant Dredging Co. v. United States, 834 F.2d 1576, 1581 (Fed. Cir. 1987)).

Type II Differing Site Conditions

Under Federal Circuit precedent, in order to qualify as a Type 2 differing site condition, “the unknown physical condition must be one that could not be reasonably anticipated by the contractor from his study of the contract documents, his inspection of the site, and his general experience [,] if any, as a contractor in the area.” Randa/Madison Joint Venture III v. Dahlberg, 239 F.3d 1264, 1276 (Fed. Cir. 2001) (citing Perini Corp. v. United States, 180 Ct. Cl. 768, 381 F.2d 403, 410 (1967)).

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