By Brian P. Waagner
Construction contractors must have the expertise to perform high quality work efficiently and on schedule. They must be able to read plans and to interpret construction specifications and they must be able to accurately estimate costs and to anticipate overhead and profit on competitively-bid jobs. They must be able to protect their rights through contract language. To be successful contractors must do all of these things better than their competitors.
But when it comes to reviewing geotechnical reports boring logs and other information about subsurface conditions contractors need not be experts. With respect to analysis of geotechnical information contractors are judged by the standard of a “reasonable and prudent contractor in the industry.”
Why is this important? Because engineers working for owners often do not understand that contractors have knowledge and skills different from their own. This misunderstanding can be the source of unnecessary disputes. If a contractor encounters unsuitable soil for example an engineer might argue that the conditions could have been predicted if the contractor had done a “proper engineering review” of the geotechnical report or the soil samples before submitting a bid. Based on that argument the engineer would be wrong. A reasonable and prudent contractor need not have the expertise of a geotechnical engineer or a geologist and need not make extensive pre-bid engineering efforts to verify site conditions indicated in the contract.
In fact disputes as to what constitutes a differing site condition often turn on the reasonable and prudent contractor standard. In Garcia Concrete Inc.1 test logs indicated that the subsurface materials consisted of gravel silty sand and silty gravel. A government geologist testified that the contractor should also have expected boulders. The Board nevertheless found in favor of the contractor concluding that the geologist’s testimony was not relevant to what a reasonable contractor should anticipate:[A contractor is] not required to hire his own geologist or to perform the seismic investigations which even the government had not performed. . . . A bidder is not obligated to make a scientifically educated and skeptical analysis of the contract. . . . To require bidders to make extensive engineering or scientific investigations prior to bid would place an onerous burden on the small contractor. . . .
Based on the facts in the case the boulders were a differing site condition because a reasonable contractor would not have anticipated them.
On the other hand the reasonable contractor standard can work against contractors that are new to an industry or inexperienced in reading boring logs. The contractor in H.B. Mac Inc. v. United States2 for example was a small disadvantaged business with no expertise in soils analysis and very little experience in the geographic area. Groundwater at the site forced the contractor to install a sheet piling system and the contractor claimed that the groundwater was a differing site condition. The appeals court rejected the claim explaining that the contractor’s status as a small disadvantaged business was not relevant to what could reasonably have been anticipated from the contract documents. Even if this particular contractor did not anticipate the groundwater problems the court found that a reasonable and prudent contractor “would have foreseen the need for sheet piling.” Based on H.B. Mac contractors are not entitled to special treatment because they are small or inexperienced — they must be at least as smart as others in the industry.
The reasonable contractor standard has implications on every construction project involving subsurface excavation. Engineers and contractors should know that contractors need not hire a geotechnical engineer or drill and log their own borings to assist in their bid preparation. Most reasonable contractors do not have the resources or time for such an investment on each bid and the law simply does not require it. If they visit the site and review the contract documents before submitting a bid it is unlikely that an engineer will later be able to second-guess their analysis of the subsurface conditions.
1 AGBCA No. 78-105-4 82-2 BCA ¶ 16046.
2 153 F.3d 1388 (Fed. Cir. 1998).
About the Author
Brian Waagner is an attorney in the Vienna Virginia office of Wickwire Gavin P.C. He practices in the areas of government contracts and construction law and regularly advises contractors involved in subsurface excavation including dredging. He can be reached at phone 703-790-8750