Some state DOTs believe: (1) the Site Investigation clause trumps the Differing Site Condition clause; and (2) payment at unit prices for overruns caused by differing site conditions is appropriate.
Recently, the Virginia Supreme Court reiterated the points in Asphalt Roads & Materials Co. Inc. v. Commonwealth of Virginia, Department of Transportation, et al., 512 S.E.2d 804 (Va. 1999).
In June 1992, VDOT awarded a contract to Asphalt Roads to widen a section of Landstown Road in Virginia Beach. As part of the installation of utility pipes, the contractor was to remove and replace an estimated quantity of 940 cu yd of unsuitable soil under the utility pipes. During excavation, VDOTs inspector required Asphalt Roads subcontractor to remove a substantially greater quantity of unsuitable soil and replace it with borrow.
Asphalt Roads, on behalf of its subcontractor, filed suit against VDOT seeking additional compensation for the excess unsuitable material that was removed and for the borrow used to backfill the pipes. The trial court held that the contractor was entitled to payment for an additional 8,657 cu yd of borrow and 8,807 cu yd of unsuitable material. The court adopted VDOTs contention that compensation for the borrow should be awarded at the contract-stated unit price of $6.18 for select borrow and awarded the contractor $53,500.26 on that claim. With regard to the disposal of unsuitable material, the court adopted the contractors contention that compensation should be in the amount of $11.16 per cu yd, the unit price stated in the contract for the disposal of similar materials, and awarded the contractor $98,286.12 for that claim.
Clause and effect
On VDOTs appeal, the Court of Appeals reversed the portion of the judgment awarding the additional compensation. That decision was in turn appealed to the Virginia Supreme Court.
First, the court dealt with whether the contractor was entitled to compensation for the borrow that had to be obtained from off-site sources to replace the unsuitable material. VDOT argued that Sections 302.04 and 520.06 of the Road & Bridge Specifications precluded the payment of additional sums for obtaining borrow to replace the excess unsuitable soil removed by the contractor. The court disagreed based on its review of Section 303.6 of the Road & Bridge Specifications.
Section 303.06, also entitled "Measurement and Payment," provides, in subsection (d) that: Furnishing and placing backfill material, including backfill for undercut, will be included in the price for excavation . . . unless . . . suitable material is not available within the construction limits. When suitable backfill is not available within the construction limits, the material furnished and placed by the contractor will be paid for in accordance with Section 109.05.
The court interpreted Section 303.06 as specifically providing that when suitable backfill is not available on the jobsite, the contractor will be compensated for the backfill provided from off-site sources.
Next, the court dealt with whether the contractor was entitled to additional compensation for removing and disposing of the excess unsuitable material. The contractor claimed that it is entitled to such compensation under Section 104.03, the Differing Site Conditions clause.
The court started with discussing the purpose of the Differing Site Conditions clause and similar clauses, which is "[t]o encourage low, competent bids" and to take some of the gamble on subsurface conditions out of bids.
VDOT contended that the Differing Site Conditions clause does not apply to mere increases in quantities of material as distinguished from the character and nature of materials. Once again, the court disagreed. It found that the Differing Site Conditions clause applied to both "quantitative" or "qualitative" changes to the work to be performed.
Next, VDOT argued that the claim should be denied because Section 102.04, (the Site Investigation clause), made the contractor responsible for any alleged excess quantities of unsuitable soil.
Additionally, VDOT noted other warnings in Section 102.04 which advise bidders that the available subsurface data are accurate with regard to test borings only and disclaim any warranty regarding subsurface conditions or the condition, amount or nature of the material which may be encountered.
The court rejected these contentions, noting that to apply these sections to the change of condition encountered by the contractor would render meaningless the Differing Site Conditions clause.
Finally, and contrary to VDOTs contention, the court concluded that since Section 104.03 applies to a specific situation, "differing site conditions," it controls, rather than the general language in Sections 302.04 and 520.06. On that basis the court concluded the contractor was entitled to additional compensation for the disposal of the excess material under the Differing Site Condition clause.