Government Contracts Undisclosed Utility Line Entitled Contractor to Costs
Wednesday, April 24, 2019

Undisclosed Utility Line Entitled Contractor to Costs

By Government Contracts Editorial Staff

An appeal seeking additional compensation was sustained by the Armed Services Board of Contract Appeals because the government’s direction to provide gas service was outside the scope of the contract. The dispute arose from a contract to renovate a hangar at an Air Force base. The contractor objected to the contracting officer’s direction to provide gas service to an adjacent building after the contractor shut down a gas line that supplied both the hangar and the adjacent building. While the government put the contractor on notice that pre-bid information might not accurately identify all utilities, the contract did not clearly convey that the government intended the disclaimers to override the Differing Site Conditions and Changes clauses with respect to undisclosed utilities. Also, although contractors are charged with knowledge of what a reasonable pre-bid site visit would have revealed, the duty to make a site inspection does not require the contractor to discover conditions “beyond the limits of an inspection appropriate to the time available.”

“Needle-in-the Haystack”. Here, both the gas meter and pipe were visible on the site visit, but bidders had only a couple of hours to walk around and inspect the entire 20,000 square foot facility and none of the 27 site visit attendees asked any questions about the pipe. The board concluded the pipe had “a needle-in-the-haystack quality to it,” and it was not apparent that it was a gas line that served the adjacent building. Accordingly, a reasonably prudent offeror could not be expected to notice the pipe supplied gas to the adjacent building. Therefore, the contractor’s provision of temporary and permanent gas service to the adjacent building was extra work for which it was entitled to recover under the Changes clause. (GSI & Whitesell-Green JV, ASBCA, ¶95,723)

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