February 20, 2015

DSC Claim Denied on Military Design/Build Project

By John Parnass

Traditional Differing Site Condition (DSC) law continues to evolve as more project sponsors use alternative delivery methods (such as Design/Build).  This recent case (CCI, Inc. Appeal) is an example.  It arose from a port construction contract in Iraq where the military, in its Request for Proposals (RFP), offered some preliminary geotechnical data but also made it clear that the contractor must (after award) obtain further data on its own.  The RFP also said the preliminary data was provided “for information only.”

Under traditional DSC law, a “for information only” disclaimer is sometimes given little weight by the courts.  The court in this case recognized that.  But it also held that in light of the Design/Builder’s duty (after contract award) to obtain site specific geotechnical information for design and construction, any “absolute reliance” on the preliminary data “would be unreasonable.”  The design/build nature of the contract thus changed the outcome very significantly.

The fact that the bidder wanted the contract to get a “foot in the door” in Middle East war-related construction opportunities was noted as another reason to find that the bidder didn’t reasonably rely on the preliminary data in the RFP.