May 18, 2004
Appeal of
BERRY AND CLAY, INC.
LEASE AGREEMENT
PSBCA No. 4995
APPEARANCE FOR APPELLANT:
Danny Berry
APPEARANCE FOR RESPONDENT:
Mark E. Dennett, Esq.
OPINION OF THE BOARD
Appellant, Berry and Clay, Inc., has appealed from a decision of the contracting officer denying Appellant’s claim for the cost of additional site work performed in connection with its contract with Respondent, United States Postal Service. At the request of the parties, this appeal is being decided on the record without an oral hearing. 39 C.F.R. §955.12. Only entitlement is at issue.
FINDINGS OF FACT
1. On December 7, 1999, the parties entered into a contract under which Appellant was required to purchase a Postal Service-controlled[1] site in Cushing, Texas; construct a postal facility on the site according to Postal Service plans and specifications included in the contract; and lease the facility to Respondent for a base period of twenty years, with two five-year options exercisable by Respondent. (Stipulation, paragraph (Stip.) 1; Appeal File, Tab (AF) 1, 4).
2. The contract contained a Construction Rider (Postal Service Form “RECONS,” dated January 1995). Paragraph 12 of that Rider stated,
“SITE
Offerors must examine the site and be thoroughly acquainted with conditions thereon. The Lessor will be responsible for site conditions including but not limited to subsurface or latent physical conditions or unknown physical conditions of an unusual nature differing materially from those ordinarily encountered.” (AF 1; Stip. 2).
3. Paragraph 25 of the contract stated, in part,
“… Regardless of the terms of the [Assignable] Option [to Purchase], the offeror selected shall assume the role of owner/developer and shall be responsible for due diligence concerning the site and construction according to USPS requirements. This includes securing any necessary … engineering …. Although the Postal Service has somewhat investigated the site and has no know[n] reason for concern, no written commitments concerning such things have been obtained. The [P]ostal Service assumes no responsibility for such items.” (AF 1; Stip. 2).
4. Paragraph 29 of the contract stated, in part,
“… The boundary and topographical survey was used in developing the site utilization plan, and is provided as information only. The Postal Service assumes no responsibility for the correctness of the survey. It is the lessor’s responsibility to meet all site requirement[s] listed in the solicitation and as illustrated on the small standard building plan that relates to this project.” (AF 1; Stip. 2).
5. For reasons not explained in the record, there were delays in Appellant’s acquisition of the site and its submittal of materials in preparation for a pre-construction conference. However, on January 23, 2001, the parties held the pre-construction conference and the contracting officer gave Appellant a formal notice-to-proceed with construction. Under the provisions of the contract, Appellant had 150 days thereafter to complete construction. (AF 1, 5-7; Stip. 3). By letter dated April 2, 2001, Appellant notified Respondent that it planned to request a time extension due to weather, that it needed to move water and sewer lines, and that there was a need for overexcavation and fill work (AF 8).
6. By letter dated June 5, 2002, Appellant requested payment in the amount of $6,850 for 685 cubic yards of overexcavation and replacement with select fill under the building. (Stip. 4; Appellant’s Complaint).[2]
7. By letter dated July 29, 2002, the contracting officer denied Appellant’s request, stating that the cost of the excavation and fill was Appellant’s responsibility under the contract. (AF 9; Stip. 5).
8. In a final decision, dated August 28, 2002, the contracting officer again denied Appellant’s request for the costs of the excavation and fill. Appellant filed a timely appeal with the contracting officer. (Stip. 7; AF 11; Respondent’s April 28, 2003 submittal; Board Order of May 9, 2003).
DECISION
Appellant argues[3] that under the solicitation, it was obligated only to visit the site and familiarize itself with existing conditions, and that it did so thoroughly. It argues that only after award, with the assistance of a testing lab, was it able to determine that the site contained the unsuitable soil that had to be replaced. Appellant notes that the site had been chosen by the Postal Service and had never been tested for unsuitable soil.
Respondent argues that under paragraph 12 of the Construction Rider and paragraphs 25 and 29 of the contract (Findings 2, 3, and 4) Appellant was responsible for any additional costs arising from unforeseen site conditions. Respondent also notes the absence of any provisions, such as a Differing Site Conditions or Changed Conditions clause, which could shift the financial burden of dealing with adverse subsurface conditions to Respondent.
In this instance, as argued by Respondent, the contract did not contain either a Differing Site Conditions or Changed Conditions clause, which clauses are often used in government contracts to “shift the risk of adverse subsurface or latent physical conditions from the contractor, who normally bears such risk under a fixed-price contract, to the government.” Olympus Corp. v. United States, 98 F.3d 1314, 1316 (Fed. Cir. 1996), citing United States v. Spearin, 248 U.S. 132, 63 L. Ed. 166, 39 S. Ct. 59 (1918). In the absence of such a clause Appellant was responsible for the expense of dealing with adverse site conditions. See, e.g., National Construction Co., PSBCA Nos. 3902, 3929, 99-2 BCA ¶ 30,509 at 150,647. Moreover, the language of paragraph 12 of the Construction Rider (Finding 2) made explicit Appellant’s responsibility for site conditions.
Appellant is apparently contending that the language in paragraph 12 of the Construction Rider (Finding 2) only required offerors to visit the site and become thoroughly acquainted with “conditions thereon,” and that he did so. However, part of the remaining language in the same paragraph made Appellant specifically responsible for dealing with subsurface conditions. Although Appellant is correct in noting that the site had already been selected by the Postal Service before offers were solicited, under the Construction Rider language Appellant nevertheless unambiguously assumed the risk of encountering adverse subsurface site conditions. Further, there is no claim, or any evidence, suggesting that Respondent possessed site information that it did not disclose to Appellant, see, e.g., Thomas J. Young, PSBCA Nos. 3885, 3983, 98-2 BCA ¶ 29,772 at 147,530, and Appellant has not suggested any other basis for relieving it of the risk it assumed.
Under these facts, Appellant may not recover the costs of excavating and replacing unsuitable soil found in the course of the building excavation. Accordingly, the appeal is denied.
David I. Brochstein
Administrative Judge
Vice Chairman
I concur:
James A. Cohen
Administrative Judge
Chairman
I concur:
Jon N. Kulish
Administrative Judge
Board Member