Government Contracts Monitor

The Government May Have the Right to Remain Silent, But Anything It Says In the Solicitation May Be Used Against It To Find a Latent Ambiguity

April 5, 2018

If the Government chooses to remain silent regarding site conditions, then it has to be consistent throughout the Solicitation. As the recent Armed Services Board of Contract Appeals (ASBCA) decision in R.L. Persons Construction, Inc., ASBCA 60121 (March 15, 2018), makes clear, where the government makes representations about site conditions in one place but is curiously silent in others, the ASBCA may conclude the solicitation is ambiguous and interpret the provision in favor of the contractor.

In R.L. Persons, the United States Army Corps of Engineers (Corps) selected the contractor to construct a slurry trench and two berms along the Ohio River near Cairo, Illinois. The purpose of the contract was to reinforce a levee system by reducing the threat of groundwater underseepage and sand boils on the landside transition between the base of the levee and the natural ground elevation. The Solicitation indicated “that the Corps would provide a borrow pit from which the contractor could obtain earthen materials required for the project.” The solicitation included several boring profiles for the slurry trench site and the borrow pit area that included a legend indicating that a specific typographic symbol represented groundwater surface. That legend also stated that:

Ground water elevations shown on the borings logs represent ground water surfaces encountered in such borings on the dates shown. Absence of water surface data on certain borings indicates that no ground water data are available from the boring but does not necessarily mean that ground water will not be encountered at the locations or within the vertical reaches of such borings.

None of the boring profiles for the borrow pit contained the symbol or other information relating to ground water data.

The contractor submitted a proposal taking the groundwater representations into account and was ultimately awarded the contract. At some point after the contractor began excavation, it encountered what it claims was groundwater in the borrow pit and consequently submitted a claim, which was denied, and then this appeal asserting differing site conditions, changes, and defective specifications.

The government moved for summary judgment claiming that the contract must have contained “positive indications of the conditions at the site” in order for the contractor to claim differing site conditions. See Nova Group, Inc., ASBCA No. 55408, 10-2 BCA, 34,533 at 170,321 (citing H.B. Mac, Inc. v. United States, 153 F.3d 1338, 1345 (Fed. Cir. 1998); Stuyvesant Dredging Co. v. United States, 834 F.2d 1576, 1581 (Fed. Cir. 1987)). The government further noted that while the indication “need not be explicit, [] mere silence is insufficient.” Nova, 10-2 BCA , 34,533 at 170,321.

The parties’ arguments raised issues of contract interpretation and whether the subject contract was ambiguous. The ASBCA noted that “[a]n ambiguity exists when a contract is susceptible to more than one reasonable interpretation.” E.L. Hamm & Assocs., Inc. v. England, 379 F.3d 1334, 1341 (Fed. Cir. 2004). To determine whether an interpretation is reasonable, the ASBCA:

put[s itself] in the position of appellant at the time he bid on the contract, i.e., we must seek the meaning that would be attached to the language by a reasonably intelligent bidder in the position of appellant, who would be expected to have the technical and trade knowledge of his industry and to know how to read and interpret technical engineering specifications and perform construction work in accordance with such specifications. Adrian L. Roberson, dlb/a Roberson Constr. Co., ASBCA No. 6248, 61-1 BCA, 2857 at 14,915.

If a term is ultimately found ambiguous, the ASBCA applies the doctrine of contra proferentem and interprets the provision “against the party that drafted the contract.” Turner Constr. Co. v. United States, 367 F.3d 1319, 1321 (Fed. Cir. 2004).

The government’s primary argument for summary judgment was that the solicitation was silent as to the presence of ground water in the borrow pit because, unlike other areas, it did not include the Symbol. The ASBCA disagreed and believed the inclusion of the language from Note 2 of that section of the Solicitation that the “absence of water surface data on certain borings indicates that no ground water data are available from the boring,” was susceptible to two interpretations: (1) that no groundwater data was available because the borings did not sample for groundwater, or (2) that no groundwater data was available because the borings sampled for but did not find any groundwater. The Court found that the absence of the Symbol in concert with the second reasonable interpretation constituted a “latent” ambiguity that did not require further inquiry from the Contractor and entitled it to a favorable interpretation.

The ASBCA also took issue with the government’s other complaint that it would have subjected itself to a differing site condition claim had it disclosed groundwater levels and the actual groundwater ended up being different. The ASBCA noted that government could have avoided such exposure “while still providing accurate information” to bidding contractors “by clearly stating in the legend that it did not sample for groundwater in the borrow pit area, or by omitting the misleading suggestion that it was reporting whether it encountered groundwater.” Based on the latent ambiguity and other issues of fact that remained in dispute regarding whether the contractor—as a matter of course—should have expected to encounter ground water, the ASBCA denied the government’s motion for summary judgment.

While the contractor here successfully staved off the government’s summary judgment motion due to the ambiguity in the contract, it has not yet prevailed. In order to avoid this problem, bidders should carefully consider their interpretation of solicitation provisions and whether the presence of a potential ambiguity is latent versus patent. In the case of a patent ambiguity, a bidder that proceeds based on the assumption its interpretation is the correct one, without further inquiry, does so at its own peril.

Attorneys

Lindsay Simmons