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If you have ever bid on a construction project, you more than likely are familiar with the term “differing site conditions”. A differing site condition is basically any unforeseen condition that may arise during the execution of a contract. These conditions can delay a project, forcing contractors to spend more time and money than what was budgeted for in the original contract. The good news is that construction contracts often include clauses that protect both the vendor and agency in situations like these.
However, the soliciting agency is likely to conduct an independent government estimate when crafting their invitation for bids in an effort to minimize a vendor’s ability to overinflate their price based on potential for differing site conditions. They own the property and will make every effort to provide all the necessary details in their bid solicitation so a vendor knows exactly what they can expect to walk into on day one. Typically, on a construction contract a vendor will have the ability to do a site visit. But since they are only bidding on a project (and most likely bidding on many and winning only a few) they rely heavily on the agency to do a proper site survey and fully disclose all findings in the solicitation.
None the less, mistakes can and do happen. When they do, a vendor has channels it can pursue to potentially be compensated for differing site conditions as vendors should not be expected to bare the sole burden of the extra time and money it will take to fulfill contractual obligations.
Protect Yourself from the Start
For federal contracts, the following clause is required in most construction projects per the Federal Acquisition Regulations (FAR):
The contracting officer shall insert the clause at 52.236-2, Differing Site Conditions, in solicitations and contracts when a fixed-price construction contract or a fixed-price dismantling, demolition, or removal of improvements contract is contemplated and the contract amount is expected to exceed the simplified acquisition threshold.
Take Note: Type 1 vs. Type 2 Claims for Differing Site Conditions
If you find yourself in a situation where you encounter a differing site condition, it is important to understand what type of claim you will need to make to the agency. You have two options:
Type 1 differing site condition: Actual conditions encountered differ materially from those represented within the contract. For example, the solicitation packet supplies soil samples that indicate an absence of rocks, yet when the project begins a large quantity of rock exists requiring additional labor and resource costs to complete the project.
Type 2 differing site condition: Actual conditions encountered differ materially from conditions ordinarily encountered in the area. An example of this could be the discovery of a contaminate substance that is encountered during an excavation. Such disposal could cost additional funds that were not planned for due to lack of knowledge of its existence.
Remember: Unforeseen complications are always a possibility when working in government contracting. Fortunately, there are regulations and protections available to you as a vendor to make sure you do not suffer catastrophic losses on a project. It is, however, important to note that reasonable measures must be taken by you as the vendor to ensure you are bidding as accurately as possible. This means reading thoroughly through all solicitation packets and agency-provided site surveys, and conducting your own site visits when offered. These simple measures can mean the difference between a profitable project and a disastrous one.