W.M. Schultz Construction, Inc.
Vermont Agency of Transportation
Appeal from Transportation Board Vanessa Kittell, Chair
Alexander Fead of Fead Construction Law, PLC, South
Burlington, and John W. Dreste of Ernstrom & Dreste, LLP,
Rochester, New York, for Plaintiff-Appellee.
J. Donovan, Attorney General, Eleanor L.P. Spottswood and
Toni Hamburg Clithero, Assistant Attorneys General,
Montpelier, for Defendant-Appellant.
PRESENT: Reiber, C.J., Skoglund, Robinson, Eaton and Carroll,
1. The Vermont Agency of Transportation (VTrans) appeals from
the Transportation Board's order granting judgment to
W.M. Schultz Construction, Inc. in this contract dispute. The
Board concluded that Schultz encountered "differing site
conditions" in carrying out its bridge-construction
project and that it was entitled to an equitable adjustment
for costs it incurred as a result. VTrans appeals, arguing
that the Board misread the contract materials and otherwise
erred in granting judgment to Schultz. We affirm.
2. The record indicates the following. Schultz entered into a
contract with VTrans in December 2013 to replace four bridges
destroyed by Tropical Storm Irene. Three bridges were
completed without incident. This dispute concerns the fourth
bridge, referred to as "Bridge #19." The Bridge #19
project involved the construction of a single-span
steel-girder bridge over the White River in Rochester,
Vermont. The west abutment was to be placed on a deep pile
foundation and the east abutment (Abutment #2) was to be
placed on ledge. The work was to begin in April 2014 and be
completed in a single construction season.
3. After engaging in exploratory drilling, Schultz discovered
what it considered "differing site conditions,"
i.e., subsurface physical conditions that were materially
different than those described in the contract plans and
specifications. Schultz's claim concerned the elevation
of the subsurface bedrock or ledge associated with Abutment
#2. According to Schultz, the assumed rock elevation of 802.5
feet for the bottom of the bridge footing as shown on
VTrans' plans was in fact drastically irregular and much
lower in some areas than shown. Schultz argued that the
uneven elevation required it to change the specific means and
methods required for the installation of a cofferdam from
what had been originally estimated in its bid pricing-a
sandbag style cofferdam-to a steel-sheet pile
4. Schultz filed a claim under the contract's
differing-site-conditions provision, which states:
104.08 DIFFERING SITE CONDITIONS.
(a) During the progress of the work, if subsurface or latent
physical conditions are encountered at the site differing
materially from those specified in the Contract or if unknown
physical conditions of an unusual nature, differing
materially from those ordinarily encountered and generally
recognized as inherent in the work provided for in the
Contract, are encountered at the site, the party discovering
such conditions shall promptly notify the other party in
writing of the specific differing conditions before they are
disturbed and before the affected work is performed.
(b) Upon written notification, the Engineer will investigate
to determine if the conditions materially differ and will
cause an increase or decrease in the cost or time required
for the performance of any work under the Contract. The
Contractor will be notified of the Engineer's
determination, whether or not an adjustment of the Contract
is warranted. If an adjustment is warranted, the Contract
will be modified in writing accordingly. Any adjustment made
will exclude loss of anticipated profits.
(c) No Contract adjustment that results in a benefit to the
Contractor will be allowed unless the Contractor has provided
the required written notice.
(d) No Contract adjustment will be allowed under this clause
for any effects caused on unchanged work.
VTrans notes, this project was funded in part with federal
aid and the inclusion of this standardized
differing-site-conditions provision was required under 23
C.F.R. § 635.109, with the exception of subdivision (d),
which is optional.
5. "The purpose of the Differing Site Conditions clause
is to allow contractors to submit more accurate bids by
eliminating the need for contractors to inflate their bids to
account for contingencies that may not occur." H.B.
Mac, Inc. v. United States, 153 F.3d 1338, 1343 (Fed.
Cir. 1998). This clause:
makes it clear that bidders are to compute their bids, not
upon the basis of their own preaward surveys or
investigations, but upon the basis of what is indicated and
shown in the specifications on the drawings. The clause
should induce the bidder not to consider such contingencies
as the latent or subsurface conditions, for which the
Government has assumed responsibility.
Foster Constr. C.A. v. United States, 435 F.2d 873,
887 (Ct. Cl. 1970) (quotations omitted) (discussing history
and purpose of differing-site-conditions clause).
Legal Standard Employed Below
6. Both VTrans and the Board evaluated Schultz's
differing-site-conditions claim under the so-called
Stuyvesant test. To be entitled to an equitable
adjustment under this test, a contractor must prove by a
preponderance of the evidence that:
(1) "the conditions indicated in the contract differ
materially from those it encounters during performance";
(2) "[t]he conditions actually encountered" were
"reasonably unforeseeable based on all the information
available to the contractor at the time of bidding";
(3) "it reasonably relied upon its interpretation of the
contract and contract-related documents"; and
(4) "it was damaged as a result of the material
variation between the expected and encountered
Stuyvesant Dredging Co. v. United States, 834 F.2d
1576, 1581 (Fed. Cir. 1987) (citations and quotations
7. The first Stuyvesant element is a
"threshold" question-the contract must contain
"some identification of the conditions to be encountered
at the site." Renda Marine, 509 F.3d at 1376.
While there need not be "express representations as to
the nature of conditions, . . . at least insofar as
subsurface or latent conditions are concerned, there must be
reasonably plain or positive indications in the bid
information or contract documents that such subsurface
conditions would be otherwise than actually found in contract
performance." Pac. Alaska Contractors, Inc. v.
United States, 436 F.2d 461, 469 (Ct. Cl.
1971); see also Stuyvesant, 834 F.2d at 1581
(outlining same standard).
8. Applying this test, VTrans' Construction Engineer
denied Schultz's claim. He found no material difference
between the conditions described in the contract and those
encountered by Schultz at Abutment #2, and ...