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H.B. Mac Inc. v. United States

August 19, 1998

H.B. MAC, INC., PLAINTIFF-APPELLEE,
v.
THE UNITED STATES, DEFENDANT-APPELLANT.



Before: Lourie, Rader, and Schall, Circuit Judges.

The opinion of the court was delivered by: Schall, Circuit Judge

Mitchell J. Matorin, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, argued for defendant-appellant. With him on the brief were Frank W. Hunger, Assistant Attorney General, David M. Cohen, Director, and Robert M. Hollis, Assistant Director. Of counsel was Richard P. Nockett, Attorney, U.S. Department of Justice, of Washington, DC. Of counsel on the brief were Frank Carr, Chief Trial Attorney, U.S. Army Corps of Engineers, of Washington, DC and Robyn Au, Trial Attorney, U.S. Army Corps of Engineers, of Ft. Shafter, Hawaii.

Appealed from: United States Court of Federal Claims

Judge Wilkes C. Robinson

The United States appeals from the December 31, 1996 judgment of the United States Court of Federal Claims awarding H.B. Mac, Inc. (Mac) $103,365.60 additional compensation (plus interest) under its construction contract with the United States Army Corps of Engineers (the Corps). Following a trial, the court held that Mac was entitled to an equitable adjustment in the contract price due to a Type I differing site condition. See H.B. Mac, Inc. v. United States, 36 Fed. Cl. 793, 832 (1996). Accordingly, the court concluded that Mac was entitled to recover the costs it incurred in providing sheet pile shoring to prevent caving at one of the project's excavation sites, as well as related delay and impact costs. See H.B. Mac, Inc. v. United States, No. 93-79C (Fed. Cl. Dec. 31, 1996). Because the need for sheet pile shoring was not reasonably unforeseeable based on information available to Mac at the time of bidding, however, we reverse.

BACKGROUND

Mac is a San Diego-based construction company and is self-certified as a small disadvantaged business (SDB). See H.B. Mac, 36 Fed. Cl. at 795. On July 31, 1991, the Corps awarded Mac Contract No. DACA83-91-C-0029 for construction work at Fort Shafter on the island of Oahu, Hawaii. See id. at 796. The contract, which was in the amount of $6,281,000, was a set-aside for an SDB. See id. at 797. Under the contract, Mac was required to construct a reinforced concrete motor vehicle maintenance facility (the maintenance facility) and a separate reinforced concrete motor vehicle wash rack facility (the wash rack facility). See id. at 796. It was work in connection with the construction of the wash rack facility that gave rise to this litigation.

Fort Shafter is located on an alluvial plain containing a variety of sedimentary soils deposited at various times during the area's geologic development. See id. The plain also contains a mixture of surface soils from past construction activity. See id. The project site itself is located in an area known as the Fort Shafter Flats, about 700 yards from the Pacific Ocean and Keehi Lagoon. See id. Various small streams flow nearby. See id. The wash rack and maintenance facilities are located about 300 yards apart. See id. The maintenance facility is located between the ocean and the wash rack facility. See id. The wash rack facility consists of: (1) a wash rack with mechanical washing equipment, (2) one or more concrete slabs, (3) a sedimentation basin, and (4) an underground oil/water separator tank. See id. The contract specified a 15,000 gallon oil/water separator tank, but left the particular dimensions of the tank and the depth of the necessary excavation to the discretion of the contractor. See id. at 797.

Bidders were provided with contract specifications and drawings, including eight logs of soil borings. See id. at 796. The borings varied in depth from six feet to twenty-four feet and were clustered around the maintenance facility. See id. at 821. The borings showed the presence of a layer of limestone as well as soils that consisted primarily of sands and gravels. See id. at 830-31. Three of the borings showed that the water table was located approximately twelve feet below the surface. *fn1 See id. at 796. The other five borings did not reach down to the water table. See id. The Corps did not provide any other subsurface information to the bidders, such as geologic data or soils reports. See id. Mac submitted its bid based on the contract documents and specifications. See id. at 797. It did not conduct a pre-bid site visit. *fn2

Mac began construction work in August of 1991. See id. As far as the wash rack facility was concerned, Mac successfully excavated the sedimentation basin to a depth of about fourteen feet, using only temporary aluminum and wood safety shoring. *fn3 See id. During construction of the sedimentation basin, only nuisance water was encountered and the subsurface conditions did not vary significantly from those shown in the borings from the area of the maintenance facility. See id.

Around October 17, 1992, Mac began excavation for the oil/water separator tank. See id. Exercising the discretion given to it under the contract, it selected a round-shaped tank and anticipated that the excavation for the tank would not exceed sixteen feet. See id. During excavation, Mac encountered a black silty, clay material at a depth of seven feet. See id. This same material continued down to between thirteen and fourteen feet. See id. At that level, however, Mac encountered soil saturated with groundwater, and the walls of the excavation began collapsing. See id. Temporary safety shoring was installed in the excavation, and small pumps were used in an attempt to remove the water and stabilize the site. See id. In spite of these efforts, the temporary shoring failed and the sides of the excavation collapsed. See id. Mac attempted to resume excavation by resloping or laying back the sides of the excavation, but the black silty clay material became increasingly unstable. See id. at 797-98. Consequently, it abandoned its excavation efforts, refilled the excavation, and notified the Corps of the problems it had encountered. See id. at 798. During excavation for the oil/water separator tank, Mac never encountered a thick layer of limestone similar to what was indicated in the borings from the area of the maintenance facility. See id. at 797.

After backfilling the excavation, Mac provided the Corps with a sample of the backfilled soil. See id. at 798. Eric Bjorken, a Corps geologist, and Olson Okada, a Corps engineer, evaluated the sample. See id. Based upon a visual examination, they concluded that the soil was a mixture of clay, sand, and gravel and that a sheet pile shoring and bracing system would be required for the excavation for the oil/water separator tank. *fn4 See id.

In a letter dated October 20, 1992, Mac notified the Corps that it believed that the soil conditions it had encountered in excavating for the oil/water separator tank constituted "a change [sic] condition to the contract." See id. In an internal memorandum dated October 21, 1992, Mr. Frank Ono, the Contracting Officer's Authorized Representative, recommended that the Corps issue a change order under the contract to provide for sheet pile shoring at the oil/water separator tank excavation site. "Contract drawings," wrote Mr. Ono, "do not provide any boring logs at the wash rack site." However, in another internal memorandum, dated November 3, 1992, Glenn Ishihara, a Corps civil engineering technician, took the position that, "taking the plans and specifications as a whole, there appears to be adequate information from which the Contractor should have been aware that an engineered support system would be required." Accordingly, he stated, "the Contractor's claim for additional compensation for providing a steel sheet piling system is without merit as this requirement could reasonably have been ascertained when preparing his bid." Mr. Ono concurred in Mr. Ishihara's assessment. Accordingly, that same day he denied Mac's request for additional compensation on the ground that the condition actually encountered was not materially different from what was shown in the boring logs. See id.

Mac hired George F. Moore of Construction Labs, a local engineering contractor, to investigate the site and provide a recommendation for completion of the project. See id. Mr. Moore drilled two soil borings on November 19, 1992 at the oil/water separator site. See id. The borings were taken after the excavation had been backfilled, but before any additional work had been done at the site. See id. Based on these borings, Construction Labs provided Mac with a recommended shoring plan using sheet pile shoring. See id. Mac followed the recommended plan and completed the work without any further problems. See id. at 799.

By letter dated December 4, 1992, Mac submitted a certified claim to the contracting officer under the Contract Disputes Act, 41 U.S.C. § 601-613 (1994). See H.B. Mac, 36 Fed. Cl. at 799. In its claim, Mac requested an equitable adjustment under the contract for costs associated with installing sheet pile shoring at the site for the oil/water separator tank. See id. After the contracting officer failed to respond to the claim, it was deemed denied pursuant to 41 U.S.C. § 605(c).

On February 12, 1993, Mac filed a complaint in the Court of Federal Claims challenging the denial of its claim for an equitable adjustment. Mac asserted that the thick layer of unstable black silty clay material that it had encountered, combined with the total absence of a thick layer of ...


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