It is self-evident that design-build contracts place much more responsibility -- and risk -- with the contractor than a traditional contract for construction only. The parameters of that risk continue to be defined in the courts. A recent federal case calls into question the ability of design-build contractors to recover for differing site conditions.
The government solicitation for a fixed-price design-build contract included a soil investigation report. It was marked as “preliminary information only.” In a contract for construction only, a broad disclaimer of this nature is usually not enforceable. The contractor is entitled to reasonably rely on the subsurface information provided by the project owner. In this design-build contract, however, the contractor was responsible for retaining its own geotechnical engineer and responsible for the design of the foundation.
The contractor encountered subsurface conditions which differed materially from conditions indicated in the government’s soil investigation report. The contractor spent $4.5 million remediating those conditions. The contractor was denied additional compensation under the Differing Site Conditions clause, however, because the contractor was responsible for its own subsurface investigation as part of its design responsibilities. The contractor could rely on the government’s report only “for bidding purposes.”
What is your opinion on this matter? If the project owner’s soil report couldn’t be relied on during contract performance, was it reasonable to provide it for purposes of submitting a fixed-price proposal? Must each prospective design-build contractor conduct its own independent subsurface investigation prior to bidding a contract? I welcome your comments.
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