By Bruce Jervis
Many state highway construction and improvement contracts involve the use of federal funds. When that is the case, the Federal Aid Highway Act requires the construction contract to include a standard federal Differing Site Conditions clause. The language of this clause is familiar and has been interpreted extensively over the years. Actual physical conditions at the site that differ materially from representations in the contract or that could not have been reasonably foreseen by a prudent contractor are grounds for an equitable price adjustment.
Despite the standardization of this contract clause, contractors have long complained of inconsistent application at the state level. An Oklahoma contractor, performing highway work in Arkansas, alleged that state officials showed favoritism toward in-state contractors when dealing with differing site condition claims. The disappointed contractor cited a claim “almost identical” to its own that had been granted to an in-state highway contractor. A federal appeals court dismissed the suit on procedural grounds, while leaving the door open for the contractor to revive its challenge.
What has been your experience, and not just with regard to claims on highway contracts? Do you feel that state and local officials apply standard contract clauses inconsistently, showing more leniency toward local contractors? Your comments are welcomed.