By Bruce Jervis
Public project owners do it all the time: They provide detailed subsurface site information to bidders and then contractually disclaim responsibility to the successful bidder for the accuracy of that information.
The subsurface data furnished to bidders can be detailed and precise. It frequently includes logs from test borings and a geotechnical report. This is beneficial to a public project owner because it reduces contingencies and facilitates tight competitive bidding.
The contract documents, however, counsel to the contrary. The subsurface data are general in nature and not intended to be representative of the entire site. The owner is not responsible for the accuracy of the information furnished. The contractor is required to familiarize itself with subsurface conditions affecting construction.
On federal construction contracts, these disclaimers are unenforceable. This was recently reiterated in a decision by the Armed Services Board. The rationale is that bidders have no realistic opportunity to investigate subsurface conditions and must rely on the government’s representations. The government owns the property and has the time and resources to become informed regarding its characteristics. The contractor is responsible only for information that can be gleaned during a reasonable pre-bid inspection of the surface.
It must be stressed that state law, which governs state and local public construction contracts, does not necessarily follow this federal contracting rule. An argument can be made that a party to a contract, even a governmental entity with overwhelming leverage, should be allowed to contractually allocate risk. Your comments are welcomed.