A contractor learned a $12M lesson when it tried to change course on a Corps of Engineer river dredging project. The case also illustrates the importance of documenting problems on a project and providing notice of those problems to the owner.
In Weston/Bean Joint Venture v U.S., Weston/Bean was awarded a Corps of Engineers project to provide maintenance dredging on the Miami River to a depth of 15 feet. The contract noted that the contractor may experience sediment, debris and rock, including soft to moderately hard limestone.
The contractor encountered rocks early on in the project, but consistently submitted reports to the Corps of Engineers that nothing was experienced on the project that would lead to a change order or claim. And, for the first year of operations, the contractor made no claim for differing site conditions. Instead, the contractor terminated the subcontractor for not being able to process the rock uncovered during the dredging process.
Once the project was completed Weston/Bean submitted a claim for $12 million alleging that the Corps of Engineers directed it to perform work above and beyond the contract. The Court of Claims closely reviewed the contract, finding various clauses precluded the contractor’s claim. Importantly, the contract stated that “massive, monolithic in situ rock” would not have to be removed. This necessarily meant that large rocks, but not massive ones, would have to be removed.
The court also found it significant that Weston/Bean never submitted a change order or claimed differing site conditions until well after a year on the project. In essence, the contractor’s failure to submit a claim immediately upon finding rocks larger than expected precluded its claim.
Take Away: It is very difficult to change course midstream. The contractor’s failure to notify the Corps of the rock problems early on greatly diminished its ability to claim unforeseen conditions later on.