The Differing Site Conditions clause at Federal Acquisition Regulation (FAR) 52.236-2 is typically included in construction contracts to discourage contractors from inflating their proposed prices on account of unexpected physical conditions that may not arise. There are two types of differing site conditions claims contemplated under the clause. In a type I claim, the conditions encountered by the contractor differ materially from those indicated in the contract. On the other hand, in a type II claim, the conditions are different from those ordinarily encountered. To qualify as a type II differing site condition, the conditions must be such that they cannot be predicted by the contractor’s review of the contract documents, site inspections, and its general experience, if any, as a contractor in the region. Proving a type II differing site condition is typically more difficult than proving a type I condition, as it involves a heavier burden of proof because there is no clear point of reference in the contract documents as to the known and usual conditions on site. To prove a type II condition, the contractor must first establish the known and usual conditions at the site. Next, the contractor must show that the actual physical conditions it encountered were different from the known and usual conditions. Finally, the contractor must demonstrate that the different conditions increased the cost of performance.

Government contracts for construction projects typically include a Differing Site Conditions clause to account for the risk that the contractor may encounter unanticipated subsurface or otherwise latent physical conditions. The purpose of this clause is to discourage contractors from inflating their pricing on account of unexpected physical conditions that may or may not arise. The clause contemplates two types of differing site conditions. In a type I condition, the contractor encounters physical conditions materially different from those specified in the contract. Meanwhile, a type II condition is unknown, unusual, and materially different from that ordinarily encountered. To successfully recover under a type I differing site conditions claim, the contractor must establish five elements by a preponderance of the evidence. The contractor must establish that: (1) a reasonable contractor reading the contract as a whole would interpret it as making a representation as to the site conditions; (2) the actual site conditions were not reasonably foreseeable to the contractor with the information available to it outside the contract documents; (3) the contractor in fact relied on the contract representation; (4) the conditions differed materially from those represented; and (5) the contractor suffered damages as a result.

Upon being awarded federal contracts, contractors sometimes find that they made a mistake in their bid or proposal regarding the level of effort required for performance. In such situations, contractors may seek relief in the form of a pricing adjustment or change in performance requirements under the theory of unilateral mistake. To obtain recovery for a unilateral mistake, contractors must present evidence establishing that: (1) a mistake in fact occurred prior to contract award; (2) the mistake was a clear-cut, clerical or mathematical error or a misreading of the specifications and not a judgmental error; (3) prior to award the government knew, or should have known, that a mistake had been made and, therefore, should have requested bid verification; (4) the government did not request bid verification or its request for bid verification was inadequate; and (5) proof of the intended bid is established. Contractors must meet all five elements with clear and convincing evidence. If contractors can satisfy these elements with the required burden of proof, the contract may be reformed to reflect the correction, and relief may be obtained either through a pricing adjustment or a change in performance requirements.