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CONSTRUCTION CLAIMS | OWNER SUPERIOR KNOWLEDGE

Various ASBCA decisions have adopted the doctrine of superior knowledge as a contributing element in the establishment of a practical (economic) impossibility or a physical impossibility situation. It is frequently applied to changed conditions situations. However, where a Differing Site Conditions clause is not contractually incorporated, the doctrine of superior knowledge may be a contractor’s only alternative for relief. The entitlement is somewhat akin to misrepresentation.

In a decision concerning the construction of a government laboratory building, the contractor encountered severe subsurface water conditions, conditions known to the government, but not disclosed. The Board ruled in favor of the contractor:

CONSTRUCTION CLAIMS | OWNER SUPERIOR KNOWLEDGE


Under the doctrine of owner superior knowledge, when the contractor is not advised of information that is exclusively available to the Government, and the contractor, relying on those disclosures actually made, is misled in bidding or setting the price of the contract, then a breach of duty to provide such undisclosed information may occur. Tyroc Construction Corporation, EBCA No. 210-3-82 (April 1984).

Failure by the owner to disclose superior knowledge or information, which failure increases the contractor’s costs is a constructive change. But this rule has its limitations. Superior owner knowledge is material only when it is specific as to some fact that the contractor needs to know in order to produce an item that meets specifications, and is either exclusive or not reasonably available elsewhere. There is no owner duty to volunteer information if the contractor can reasonably be expected to seek and obtain the information elsewhere or have, in fact, obtained such information through his own efforts.

In Helene Curtis Industries v. United States, 160 Ct. Cl. 437 (1963), the Court of Claims established the rule that contract specifications are deemed to be defective where the Government fails to disclose special difficulties encountered in working with technology of which the Government has superior knowledge. As stated therein.

In order to recover under this theory, the following elements must be established.

1. The procuring agency knew or should have known the vital information and its probable consequences at the time the contract was awarded;

2. The contractor neither knew nor should have known the vital information and its probable consequences at the time the contract was awarded;

3. The agency was, or should have been, aware of the contractor’s ignorance but nevertheless failed to disclose the pertinent information; and

4. The failure to disclose actively misled the contractor. J. A. Jones Construction Co. v. United States, 182 Ct. Cl. 615 (1968); Bateson-Stolte, Inc. v. United states, i58Ct. Cl. 455 (1962).

If a contractor is able to present “superior knowledge” facts, therefore, he may be in a position to claim additional compensation via the changes clause due to defective specifications even though the specifications may not be inherently defective but are merely made so by the Government’s failure to disclose information concerning them.


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