Armed Services Board of Contract Appeals

Case no.: ASBCA No. 64490
Date filed: July 23, 2026

The Armed Services Board of Contract Appeals has ruled that a contractor could rely on the government’s as-built drawings despite broad disclaimers such as “approximate” and “not for construction.” Additionally, the contractor’s notification of the site conditions two weeks after discovery was considered prompt.

The US Army awarded a fixed-price contract to PDO Ahusaka Joint Venture LLC to design and construct a storm system and flood control project at the US Army Garrison Detroit Arsenal in Warren, Michigan. The Army provided PDO with as-built drawings of buried utilities in the work area, as required by the contract.

The contract contained a number of statements qualifying the information in the as-built drawings. Locations were approximate and did not purport to be exact. The drawings were provided as a courtesy and were not to be relied upon for construction purposes.

The contract also placed responsibility with PDO regarding existing underground utilities. The contractor had to field-verify locations using ground-penetrating radar, have utilities mark existing lines, and obtain an excavation permit. PDO complied with these requirements. Nonetheless, PDO’s subcontractor encountered three unexpected, unidentified subsurface junction boxes while excavating the site.

PDO did not immediately notify the Army of this occurrence. The base fire department started experiencing disruptions to its emergency communication services. More than two weeks after striking the junction boxes, PDO informed the Army representative of the situation.

PDO subsequently filed a certified claim for a differing site condition. The Army denied the claim. The Army had not made affirmative representations regarding the location of all buried utilities and had expressly disclaimed responsibility for the information it furnished. The contractor's reliance on the as-built drawings was not reasonable. Also, PDO had failed to “promptly notify” the Army of the situation, as required by the differing site conditions clause. PDO appealed the denial of its claim.

The board said that when the Army furnished bidders with as-built drawings of subsurface utilities, the Army made affirmative representations regarding site conditions. The question was whether PDO was entitled to rely on those representations. Did the disclaimers shift the risk of differing site conditions back to the contractor?

“The Army asserts that these disclaimers made it unreasonable for PDO to rely on the contract’s representations as to underground utility locations. . . . However, such broad disclaimers of liability for changed conditions do not shift the risk from the government to the contractor. . . . Indeed, government disclaimers of responsibility for specifications which it authors are disdained by the courts.”

With regard to timely notice, the board noted that the differing site conditions clause does not define “promptly notify.” There is no bright line test. Timeliness is situational and judged on a case-by-case basis.

“PDO’s notice was still prompt despite the two-week delay; we have found ‘prompt’ notice even 21 months later, for example. . . . Even if not prompt, the Army has failed to establish how it was prejudiced. Untimely notice prejudices the government where it prevents the government from verifying the contractor’s differing site condition claim and weighing in on how the contractor should remedy the problem. . . . Here, the Army examined the site condition and directed PDO how to remediate, which undermines any assertion of prejudice.”

Notice timeliness always comes down to the issue of prejudice. If the contractor disturbs the actual conditions at the site before notifying the government, it may limit or preclude the government’s options for addressing those conditions. The contractor, not the government, will pay for any resulting increased costs.

A contractor should be as prompt as reasonably possible in notifying the government of a site condition issue. This will mitigate the contractor’s liability exposure for increased performance costs.

Participants:
For the government: Dana J. Chase
Before: Administrative Judge Daniel S. Herzfeld
Opinion by: Administrative Judge Herzfeld
Outcome: Appeal sustained regarding junction boxes

Source: Please click here to read the complete opinion.