Civilian Board of Contract Appeals

Case no.: CBCA 8353
Date filed: March 5, 2026

The Civilian Board of Contract Appeals has ruled that although a contractor stated a valid claim for changed work, it could not claim a differing site condition. The contract provisions in question concerned the manner in which the work would be performed, not physical conditions at the worksite.

The U.S. Department of Transportation, Federal Highway Administration (FHWA) awarded a fixed-price contract to VSS International for pavement preservation work on the roads and parking areas of Pinnacles National Park in California. Approximately 2,647 square yards of pavement would be patched, with FHWA marking the patch areas.

The specifications called for the patch area to extend 12 inches beyond the “distressed area,” a term left undefined in the contract. If the patch area limits were within 24 inches of the pavement edge, the patch area was to be extended to the pavement edge.

The FHWA representative marked all patch areas in two-foot widths, ignoring the 12-inch extension and the extension to the pavement edge. VSS International’s subcontractor, Martin Brothers Construction, complained this resulted in smaller, more numerous patch areas, increasing labor and equipment costs.

VSS sponsored a certified claim on behalf of its subcontractor, but FHWA denied the claim entirely. The contractor appealed to the Board, alleging both changed work and a differing site condition. FHWA moved for summary judgment on all counts.

With regard to the changed work claim, FHWA argued the contract did not define “distressed area” and gave the government contracting officer discretion to determine the size of the patch “based on conditions encountered at time of construction.” If the VSS interpretation of the contract was adopted, the full quantity of asphalt patching would be quickly exhausted, leaving other cracked surfaces unaddressed. With regard to the site condition claim, FHWA contended the contract had not misrepresented physical conditions in the field.

The board said FHWA’s interpretation of the contract was unreasonable. It ignored the specifications’ 12-inch extension and the extension to the pavement edge provisions. It also attempted to use the lack of definition for “distressed area” to give the contracting officer unfettered discretion to mark the areas to be patched. While one section of the specifications referred to a minimum width of 24 inches, which FHWA arguably met, the extension provisions could not just be read out of the contract. The government’s motion for summary judgment on the changed work claim was denied.

The board agreed with FHWA, however, regarding the site condition claim. While there may have been a difference between the work specified in the contract and the work directed by the government in the field, this discrepancy did not result from misrepresentation of latent physical site conditions.

“VSS does not contend that subsurface or latent physical conditions that existed were different from those specified in the contract or that the worksite had unknown physical conditions of an unusual nature that differed materially from what would be ordinarily encountered. Rather, VSS argues that there was a difference between the contract’s specifications and the FHWA’s directions with regard to the size of the asphalt patches. The contract provisions cited by VSS concern the manner in which the work would be directed, rather than specific physical conditions at the worksite…. Rather than alleging facts that support a differing site conditions claim, VSS’s complaint and opposition to the motion, in essence, merely repeat its breach of contract and changes arguments.”

Regardless of whether the increased performance costs were caused by a change in the work or differing site conditions, the contractor’s recovery would be an equitable price adjustment based on actual costs incurred.

A challenge with changed work of this nature is quantifying the contractor’s increased performance costs. It is essentially a lost efficiency claim. Apparently, the government never marked any patch areas in accordance with the contract, so there is no baseline against which to measure increased costs. A percentage increase, based on expert opinion, might be the best calculation available.

Participants:
For VSS International: Douglas P. Hibshman, Washington, D.C.
For the FHWA: Rayann L. Speakman, Vancouver, Washington

Before: Board Judges Zischkau, Sullivan, and Kang

Opinion by: Board Judge Kang

Outcome: Government motion for summary judgment granted in part and denied in part

Source: Please click here to read the complete opinion.