The Importance of Site Investigations - Construction Contracts

All construction projects have risks. Although participants in the process attempt to limit or minimize those risks, there is no contract that eliminates all risks. In Government contracting, the Government makes it incumbent upon bidders and winning contractors to take reasonable steps to understand the full scope and breadth of the project.

FAR 36.503 requires contracting officers to insert the "Site Investigation and Conditions Affecting the Work" clause in solicitations and contracts for fixed-priced construction. This clause, located at FAR 52.236-3 and states:

The contractor acknowledges that it has taken steps reasonably necessary to ascertain the nature and location of the work, and that it has investigated and satisfied itself as to the general and local conditions which can affect the work or its costs, including but not limited to

• conditions bearing upon transportation, disposal, handling, and storage of materials

• the availability of labor, water, electric power, and roads

• uncertainties of weather, river stages, tides, or similar physical conditions at the site

• the conformation and conditions of the ground

• the character of equipment and facilities needed preliminary to and during work performance.

The Contractor also acknowledges that it has satisfied itself as to the character, quality, and quantity of surface and subsurface materials or obstacles to be encountered insofar as this information is reasonably ascertainable from an inspection of the site, including all exploratory work done by the Government, as well as from the drawings and specifications made a part of this contract. Any failure of the Contractor to take the actions described and acknowledged in this paragraph will not relieve the Contractor from responsibility for estimating properly the difficulty and cost of successfully performing the work, or for proceeding to successfully perform the work without additional expense to the Government.

The Government assumes no responsibility for any conclusions or interpretations made by the Contractor based on the information made available by the Government. Nor does the Government assume responsibility for any understanding reached or representation made concerning conditions which can affect the work by any of its officers or agents before the execution of this contract, unless that understanding or representation is expressly stated in this contract.

The existence of this clause makes it very difficult for contractors to submit equitable adjustment claims when project costs increase because of conditions that were knowable, but unknown to the contractor, at the time of contract award. It makes it especially critical for bidders to conduct comprehensive site investigations in the process of estimating costs (and performance periods).