Armed Services Board of Contract Appeals addresses the elements of a superior knowledge claim
In H&L Contracting, LLC, ASBCA Nol. 63695 (November 21, 2024), the contractor sought to recover for cost overruns it incurred in connection with a dredging contract. The contractor had to utilize an ocean-going dredge to complete the contract as opposed to the cutterhead dredge it had intended to use. The contractor alleged that the government failed to disclose superior knowledge concerning the entrance channel conditions and the need for an ocean-going dredge in order to successfully perform the project.
The basis for the contractor's superior knowledge claim was based on discrepancies between a 2010 dredging request for proposal ("RFP") and the 2022 dredging RFP to which the contractor responded. The 2010 RFP emphasized the need for dredging equipment that could handle rough sea conditions; the 2022 RFP did not. The contractor also learned of other documents prepared after the 2010 RFP that emphasized that the sea conditions could be rough.
The Armed Services Board of Contract Appeals stated that, to prevail on a superior knowledge theory, the contractor must establish four elements:
- It undertook to perform without vital knowledge of a fact that affects performance costs or duration;
- The government was aware that the contractor had no knowledge of and had no reason to obtain such information;
- Any contract specification supplied misled the contractor or did not put it on notice to inquire; and
- The government failed to provide the relevant information.
The board refused to grant either party summary judgment because each of the elements was subject to factual dispute, including:
- Whether the conditions were materially different than represented;
- Whether the government was aware the contractor had no knowledge of and had no reason to obtain the information, e.g., should the contractor have discovered the sea conditions with a reasonable site investigation;
- Whether the specifications in the 2022 request for proposal actually misled the contractor; and
- Whether the government solicitation effectively conveyed the substance of the allegedly vital undisclosed information.
The teaching point for this case is that if you, as a contractor, determine that you are encountering conditions different than anticipated, and the contract you are performing has previously been performed, you should inquire concerning prior similar contracts to determine if there are critical differences in the information conveyed.
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