asbca|Optimum Services, Inc., ASBCA No. 58755 (2015) -- eLawyers

Judges: Ting
Filed: Mar. 25, 2015
Latest Update: Mar. 02, 2020
Summary: with sand-sized shell fragments. By the end of October 2010, five months after Ryan, began dredging, the Corps confirmed that crusts on top of the silt layer and dredged, material with heavy shell content were found in patches scattered around the, acceptance sections (finding 69).

ARMED SERVICES BOARD OF CONTRACT APPEALS

Appeal of-- )
)
Optimum Services, Inc. ) ASBCA No. 58755
)
Under Contract No. W912EP-09-C-0033 )

APPEARANCE FOR THE APPELLANT: Joseph W. Lawrence, II, Esq.
Vezina, Lawrence & Piscitelli, P.A.
Fort Lauderdale, FL

APPEARANCES FOR THE GOVERNMENT: Thomas H. Gourlay, Jr., Esq.
Engineer Chief Trial Attorney
Carolyn J. Fox, Esq.
Assistant District Counsel
U.S. Army Engineer District, Jacksonville

OPINION BY ADMINISTRATIVE JUDGE TING

Optimum Services, Inc. (OSI), entered into a contract with the Jacksonville
District Corps of Engineers (the government or the Corps) to restore the benthic
substrate and hydro logic process of Rose Bay in Volusia County, Florida, as the final
phase of a multi-phase project. OSI subcontracted the dredging portion of its contract
to Ryan Incorporated Southern (Ryan). OSI initially sponsored and submitted a
$1.87 million and 93-day time extension Request for Equitable Adjustment (REA)
from Ryan to the contracting officer (CO). At Ryan's request, OSI converted the REA
into a certified claim. The CO denied the claim and OSI/Ryan appealed. 1 We have
jurisdiction under the Contract Disputes Act (CDA) of 1978, 41 U.S.C. §§ 7101-7109.
We decide entitlement in favor of OSI/Ryan and remand the appeal to the parties for
determination of the quantum of adjustment.

FINDINGS OF FACT

1. Rose Bay is located along the Intracoastal Waterway in east central Volusia
County, Florida (ex. 204 at 1455). In the years before Florida's rapid growth, Rose Bay
was a productive estuary in the Halifax River in Volusia County. Good water quality
once provided vital nursery grounds and habitat for shellfish. Over time, stormwater
runoff, leaking septic systems and restricted water flow caused by two causeways
degraded the bay's shellfish productivity. To restore Rose Bay, the St. Johns River

1
Unless context dictates otherwise, we use OSI/Ryan because the appeal was
prosecuted by Ryan with its attorney.
Water Management District (SJRWMD) worked with the residents and local
governments and formed a coalition of agencies to find solutions to the pollution
problems. SJRWMD, the city of Port Orange and Volusia County coordinated efforts
through the Rose Bay Task Force and developed a five-point restoration plan. The task
force also established partnerships with the Florida Department of Transportation and
the U.S. Army Corps of Engineers. (Ex. 101 at 4, http://www.sjrwmd.com/rosebay/)

2. The five-point restoration plan included: (1) controlling stormwater runoff
pollution; (2) eliminating leaking septic systems; (3) replacing the existing US-1
Bridge and removing a causeway to reestablish natural water exchange in the bay;
(4) removing the old causeway east ofUS-1; and (5) removing accumulated sediment
to restore estuary habitat (see http://www.sjrwmd.com/rosebay/). This appeal relates
to the last phase of the Rose Bay Restoration Project or the "Section 206, Aquatic
Ecosystem Restoration, Rose Bay" Project (the Rose Bay Project) (R4, tab 5).

3. Oysters are "an indicator species" (tr. 3/149). "[I]f the oysters are doing
well ... then the rest of the habitat would be doing well as well" (tr. 3/149-50).
Dredging the accumulated sediment would help restore oyster habitat in Rose Bay
(tr. 3/149). In addition to oysters, other shellfish exist in Rose Bay (tr. 3/150).

4. On 10 March 2009, the Corps issued a solicitation for the "restoration of
inter-tidal and sub-tidal benthic substrate and hydrologic processes within Rose Bay
by removing up to approximately 152,000 cubic yards of unconsolidated sediment
from the Bay" (see Section 01 11 00, SUMMARY OF WORK, Paragraph 1.2.1,
Project Description) (R4, tab 5 at 316) (emphasis added). The contract included a base
and three option items. The base work consisted of reconstructing an existing upland
disposal area at Lost Creek Island (the disposal area) requiring approximately 147,000
cubic yards (CY) of new dike construction, removal of two existing weirs and
construction of two new weirs and outfall pipes. 2 The dredging work was divided into
Option Items A, B, and C of approximately 104,000 CY, 21,000 CY and 27 ,000 CY
respectively. (R4, tab 4 at 40) The dredged material was to be placed in the disposal
area which would be located about two miles from the dredging area and was not
accessible by land (ex. 216 at 2068).

5. On 20 May 2009, OSI submitted a bid including the three option items for
dredging for $4,073,158.96. The Corps awarded Contract No. W912EP-09-C-0033
including all option items (the Rose Bay contract) to OSI on 19 June 2009. The
contract required OSI to begin work within 30 calendar days and to complete work
within 324 calendar days after receiving the notice to proceed. (R4, tab 4 at 38-39)

2
The construction of the disposal area was the subject of another appeal decided in
2013. Optimum Services, Inc., ASBCA No. 57575, 13 BCA if 35,412, ajf'd,
Optimum Services, Inc. v. McHugh, 582 F. Appx. 879 (Fed. Cir. 2014).

2
6. The Rose Bay contract incorporated by reference the following FAR clauses,
among others: FAR 52.233-1, DISPUTES (JUL 2002); FAR 52.236-2, DIFFERING SITE
CONDITIONS (APR 1984); and FAR 52.243-4, CHANGES (JUN 2007) (R4, tab 5 at 64-65).

Dredging Requirements

7. Section 35 20 23 of the specifications pertained to dredging:

3 .4 .4 Areas to be Dredged

The areas requiring dredging are depicted on the drawings
as hatched areas and the dredging limits are designated by
State Plane (X-Y) Coordinates. The actual limits of
I
dredging may be adjusted, if necessary, by the Contracting
Officer, in order to maintain the minimum setback of 25
feet from any structure.

3.4.5 Acceptance Sections

For the purposes of acceptance, the work to be done will
be divided into acceptance sections as shown on the
drawings ....

3.4.6 Special Instructions

Materials to be removed under this contract are described
in Section 00 31 32 GEOTECHNICAL DATA; however,
if any hardbottom is encountered above grade, the
hardbottom material shall not be dredged and its location
shall be reported to the Contracting Officer for verification.

(R4, tab 5 at 499)

8. As shown on contract Drawings CN 103 and CN 104, of the nine
Acceptance Sections (AS), AS#8 and AS#9 were located east of the US-1 Bridge, and
AS#l through AS#7 were located west of the US-1 Bridge3 (app. supp. R4, tab 2;
Drawings CN 103, CN 104).

3
Option A applied to AS#l through AS#6; Option B applied to AS#7; and Option C
applied to AS#8 and AS#9 (ex. 204 at 1296).

3
9. Drawing CN 105, "DREDGING PLAN -TOP OF SEDIMENT, EAST OF
US-1," showed five areas of"EXPOSED OYSTER BED" (ex. 1003). Drawing CN
106, "DREDGING PLAN -TOP OF SEDIMENT, WEST OF US-1," showed three
areas of"EXPOSED OYSTER BED," two in AS#6 and one in AS#5 (ex. 1004). Both
drawings contained this note:

4. THE DREDGING LIMITS HAVE BEEN
ESTAB LI SHED TO PROVIDE FOR A 25' MINIMUM
SETBACK FROM ALL STRUCTURES AND OYSTER
BEDS. THE CONTRACTOR SHALL ADJUST THESE
LIMITS AS NECESSARY IN ORDER TO MAINTAIN
THIS 25' MINIMUM SETBACK. THE CONTRACTOR
SHALL NOTIFY THE CONTRACTING OFFICER'S
REPRESENTATIVE OF THE NEED TO MAKE SUCH
ADJUSTMENTS PRIOR TO DOING SO.

(Exs. 1003, 1004)

10. Drawing CN 104, "DREDGING DEPTHS, QUANTITIES AND
ACCEPTANCE SECTIONS WEST OF US-1," showed that AS# 1 through AS#6
required -3 feet NGVD 4 as dredging depth and AS#7 required -4 feet NGVD as
dredging depth. Drawing CN 103 showed AS#8 and AS#9 required -4 feet NGVD as
dredging depth. (App. supp. R4, tab 2)

Materials the Specifications Represented the Contractor Would Encounter

11. The specifications of the Rose Bay Project included a Geotechnical Data
Report at Section 00 31 32. Section 1.2.2 pertained to "Materials Encountered" at
Rose Bay. Paragraph 1.2.2.1, referred to as the "Character of Materials" clause in this
appeal, provided:

1.2.2.1 Rose Bay

Sediments within Rose Bay are represented through
borings CB-RB-1 through CB-RB-10 and all borings were
drilled by barge and tripod in shallow water.

The first materials encountered in the bay are
unconsolidatedfine sediments. This unconsolidated fine
sediment is predominantly organic sandy silt with gravel to
sand-sized shell particles with a very soft consistency, as

4
NGVD stands for National Geodetic Vertical Datum (tr. 2/80).

4
indicated by the absence of blow counts. Silt is
occasionally interbedded with seams of very soft organic
silty fine quartz sands with shell fragments, obtaining a
thickness of several feet. Throughout Rose Bay, borings
indicate that this unconsolidated fine sediment ranges in
thickness from 9 to 27 feet and pinches out toward the
shoreline. Below the unconsolidatedfine sediment, a
resistant, consolidated material is encountered, referred to
as "hard bottom ". It is comprised of soft to medium
dense, fine quartz sands, and silty sands, with sand-sized
shell fragments. Boring CB-RB-3 indicates that clay is
also present in the base material. The initial resistance I
(hardness) at the top of this unit may come from cemented I
~·

oyster beds covered with unconsolidated fine sediment.

(R4, tab 5 at 205) (Emphasis added)
I
I
12. Sediments are "the products of run-off from the region that come into
suspension and then settle in the area." Sediment is "very different from ... shell[s] that
are organisms that are trying to in situ thrive." (Tr. 2/58) The term "unconsolidated"
referred to "a very loose [and] soft material" and "something [with] very soft
consistency" (tr. 1154). In contrast, the term "consolidated" means "cemented"
(tr. 4/207, 211). Oyster beds are "cemented together in distinct clusters" (tr. 3/9-10).
The firm layers of crust at issue in this appeal were not oyster beds because they were
a localized collection of "interlocked shells" that "can give an appearance of being
cemented" (tr. 4/164-65). Other than oysters, there were other types of shellfish such
as "clams and mollusks" (tr. 3/150). The contract defined the word "[s]hell" to mean
"[m]aterial composed of predominantly (>75%) coarse-grained sand to gravel-sized
whole or broken shell" (R4, tab 5 at 206).

13. Section 00 3 1 32, Paragraph 1.3, of the Geotechnical Data Report pertains
to "DEFINITIONS." It states that"[ d]efinitions not explicitly indicated in the sections
below are typical industry standard definitions from their respective ASTMs." (R4,
tab 5 at 205) This paragraph does not require a prospective bidder to use any specific
ASTM to calculate the volumes of silt, sand or shell to be dredged as a means of
verifying the material description the Corps set out in Paragraph 1.2.2.1 or the visually
classified materials in Borings CB-RB-1 through CB-RB-10. Among other terms,
paragraph 1.3.2 defines "Coarse Gravel-Sized" to mean "[p]articles greater than 3/4 of
[
an inch but less than 3 inches in diameter" (id. at 206). Thus, a prospective contractor
should expect to dredge whole or broken shells up to three inches in diameter. f
14. The so-called "dredging prism" tells a contractor how far to dredge both
horizontally and vertically (tr. 1/56). Drawing CN 309, "TYPICAL DREDGING
t
5
I
SECTIONS," showed a typical dredging prism or area to be dredged in relation to the
top of sediment and the hard bottom (ex. 1000). Paragraph 1.2.2.1 of the
specifications indicated that the unconsolidated fine sediment ranged in depth from
9 to 27 feet. That meant that the hard bottom would be from 9 to 27 feet below the top
of sediment. Because the dredging prism only extended to a depth of -4 feet NGVD, a
contractor could reasonably assume that it would not dredge into hard bottom three or
four feet below the top of sediment. (Tr. 2/69, 88) We find in cases where the Corps
directed the contractor to dredge to the lines, grades, and limits of the contract, it was
directing the contractor to dredge in accordance with the dredging prism specified in
the contract drawings (tr. 1/137).

15. The Corps performed a hydrographic and topographic survey of Rose Bay
between 16 September and 17 October 2002. Drawing CN 107 showed the results east
of the US-1 Bridge (AS#8 and AS#9). Drawing CN 108 showed the results west of I
the US-1 Bridge (AS# l-AS#7). These drawings show hundreds of probes were made. I
I
The drawings do not, however, indicate any obstructions of the kind the contractor
would later encounter in 2010 and 2011. In 2010, OSI's dredging subcontractor
encountered patches of firm crusts of shells scattered around all but AS#7
(finding 55-56) and heavy concentrations of shell at various locations (finding 69).
We find these crusts and at least some of the shells were developed in Rose Bay since
the 2002 survey (tr. 11154-55).

Borings CB-RB-1 through CB-RB-10

16. As noted, Paragraph 1.2.2.1 of the Geotechnical Data Report told bidders
that "[s]ediments within Rose Bay are represented through borings CB-RB-1 through
CB-RB-10" (R4, tab 5 at 205; finding 11). CB-RB-1 was drilled outside the dredging
area. Each Acceptance Section has one boring except AS#6 and AS#2. AS#6 had no
boring and AS#2 had two. (R4, tab 5 at 212 and Drawing CN 104; ex. 101 at 22)

17. The drilling logs for all ten borings were depicted on pages 14 through 23
of the Geotechnical Data Report. As indicated on the logs, the boring samples were
taken and visually classified in accordance with the Unified Soils Classification
System in April 2000, nine years before the Corps issued the solicitation for the Rose
Bay Project. (R4, tab 5 at 215-24)

18. Borings were accomplished with the use of a split spoon sampler which
was a hollow tube with inside diameter of 1 3/8 inches attached to a drill rod. Drill rod
advances were indicated by (1) "WOR" (Weight of Rods) or (2) "WOH" (Weight of
Hammer) (R4, tab 5 at 215-25; tr. 1/47, 49). "WOR" means "[the] sampler penetrated
into the soil 18 inches under its own weight" and "we didn't have to drop our 140
pound hammer to drive it through." "WOR" material means material of "very soft
consistency." (Tr. 4/149) "WOR" material is also generally referred to as "zero blow

l
count" material (tr. 2/23). In Paragraph 1.2.2.1 "WOR" was described as "absence of
blow counts" (R4, tab 5 at 205). Because the borings were accomplished with a split
spoon sampler with a 1 3/8 inch diameter, it was impossible for a shell or shell
fragment larger than 1 3/8 inches in width to enter the sampler (ex. 101at32-33). In
July 2010, after the parties' dispute arose, OSI's subcontractor hired Universal
Engineering Sciences (Universal) to conduct auger borings within the dredging area.
Universal used a 4-inch diameter casing and a 3-inch diameter hand auger. Because
the 4-inch diameter casing had a cross-sectional area of 12.6 square inches as opposed
to the split spoon sampler which had a cross-sectional area of 1.48 square inches, it
was reported that "[n]ine of the borings contained large oyster shells." (Ex. 101 at 34)
We find the use of the split spoon sampler in 2000 could have underestimated the
number of large shells in Rose Bay. Dr. Nicholas W. Hudyma, the Corps'
geotechnical engineering expert, acknowledged that a shell bed that one had to "juke
through ... with a PVC pole or an iron rod" would not be "WOR" material 5 (tr. 4/213).

19. Dr. Hudyma's expert report summarized at Table 2, the following pertinent
boring information from the specifications:

Table 2. Soil descri tion and standard enetration test (SPT) blow counts for the u er 18 inches of sediment
Borio # Soil Descri tion SPT Blow Counts
CB-RB-1 SILT, some fine
CB-RB-2 SILT, some fine
CB-RB-3 SILT, some fine
CB-RB-4 SILT, some fine
CB-RB-5
CB-RB-6
CB-RB-7
CB-RB-8
CB-RB-9 Weight of
Hammer/18"
CB-RB- SILT, little fine quartz sand, trace medium sand-size shell fragments, gray (ML) Weight ofRod/18"
10

(Ex. 101 at 14)

20. As Dr. Hudyma's report further explained:

As shown in Table 2, the soil is described as gray silt. The
consistency of the material is very soft as indicated by the
blow counts. In nine of the ten borings, the weight of the
rods alone caused the sampler to move eighteen inches into
the sediment. For the other boring, CB-RB-9, the weight
of rods and hammer caused the sampler to move eighteen
inches into the sediment. All of the descriptions note the I
5
In dredging parlance, the word ''juke" is used to describe punching through with
force using a hard tube.

7
presence of fine sand and medium and coarse sand-sized
shell fragments in the upper sediment.

(Ex. 101 at 14)

What the Borings Reasonably Revealed to Bidders

21. OSI/Ryan's dredging expert, Williams S. Humphreys, testified that the
borings used the word "SILT" in capital letters, and based on the Unified Soil
Classification System, "the first word ... tells you what the material is. The others are
just descriptors." (Tr. 1/72) Dr. Hudyma agreed that the material described was
"predominantly silt sized" (tr. 4/205), and it was the material "you most want a person
to see" (tr. 4/206).

22. Mr. Humphreys testified that, as an experienced dredger, he would read the
contract documents to require the removal of "unconsolidated silt from the Bay for
environmental reasons" (tr. 1/43), that the nine borings within the dredging area
described the material to be dredged as "unconsolidated soft sediment" (tr. 1144), with
"no blow-count" consistently "throughout the Bay" (tr. 1/45). And, as typical of such
jobs, it involved the dredging or removal of "about 15 inches" or "near-surface
material" in water that was "two feet deep" (id.).

23. OSI/Ryan's geotechnical engineering expert, Dr. Luis A. Prieto-Portar,
agreed that even though the dredging prism ranged from 9 to 27 feet deep, Ryan was
to dredge, on average, only "one-foot, three-inches of the dredging prism" (tr. 2/20).
He also explained that "sand is basically a very high friction material" and "you need
very little sand to hold up that rod" (tr. 2/25). Thus, with "a weight of rod with the
absence of blow counts, you can only have trace amounts of sand and shell," and that
"the sum o[ f] sand and shell could not have been much more than five percent in that
material" (tr. 2/24).

24. For the Rose Bay Project, the Corps used the borings from 2000, nine years
before it issued the solicitation in 2009. According to Dr. Prieto-Portar, ifthe Corps
were to take 10 borings just before the solicitation was issued at the same locations as
it did in 2000, the new borings would show a "totally different geotechnical profile"
and would show the presence of "shells" and "packed sand," cemented "oyster beds"
and "gravel-size shell[s]" (tr. 2/50-51). He explained:

This is a small bay with a lot of dynamics; run-offs,
storms, causeways being built, causeways being taken out.
You cannot have a single picture describe what is really a
movie of 10 years of intense activity.

8
(Tr. 2/50) He explained that a 1 3/8-inch split spoon would pick up whole shells
except for the big ones, and thus more recent borings would not have described the
shell contents to include only "shell fragments" (tr. 2/52-53).

Independent Government Estimate

25. The Corps prepared an Independent Government Estimate (IGE) on the
Rose Bay Project in February 2009, before issuing its solicitation (ex. 216 at 2066).
The IGE computed the dredging cost for each Acceptance Section using the Cost
Engineering Dredge Estimate Program. In all but AS#5, the Corps assumed 100%
"MUD & SILT" as the "MATERIAL FACTOR." For AS#5, the Corps assumed 50%
"MUD & SILT" and 50% "LOOSE SAND." (Ex. 216 at 2073, -79, -85, -91, -97,
-103, -109, -115, -121) Thus, the IGE indicated that the Corps did not expect any
consolidated shell bed material would be encountered. As Mr. Humphreys observed,
the Corps estimator assumed "[n]o oysters ... no shell, no rock ... he only assumed two
things, silt and mud or this little bit of sand" (tr. 1/133). A table summarizing the type
of material to be dredged by Acceptance Section from the IGE showed the Corps
estimated 93% of the CYs dredged (195,000 CY) would be "Mud & Silt," 7% (15,300
CY) would be "Loose Sand," and 0% would be "Composite Shell" (ex. 433 at 2927).

26. While Ryan's bid was based on the use of a 10-inch suction dredge, the
Corps' IGE assumed the use of a smaller 8-inch suction dredge (tr. 2/13). According
to OSI/Ryan's expert who owned the same 8-inch dredge, "[t]hat dredge can only
pump very, very loose material" (tr. 2/46). The IGE showed that using the 8-inch
dredge, dredging could be "done in daylight hours in less than six months" 6 (tr. 4/77).

Before Issuance of the Solicitation, the Corps was Told of the Presence of Shell
Crusts Throughout Rose Bay

27. Paul J. Haydt has worked for SJRWMD for over 20 years (tr. 3/145).
During those years, he chaired the Rose Bay Task Force (tr. 3/147). He was "closely
involved" with the Corps during the development of the Rose Bay Project (tr. 3/158);
he co-planned the dredging project with the Corps (tr. 3/176). Mr. Haydt probed the
Rose Bay "several times through the years with several different groups" before the
Corps became involved (tr. 3/183). "[S]ignificantly before" the project plans and

6
We agree that the IGE, in and of itself, cannot be used as proof of a differing site
condition (DSC) (see gov't reply br. at 12). The IGE, however, is reflective of
how the Corps itself interpreted the contract requirements, and thus can be used
to evaluate whether the contractor's interpretation of the same c-0ntract
requirements was reasonable. The Corps acknowledged that its "IGE
preparation is based strictly on the same contract specifications and drawings
provided to all offerors" (id. at 26).

9
specifications were finalized for bidding, Mr. Haydt and others probed the areas to be
dredged "down to [the] hard bottom" (tr. 31177). He testified he came across "hard
surfaces" of shell above the hard bottom (tr. 3/184). He acknowledged that prior to
issuance of the solicitation in March 2009 he told the Corps that there was
"[c]onsolidated shell in various areas throughout Rose Bay" (tr. 3/188). He told the
Corps that there were "crust" consisting of "shell throughout the bay" that he had to
"juke ... through" (tr. 3/182, 186-87). He described what he found at the hearing:

[S]ome shell ... out there in some places there's enough for
it to be layered and consolidated, but it's ... a three or four
foot ... area you're cutting through and it's a ... half inch
layer ... there is shell throughout the bay without a doubt
and closer to oyster bars you probably have more, but yes.
It's an estuary that has shell.

(Tr. 3/188) (Emphasis added)

28. Mr. Haydt testified that although he did not come across six-inch thick
crusts, "in some places you could walk on it and other places it will break through"
(tr. 3/191). He testified although not cemented together as in an oyster bar, the shells
of the crusts were "consolidated" or "[stuck] together" and were not "individual
shells" (tr. 3/189). The crusts were said to contain dead (as opposed to live) oyster
shells stuck together with mud (tr. 3/189-90). We find these crusts were formed and
accumulated over time and could affect dredging operations in shallow water. We find
the Corps did not mention any firm crusts throughout the bay in its solicitation or
otherwise alert bidders to their presence.

Site Investigation

29. FAR 52.236-3, SITE INVESTIGATION AND CONDITIONS AFFECTING THE
WORK (APR 1984) clause provided in part:

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

I
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

10
for proceeding to successfully perform the work without
additional expense to the Government.

(R4, tab 5 at 65)

30. OSI's president, Daniel Eastman testified that, before he bid the project, he
and others from his firm visited the 73-acre project site in May 2009. He testified he
did not see anything at the site that was different from what was represented in the
Geotechnical Data Report and shown in the boring logs, and because of the limited
time within which to submit OSI's bid, he saw no need to conduct further geotechnical
investigations. (Tr. 3/42) The Corps COR acknowledged that the submerged
algae-covered crusts would be difficult or impossible to see under certain conditions of
the day such as high tides. He testified that "[i]t would be impossible to see ifthe
water was really dark, it gets like a tea color sometimes, it would be impossible to see
if it was high tide and there were lots of these tanins [sic] in the water." (Tr. 4/97-98)

31. When the Corps awarded OSI the Rose Bay Project contract in June 2009,
OSI had not awarded a subcontract for the dredging part of the contract. On 31 July
2009, OSI entered into a subcontract with Ryan Incorporated Southern (Ryan) to do
the dredging work. The subcontract was in the amount of $1,280,120.00. (Ex. 226;
tr. 1/184-85)

32. Before entering the subcontract with OSI, Ryan's Donald (Sonny)
Buchanan investigated the site (tr. 2/100). Mr. Buchanan testified that, from his
review of the contract documents, he understood the project to involve "shallow
dredging [of] silt" (tr. 2/101). He toured the site with Ryan's chief estimator in a small
I boat. He testified that he was concerned with "water depth" and crossing "3,000 foot
of line through a coastal marsh" (id.). He "did a couple probes just west of the bridge"
with a seven-foot steel rod (id.) and his probe went down three to four feet and did not
find anything inconsistent with what the borings showed as WOR material (tr. 2/102).
I
I 33. OSI/Ryan's dredging expert, Mr. Humphreys, testified that a "normal site
visit" in this case would involve "access to the site, how ... to get the pipeline to the
disposal area, whether you can float or not," and "a few probings of the silt ... to see
how much soft fluff is on top" (tr. 1/103). He opined that a bidder might find a crust if
I it "looked extensively enough" and since the crusts could be mistaken for oyster beds,
and the contract specifically excluded oyster beds from dredging, he "would not have
gone out of [his] way to try to identify them during the bid phase" (tr. 1/163-64).
OSI/Ryan's geotechnical engineering expert, Dr. Prieto-Portar, opined that a
reasonably prudent contractor would not have discovered the firm layers of shell beds
below the water that permeated Rose Bay unless it "spent money and time putting in a
drill rig" which none of the seven bidders did (tr. 2/86-87). He testified he would

11
consider it imprudent for a bidder to second guess the information assembled by the
Corps in the contract documents (tr. 2/70).

34. We find even if a contractor were to wait until low tide to visit the site and
come across a firm layer of interlocked shell crust, it could easily have mistaken the
crust to be a hard bottom or a newly developed oyster bed required to be reported for
setback purposes and need not be dredged. We find that OSI conducted a reasonable
site investigation.

Ryan's Bid

35. William H. Ryan is and was Ryan's president (tr. 11173). He testified in
bidding the dredging work, he relied on the information provided by Paragraph 1.2.2.1
of the Geotechnical Data Report and the boring logs (tr. 5/7-8). He testified the
I
borings showed "predominantly silt" with a trace, little or some "sand-sized sediments
or fine sand" (tr. 11180). He said his only concern was pumping silt over a long
distance which could be done with the use of a booster pump (tr. 1/175). He
concluded that the project "appeared to be simpler than most dredge projects" (id.),
and it would be "an easy job" with a 10-inch suction dredge (tr. 11182).

36. Mr. Ryan testified when he bid the dredging work, he understood oyster
beds were located as shown in the contract drawings, and if additional oyster beds
were encountered, Ryan need not dredge them (tr. 11199). He testified he was aware
that Ryan was to "stay 25 feet away from them" (tr. 1/232). When asked ifhe
accounted for shell fragments less than three inches (coarse gravel size as defined in
~ 1.3.2 of the specifications) in his bid, he answered "[i]n our bid, there was going to
be no shell above sand-size. So, no, we did not assume any three inch shells. I mean,
if you got a stray shell, fine, but we were not planning to dredge oyster beds."
(Tr. 1/237-38) He testified that his bidding team was "comfortable with the six month
schedule" to perform the dredging work and had planned to work single shifts
(tr. 1/184). We find that Ryan did not assume there would be no shells in a shellfish
habitat, but did assume from the contract documents shell recovery would not cause
dredging issues. As found earlier, the Corps' IGE assumed 0% "Composite Shell"
(see finding 25).

3 7. According to OSI/Ryan's geotechnical engineering expert, because what
were shown in the borings were "so homogenous ... describing not gravel-size shell
fragments, but medium, fine and very few coarse-size shell fragments," coupled with t
the "absence of blow counts," most dredgers would consider the presence of large
shells "anomal[ous]" (tr. 2/49). As for what percentage of sand a dredging contractor
could or should have expected, OSI/Ryan's dredging expert testified:
I
12

l
The average dredger is a person with multiple talents;
project management, equipment manager, has knowledge
about some materials in the field. But to construe that that
person could look at the boring log and can come up with a
35 percent content sand from that boring log is way
beyond the capabilities of any, any dredger in the field.
There's no way they could have arrived at that conclusion.

(Tr. 2/35)

38. In dredging, the nature of the material to be dredged and pumped
determines the productivity and the cost of dredging (tr. 1/69). Sand weighs seven or
eight times more than silt (tr. 1/110), and silt could be pumped two to three times as
easily as sand (tr. 1/70). While the use of a screen could prevent clogging during
dredging, it could also reduce production rate. According to OSI/Ryan's dredging
expert, if the material described - silt - had been dredged, the use of a screen would
not have been necessary. (Tr. 1/167) OSI/Ryan's dredging expert testified that given
the material described, he would have bid the job using either a small 12-inch pipeline
dredge or a IO-inch pipeline dredge. As mentioned earlier, the Corps' IGE was based
upon using a smaller 8-inch dredge. (Tr. 1/68)

The Corps was Aware of a "Significant Amount of Firm Material" in the Bay
Before Ryan Began Dredging

39. Ryan began dredging on 12 May 2010 (ex. 201, tab 3). 7 Three months
before, Julie Anderson, the Chief of the Architect Engineering and Construction
Branch in the Corps' Contracting Division expressed concern to the CO in an
11 February 2010 email that a "significant amount of firm material above the required
grade" might be out of scope work:

Heads up Pre dredge survey has identified significant
amount of firm material above the required grade. If
information is correct and cont[r]actor is instructed to
cease work, they expect significant under run. They are at
the CAP limit on funds. Removal of this firm material is
probably out of scope too.

(Ex. 201, tab 2)

7
OSI/Ryan's dredging expert report- Ex. 201 - included tabs setting out a
chronology of events of the parties' dispute. We use ex. 201 the way we would
f
normally use a Rule 4 file since the one assembled by the Corps is not
conducive for such use.

13
40. In his 3 March 2010 email to his colleagues, COR Michael A. Presley
expressed his beliefthat the layer of oyster shells was "the hard bottom ... that is higher
than we anticipated" (ex. 201, tab 3). In his reply, Stephen R. Conger, Corps Project
Manager of the Rose Bay Project, also believed that the "significant amount of firm
material above the required grade" was tied to, and a part of, the hard bottom. He told
his colleagues:

I think that the specs are clear about hardbottom being tied
to a substantial consolidated layer as identified by the
I
borings. Bottom line, we want the Contractor to achieve
the prescribed grade unless it is proven that the layer he is
claiming to be firm is not simply a "crust."

(Ex. 201, tab 3) In other words, he said that the contractor would be required to
dredge through a crust.

41. Despite Ms. Anderson's warning and the input received from Mr. Haydt,
the Corps did not follow up and evaluate whether the nature and composition of the
above grade firm material or crust would impact dredging efforts.

Encountering Firm Layers of Crust Dredging AS#8 and AS#9

42. As planned, OSI was to complete the construction of the Disposal Area in
four months or by October 2009. The Disposal Area "took a lot longer;" OSI did not
finish it until April or May 2010. (Tr. 3/141)

43. AS#9, on the west side of the US-1 Bridge, was the first Acceptance
Section Ryan dredged (tr. 3/133). OSl's project manager, Matthew Conneen notified
the Corps by email on 19 May 2010 that on 13 May 2010 Ryan encountered hard
bottom much sooner than expected. Forwarding a sketch of the area, the email stated
"Sheet CN107 identifies the hard bottom in this area to be approximately -18.0' +/-of
which we are finding a hard bottom within 1.5' +/-below water surface." The email
went on to say "[t]he bottom in this area will support foot traffic," and OSI was
submitting a Request for Information (RFI) seeking clarification on how "hard
bottom" would be defined in the field. (Ex. 201, tab 6)

44. OSl's Quality Control Representative Matt Hart reported when the dredge
encountered the material it was "rumbling, shaking, trying to get through this material
which was not anywhere near what we thought it was going to be." Stepping off the
boat, he found the material encountered not to be "unconsolidated material" but "more
of a consolidated sandy sandbar shelly bar nature" on which he could stand knee high.
He also could not see what it was because the water was "very murky." (Tr. 3/86) We

14
find OSI/Ryan, like the Corps, erroneously believed that the firm layer of crust
material it encountered to be an unexpectedly high hard bottom.

45. OSI's 19 May 2010 RFI stated:

We have found some material we believe is hard bottom
that support foot traffic. The location of this material is
much higher than what is shown on the plans. To help
preserve any hard bottoms found on site we are requesting
a standard field procedure that may help our QC to
determine the location of the hard bottom. Section
00 31 32 - 1.2.2.1 defines a hard bottom as a resistant
consolidated material which we believe can be identified
as supporting human foot traffic.

(Ex. 236)

46. There was uncertainty within the Corps on what to do next. The Corps
design engineer emailed the Corps project manager on 19 May 2010 stating "We need
to inform Paul Haydt and be prepared to direct the Contractor to either continue
dredging to required grade or move to another location. I am leaning toward
continued dredging but would like to have more information before doing so."
(Ex. 201, tab 9)

47. The Corps Quality Assurance Representative (QAR) Ronald L. Wilson's
log of 20 May 2010 reported that Ryan continued to dredge AS#8 and its booster
pump was down "this morning for awhile." The QAR probed areas in AS#8 and AS#9
to check OSI's claim of higher than expected hard bottom. He reported "[i]n all cases
where I probed there was only slightly firm layer/crust on top of the silt. I was able
[to] push probe thru crust without much effort in most places." He reported that, on
the outer limits of the dredging area, i.e., south side of AS#9, "the firm layer/crust was
harder to push thru, but I was able to push thru with juking." The report said he "[t]old
Matt Hart (CQC) to continue dredging down to the contract required grade of -4.0'
elev. in all areas of AS#8 until we (C.O.E.) told them otherwise. He acknow[ledged]
and agreed." (Ex. 201, tab 8) We find the Corps' QAR confirmed the existence of
firm layers of crust above the hard bottom. We find the QAR did not consider the
crusts to be oyster beds requiring setbacks. COR Presley acknowledged at the hearing
that wherever such crusts were encountered during the project, he told the contractor to
dredge them (tr. 4/20). The crusts typically consisted of whole oyster shells, sand,
shell fragments, and in some locations clusters of oysters interlocked together with
mud and sand. The material was not "unconsolidated sediments" as described in the
contract. (Ex. 201, tab 31)

15
48. On 3 June 2010, Corps personnel and SJRWMD's Mr. Haydt probed AS#8

I[
and AS#9. According to the Corps QAR's log, "Their final conclusion was that the
crust we did find around the edge of dredging limits was not hard bottom." The Corps
and SJRWMD "agreed [that the] contractor should continue to dredge to lines &
grades and limits shown in the contract drawings." The QAR's log noted that "Ryan
appears to be dredging 11 to 12 hrs per day lately/but production rate has yet to be l

determined." (Ex. 201, tab 13)

49. The Corps' 3 June 2010 response to the RFI took the position that the
materials Ryan encountered were not hard bottom (ex. 236). Although the Corps did
not address the above grade firm material encountered, its silence was consistent with
its direction that Ryan was expected to dredge through the material. Running behind,
Ryan gradually increased its dredging hours in June 2010 and went to two 12-hour
shifts a day beginning the first week of July 2010 (tr. 4/90-91).
!
50. By letter dated 22 July 2010, Ryan asked OSI to notify the CO that it had
encountered a differing site condition. The letter said the material encountered "has
not been the unconsolidated fine sediments that were reflected in the borings provided
to us for the project." The letter went on to say that "[o]ur production has been
significantly hampered by this differing site condition, including the slow production
caused by pumping coarser material (including oyster shells) rather than silt and has
contributed to dredging downtime as well as higher operating cost." (Ex. 201, tab 18)
OSI forwarded Ryan's notice to the Administrative Contracting Officer (ACO) and the
Corps' North Florida Area Office Engineer, David R. Tolle by letter dated 26 July
2010 8 (ex. 201, tab 19). Even before their July 2010 notice of differing site condition,
OSI/Ryan had weekly meetings with the Corps, and the subject of encountering a
differing site condition was discussed. The Corps did not relieve Ryan from dredging
the firm layers of crust (tr. 3/115, 117).

51. OSl's Quality Control Report (QCR) of 30 July 2010 noted dredging
continued in AS#9 on double shifts. It stated that the "[d]redging subcontractor
marked out areas of hard material and oyster beds within Section 9 and had geotech
firm bore and sample these areas." 9 (Ex. 201, tab 20)

52. The Corps QAR's log of 6 August 2010 noted that the "dredge disposal
line got plugged last night." He asked "Dredge was in a position in AS#9 where they
should have been pumping soft silt materials? Why the blockage?" (Ex. 201, tab 24)
His log of 9 August 2010 reported that after the dredge line was blocked Friday,

8
During the project, OSI was told that as long as it copied its communications to the
ACO and the COR, it would be their determination whether to "advance it up"
9
to the CO (tr. 3/115, 117).
We discussed Universal's auger borings in finding 18.

16
I
Saturday and Sunday, Ryan tried to use a new booster pump but encountered "major
mech problems." After Ryan replaced a section of the dredge disposal line and a
second booster pump, dredging resumed in AS#9. 10 (Ex. 201, tab 25)

53. The Corps QAR's 11August2010 log noted that Ryan continued to dredge
AS#9. At the monthly progress meeting, Ryan complained that its work had been
impacted and delayed "because of the shelly materials." OSI and Ryan asserted that
the blockage in the dredge discharge line was "caused by excessive amounts of shell."
The Corps QAR questioned whether a differing site condition could exist "[ e]ven
though there are numerous oyster beds clearly shown in the contract drawings and
clearly visible during an extreme low tide." (Ex. 201, tab 26) We find at this point,
what qualified as an oyster bed was still unclear. OSI/Ryan had referred to the firm
layer of crust it encountered as an oyster bed. The Corps, on the other hand, had not
considered the crust as an oyster bed requiring a setback, and had directed OSI/Ryan
to continue to dredge such crusts. No oyster bed setback would be established until
dredging reached AS#5 and AS#6 in October or November of 2010.

54. As a result of receiving OSI/Ryan's notice of differing site condition in the
dredging area as well as disposal area, the Corps engaged the services of Dr. Hudyma
for his views on the issues. Dr. Hudyma visited the site on 18 August 2010 and
provided his findings to the COR in his letter of 24 August 2010. (Ex. 201, tab M).
Dr. Hudyma reported that "[p]robe sampling at various locations did not provide
evidence of large shells within the dredged area.... Hand auger samples did return
large oyster shells, both broken and fragmented, from sampling locations." (Id. at 5)
A photograph taken at the beach near the eastern edge of the dredging area showed the
presence of large oyster and clam shells in the vicinity, but not within, the dredging
area (id. at 6).

Dredging AS#7

55. In mid-August 2010, Ryan mobilized to the west side of the US-I Bridge
where AS#7 and AS# 1 were located. AS#7 was on the north side of AS# 1 and was in
a "deeper area" near some private residences. Unlike AS#8 and AS#9, which took
from May to mid-August 2010 to dredge, AS#7 had "very little shell[s]," and Ryan
had "no problems dredging AS7 and ... they finished it in the time they expected to"
(tr. 4/25).

10
At the entitlement hearing, the parties did not address the cause(s) of equipment
failure that occurred from time to time. Not all equipment failure was the
Corps' responsibility. For example, there is evidence of mechanical failure due
to Ryan operating the booster in a reverse mode (tr. 2/135-36).

17
56. We note Boring CB-RB-7 was drilled within AS#7 (Drawing CN 107 and
R4, tab 5 at 212). Boring CB-RB-7 described the material to be encountered as WOR
material consisting of "SILT, some fine quartz sand, trace coarse sand-size shell
fragments, gray (ML)" (see finding 19). With minor shell fragment size differences
(medium versus coarse), this description was similar to those of the other borings
except CB-RB-9 which contained WOH material. We find the material in AS#7
representative of what OSI/Ryan should encounter absent the firm layers of crust it
encountered in all of the other acceptance sections. When Ryan reached AS#2 west of
AS#7, it ran into crusts again which hindered its dredging efforts (tr. 3/92-93).

Dredging AS# 1, AS#2, AS#3 and AS#4

57. In response to OSI's 26 July 2010 notice of encountering a differing site
condition, ACO Tolle's 28 August 2010 letter said that after investigating "Acceptance
Sections 8 and 9 where dredging has just been completed and also in the remaining
acceptance sections where dredging had not yet commenced," the Corps "have
determined that the materials encountered during the dredging do not differ from those
described in the contract documents." He gave the following explanation:

SECTION 00 31 32 "Geotechnical Data Report" of the
contract specifications shows evidence of sandy material
that contains shell fragments. Further, the contract makes
numerous references to oyster beds that indicate that shells
will be present in the dredging area. The report also stated
that the initial resistance (hardness) at the top of the hard
bottom in the bay may come from cemented oyster beds
covered with unconsolidated fine sediment. It is my
determination that the contract clearly describes the
materials actually encountered in the bay and that the
presence of coarse material and shell does not constitute a
DSC.

(Ex. 201, tab 31) While the ACO focused on the hard resistance layer that came from
cemented oyster beds "at the on top of the hard bottom," what Ryan encountered was
firm crusts of shells in the dredging prism far above the hard bottom.

58. Ryan continued to encounter crusts. OSI's QCR of 22 September 2010
reported that the Corps and OSI "inspected the ... area where the dredge was working
when the pipeline became plugged." The QCR further reported that "a shallow bar
with a crust of shell was probed," and "[t]his crust material will be further investigated
as a differing site condition, as it is not shown in the project borings." (Ex. 201,
tab 34) The Corps QAR's log of the same day noted that Ryan was dredging the
center of AS# 1 and encountered some shell material that plugged up the dredge line.
i
18 f
In probing the area where the dredge had been dredging, the Corps QAR and OSI's
QCR "found a mound/high spot in the area" (ex. 201, tab 35). OSI's QCR reported to
his project manager that "the dredged material on the island and what material was
probed ... appears to be the same 'crust' that Ryan has been dealing with east of the
bridge" (ex. 201, tab 36). Mr. Ryan testified that the crusts Ryan dredged were made
of shells and sand cemented together. Ryan had to use a cutter to penetrate and break
up the crusts and used a screen to prevent clogging; it had to run the dredged material
through a pump and a two-mile long discharge line to the Disposal Area. And even
after all this, large pieces of cemented shells - some larger than gravel size - ended up
in the Disposal Area. (Tr. 5/11-12) As opposed to these crusts, he testified that "stray
shells" was "not a problem" (tr. 5/21 ).

Defining What Constituted Oyster Beds

59. Ryan continued to dredge AS#l on 24 September 2010. On that day, the
Corps QAR and OSI's QCR inspected the northern dredging limits of AS#2, AS#3 and
AS#4 "to verify locations of new docks and oyster beds not shown on the contract
plans." Since the docks and the oyster beds were inside the dredging limits, OSI was
told to "stay 25' away from all docks and oyster beds." (Ex. 201, tab 38) Up to this
point, the Corps had not designated any oyster beds not shown on the contract
drawings for setback. Although OSI/Ryan thought the crusts it ran into were oyster
beds, the Corps did not consider them oyster beds and had consistently required
OSI/Ryan to dredge the crusts.

60. On 7 October 2010, the Corps QAR reported to his colleagues that "[t]here
are new oyster beds in that area between the docks which are not shown on the
contract drawings." He recommended "it would be wise on our part to revise the
dredging limits to avoid all those areas." (Ex. 201, tab 41) OSI's QCR reported to his
superiors by email on 8 October 2010 that the Corps probed within the limits of
dredging that day and "will modify the northern boundary to eliminate dredging
between docks and close to oyster bars." The email said '"Hard Bottom' along with
typical shell crust was encountered along the southern side of the bay in Section 3.
USACE will modify the entire southern boundary by moving it northward by 30 feet."
Implementing the procedure set out in Drawings CN 105 and CN 106, Note 4, the
email said that "[ o]yster beds encountered throughout the dredging limits will be
identified to OSI QCM and USACE QA to determine the necessity of dredging."
(Ex. 201, tab 42)

61. Ryan's 9 October 2010 letter asked OSI to ask the ACO to reconsider his
28 August 2010 rejection of its differing site condition claim. Ryan maintained that
"[t]his differing site condition is large oyster shells which cannot be considered an
'unconsolidated fine sediment."' (Ex. 201, tab 45 at 4) Referring to the borings, Ryan
asserted that all 10 borings indicated the material to be dredged was soft silt containing

19
I
sand-size shell fragments. Ryan maintained there was no mention of whole oyster
shells in any of the 10 borings and that "[a] reasonable interpretation of the borings is
that the material within the dredging prism would be easy to dredge and easy to pump
to the disposal area." (Id. at 2) Referring to Paragraph 1.2.2.1 of the specifications,
Ryan argued that paragraph was consistent with the borings describing the materials to
be encountered in the Bay as "unconsolidated fine sediments" consisting of
"predominantly organic sandy silt with gravel to sand-sized shell particles with a very
soft consistency, as indicated by the absence of blow counts." (Id. at 2)

62. Addressing the ACO's point that the hardness Ryan encountered might be
the "hard bottom," Ryan's letter argued:

a. This "hard bottom" is 9 to 27 feet below the surface of
the bay. The dredging grade is elevation -3 .0 feet and
-4.0 feet. This "hard bottom" is well below the
dredging prism.
b. Even this "hard bottom" material is described as "soft
to medium dense, fine quartz sands, and silty sands,
with sand-sized shell fragments". It is not described as
consisting of large oyster shells.
c. In the ten USACE borings furnished in the
specifications the highest elevation at which any blow
count was recorded was at approximately elevation -8
feet (Boring CB-RB-6, 1 blow for 0.5 ft. of
penetration). The required dredging grade in this area
is elevation -3.0 feet. This means the top of the "hard
bottom" (if this one-blow material was the top of the
hard bottom) was 5 feet below the dredging prism.

(Ex. 201, tab 45 at 3)

63. OSI' s QCR of 13 October 2010 reported dredging was continuing in AS#2
on double shifts and dredging was impacted for four hours "due to shell bed." It
reported the dredge "went down at 5 :00 pm due to overheating problem" (ex. 201,
tab 46). Photographs bearing the same date show a large quantity of fragmented,
broken and whole shells discharged into the disposal area (ex. 201, tab 47).

64. On 13 October 2010, OSI asked the COR to provide field modifications to
the dredging limits. In reply, the Corps' Project Engineer, John H. Wilson (Project
Engineer J. Wilson) said that "[b]y modifying contract we risk acquiescing to a
'Changed' condition." Since the contract required the contractor to stay 25' from
structures(§ 35 20 23, ~ 3.2.3) and the contract drawings required the contractor to
provide a 25' setback from all structures and oyster beds, Project Engineer J. Wilson

20
said that he "saw no need to modify the contract." His reply went on to say "If
contractor is willing to work with QA in the field, to define limits, then this can be
done informally and thereby save contractor cost and effort" since "there isn't any
need for navigational dredge precision here." (Ex. 201, tab 48)

65. On 13 October 2010, Ryan stopped dredging in the early afternoon after it
dredged through "some sand & shell material" and the dredge engine went down with
a cracked head. On 15 October 2010, the Corps and OSI/Ryan staked the revised
dredging limits along the north side of AS#2 and AS#3. (Ex. 201, tab 50) On
18 October 2010, dredging was reported continuing in AS#2 on double shift. OSI
reported that the dredge was down "due to low tide while dredging over a shell bed
(high spot)" and the shell banks at two locations within the dredging prism were
"impacting dredge production." (Ex. 201, tab 51)

66. On 20 October 2010, Ryan continued to dredge AS#2. The Corps, OSI and
Ryan inspected AS#3, AS#4, AS#5 and AS#6 and probed areas thought to be oyster
beds. The parties agreed that Ryan's crew must clearly mark areas thought to be
oyster beds and then OSI and the Corps would verify those areas to be excluded from
dredging. The Corps QAR's log mentioned that "6" thick crust or deeper was
mentioned as a deciding factor." (Ex. 201, tab 53) OSI QCR's 20 October 2010 email
to his superior and the Corps QAR stated "[p]er further discussions with USA CE, it is
requested that the perimeters be staked where the crust/oyster bed is six inches thick
and probing requires effort to penetrate the layer." The Corps QAR forwarded OSI's
email to his colleagues including ACO Tolle and COR Presley with the following
question and comment:

The big question is, how thick does the crust have to be to
qualify as an oyster bed and be excluded from dredging?
We also probed through the middle of a live oyster bed
clearly marked on the contract drawings and it was 2 foot
thick in the center. Please review and comment.

(Ex. 201, tab 55)

67. Internally, however, the Corps began to realize that the crusts it had
required Ryan to dredge since May 2010 could potentially be considered oyster beds.
In his 21 October 2010 email to the CO (Griselle Gonzalez), COR Presley, Project
Engineer J. Wilson, Project Design Engineer Stephen R. Conger and others,
ACO Tolle wrote:

The Contractor has already put the Government on notice
that the "crust" they continue to encounter on a frequent
basis is either hard bottom or recently formed oyster

21
r
beds.... However, Ron Wilson now is expressing concerns
that this crust could be potentially ... oyster beds that have
developed since the project scope was developed.
I I
Accordingly, I believe it is imperative that we have a
marine biologist visit the site ASAP to investigate the
situation. We certainly don't want to be destroying oyster
beds with an Environmental Dredging project and if new
beds have formed within the required dredging area, we
will either need to modify this area or terminate the
remaining dredging work.

The email requested that "a Marine Biologist with experience dealing with oyster beds
visit the site ASAP." (Ex. 201, tab 56)

68. Paul E. Stodola, the Corps' biologist, told his colleagues in his 21 October
2010 email that if live oysters were encountered, the contract required "the work
should stop in these areas where they're coming up in the dredge" and the Corps
"[m]ay need to do a quick survey to delineate live oyster beds, and avoid those areas"
(ex. 201, tab 59). We find the contract did not distinguish between live and dead
oyster beds. The contract (Drawings CN 105 and 106, Note 4) required the contractor
to notify the COR and to adjust the dredging limits to maintain a 25' setback upon
encountering oyster beds.

69. The following answers, provided by the Corps' QAR R. Wilson, in his
21 October 2010 email to the questions posed by the Corps' Rose Bay Project
Manager, Nelson R. Colon, provided an overview of the parties' differing site
condition dispute up to that point:

1. Could oyster beds have formed since 2002?

Answer: Yes, there are many that have formed in the
western portions of the project site, AS#3, AS#4, AS#5,
and AS#6 that are not shown on the contract drawings.
These new oyster beds range from early development 1
foot to six 6 inches below water level at [high] tide to 6-8
inches above water level at low tide. The crust thickness
on top of the silt layer varies in each case.

2. Is the "crust" on the surface of the seafloor or buried?

Answer: Most of the areas in question are on the surface
of the seafloor formed on top of the silt layer. The
l
f

22
I
contractor has also encountered some old shell beds buried
in the silt layer.

3. Are we having dredged material with heavy shell
content coming out of the discharge pipe?

Answer: Yes, at times the shell content is heavy but most
of the time the average discharge has been a sandy silt
material with an occasional shell. So far we have not
dredged up any live oyster beds. This would be noticeable
at the dredge discharge point in the disposal area.

4. Is this condition found throughout the dredging
footprint or in patches?

Answer: Mainly in patches scattered around the
acceptance sections. It appears to be getting worse as we
progress towards the western reaches of the project and in
shallow areas along the northern, southern, and western
dredging limits. After inspecting and probing suspected
areas in AS#4, AS#5, and AS#6 yesterday at extreme low
tide we discovered many newly developed mounds of sand
and shell (10-12 approx.) that are not shown on the
contract drawings. They vary in size and thickness. I
would estimate that 20% to 25% of the areas shown in
AS#5 and AS#6 may have to be excluded from the
dredging limits; otherwise, we'll be dredging up live oyster
beds.

(Ex. 201, tab 57) We find this narrative, coming from the Corps QAR who was on the
project site several days each week, a credible assessment of the nature and extent of
the dredging issues Ryan confronted at Rose Bay up through the end of October 2010.

70. We find that the Rose Bay Task Force's restoration efforts over the years in
controlling runoff pollution, eliminating leaking septic systems, removing the old
causeway and replacing the US-1 Bridge had improved the benthic and hydrological
conditions of Rose Bay. These improvements in the intervening years, however, had
substantially changed the nature and character of the materials in the bay by the time
the dredging phase of the restoration effort took place in 2010 and 2011.

71. Internally, someone within the Corps questioned whether "historic" oyster
beds should be dredged. That person opined that keeping these "historic" oyster beds
would be ideal for the ecosystem restoration project since "[t]he oyster shell beds are

23
the ideal substrate for oyster spat settlement." (Ex. 201, tab 66) By email to
SJRWMD's Mr. Haydt on 25 October 2010, the Corps Project Manager advised that
the Corps believed there was a potential environmental situation developing on the f
Rose Bay Project. The email said that the contractor continued to report encountering
a "crust" that it believed to be either "hard bottom or recently formed oyster beds."
The email invited Mr. Haydt to a site visit as soon as possible. Mr. Haydt's reply
confirmed "There is a shell surface 'crust' over the sediment in Rose Bay that is
encountered when surveying sediment depths" and "[t]his was consistent with
conditions we found in the east part of the bay with the project team earlier in the
project." (Ex. 201, tab 73)

72. By email on 25 October 2010, the Corps Project Engineer J. Wilson
reminded OSI that pursuant to Note 4 of Drawing CN 105, "the dredging limits have
I
been established to provide for a 25' minimum setback from all structures and exposed
oyster beds," and the contractor was to "notify the contracting officer's representative
of the need to make such adjustments prior to doing so." OSI's reply said that a "new
base line was established to define oyster beds or ... shell beds." The email said prior
to 20 October 2010, "many oyster beds deeper than 6" ... were determined by the COR
to be dredged." The email wanted to know "if the 6" base line ... is not correct."
J. Wilson's reply drew a distinction between oyster beds and hard bottom: "Oyster
beds are to be delineated, defined, verified and avoided as you dredge horizontally
along the dredge plane. Hard bottoms are those areas to avoid as you dredge
vertically." His email went on to say "Unless you are willing to work according to
plans already established to address the issue of oyster beds, you will need to dredge to
the lines, grades and limits of the contract." (Ex. 201, tab 78)

73. What OSI/Ryan were complaining about up to this point was not dredging
hard bottom or oyster beds; it was complaining about dredging submerged
I
consolidated crusts of shell beds above the hard bottom that it encountered throughout
Rose Bay. The Corps has not disputed that it established a new baseline on
20 October 2010 requiring Ryan to dredge these crusts if they were less than 6" thick.

74. The Corps' Project Engineer J. Wilson, the Corps' biologist (Stodola),
SJRWMD's Haydt and Ryan's staff met at the site on 27 October 2010 to verify ifthe
"areas marked by the contractor were correctly identified as oyster beds." Mr. Haydt
sampled the site with a shovel. The substrate at each of the sites marked was found to
contain "dead oyster shell and sediment," with spats Uuvenile oysters) in "very small
numbers," and "an occasional adult oyster." (Ex. 201, tab 95 at 1) Based on this
revelation, it was determined that none of these areas the contractor marked were
"viable oyster beds." According to Mr. Haydt, "all viable oyster beds within the
Halifax River system have been observed within intertidal habitats only," and the sites
checked "appear to be sub-tidal." In contrast, when the parties surveyed the oyster
beds marked on the contract drawing in AS#5, it was found that the oyster beds there

24
"comprised of numerous live oysters, both adults and spats," and "[a]s is typical of a
viable oyster bed, the adults were attached to the substrate and their valves were
pointing up." These latter oyster beds were determined to be "an intertidal habitat."
(Id. at 2)

75. Corps Project Engineer J. Wilson's 28 October 2010 email to his
colleagues including ACO Tolle and COR Presley, stated that he reiterated to OSI that
"they should continue with the dredging per the lines, grades and ... limits as currently
set forth in the contract," and to "dredge around" those areas the contractor believed
should be avoided until "a formal ACO directive to do otherwise." The email went on
to say that "the supposed oyster beds OSI marked in [AS#3] were not the oyster beds
envisioned by the contract for avoidance" and SJRWMD, the project sponsor,
appeared willing to remove these areas from dredging but only at no costs to the
government. (Ex. 201, tab 94)

76. We find that up through the end of October 2010, the Corps itself was
learning the difference between live versus dead oyster beds, between viable versus
non-viable oyster beds, and between inter-tidal versus sub-tidal oyster beds. And until
all these differences were understood, the Corps was inconsistent in its determination
with respect to which oyster beds OSI/Ryan encountered should be excluded from
dredging. COR Presley acknowledged that through the end of October 2010, the
Corps "never thought about excluding ... submerged shell layers" from dredging. He
acknowledged that the direction not to dredge crusts over six inches did not come
about until October 2010. (Tr. 4/36)

77. OSI's QC Report of 3 November 2010 noted that Ryan was "reporting
heavy shell content within dredge prism," and dredging was continuing in AS#3 on
double shift (ex. 201, tab 108). Its QC Report of 4 November 2010 noted that Ryan
was "reporting heavy oyster beds within the dredging prism on the south boundary of
[AS#3]," and dredging was continuing in AS#3 on double shift (ex. 201, tab 110).

The Corps' Decision to Reduce the Dredging Areas in AS#4, AS#5 and AS#6

78. Prior to issuing the solicitation in 2009, the Corps had made a commitment
to the Florida Inland Navigation District (FIND) to leave 100,000 CY of capacity for
future use (tr. 4/7-8). Ryan had Sea Diversified, Inc. (SDI), a surveying and mapping
firm out of Delray, Florida, perform a survey of AS#5 and AS#6. By email on
9 November 2010, Ryan sent OSI a sketch combining SDI's survey and the Corps'
pre-survey of AS#3 and AS#4. The email called attention to the shaded areas of"Y£!.Y
heavy concentration of shell" and suggested that "these areas are similar to the
designated area on the plan that we are not suppose to dredge." (Ex. 201, tab 122) For
AS#3 and AS#4, the sketch showed shell concentrations along the northern and
southern boundaries. For AS#5, the sketch showed shell concentration along the

25
northern boundary extending south into the middle of the section. For AS#6, the
sketch showed shell concentration on all four sides enveloping nearly half of the
section. OSI forwarded Ryan's email to the ACO and the COR with the message:
"The information provides a more analytical view of areas of very heavy shell that
should be considered for exclusion in the revised dredging limit plan currently under
review." (Id.).

79. To ensure available Disposal Area capacity of 100,000 CY, Corps Project
Engineer J. Wilson's 15 November 2010 email to ACO Tolle recommended "allowing
contractor to liberally delete work areas" (ex. 346 at 2400). On 16 November 2010,
Ryan received from OSI the Corps' proposed Modification No. P00007 (ex. 201,
tab 130 at 1). The modification sought to revise the southern dredging limits of AS#4,
AS#5 and AS#6 in accordance with an attached Drawing VH 101. The modification
offered no change in contract price or contract completion date. It contained a
"Closing Statement" requiring the contractor to release the government from "any and
all liability under this contract for further equitable adjustments attributable to such
facts or circumstances giving rise to Change Request NM008 for adjustment," and
provided that "the reduction in quantity due to the removal of this area shall be
addressed in a subsequent Variation in Estimated Quantities modification as per the
terms and conditions included in this contract." (Ex. 350 at 2408-15)

80. The COR testified that excluding dredging areas along the southern and
western reaches of the bay was for the benefit of the Corps and the contractor because
"[i]t would let them get finished with the job sooner, and it limited how much material
went into the disposal area which would help us meet our commitment to the Florida
Inland Navigation District" (tr. 4/57).

81. As of 19 November 2010, Ryan had finished dredging AS#3 and was
dredging AS#4 (ex. 201, tab 130 at 2). Ryan notified OSI by letter dated
19 November 2010 that it "could not agree to the terms and conditions of P00007 as
written" for two reasons: First, Ryan said it was not clear "what Change Request
NM008 is or what it includes," and it was concerned that Ryan might release the
government from "liability for the differing site condition (shell versus fine sediment)
that Ryan and Optimum and the Corps of Engineers have been investigating and
discussing for some time now." Second, Ryan stated that the Corps' proposed changes
to the limits of dredging in Modification P00007 differed from the changes Ryan
suggested in its shaded plan using -1.5 elevation as the criteria emailed on 9 November
2010. (Ex. 201, tab 130) By letter dated 24 November 2010, the ACO canceled
proposed Modification No. P00007 and directed OSI that "[t]he unfinished dredging
work in the remaining uncompleted Acceptance Sections shall be completed in

26
accordance with the terms and conditions of the contract, including the requirements
of Modification P00006" 11 (ex. 201, tab 136).

Dredging AS#4 and AS#5 -December 2010

82. On 3 December 2010, the Corps and OSI representatives inspected the
southern dredging limits of AS#4 and AS#5 at low tide. They verified that inter-tidal
oyster beds were present within the original dredging limits. The COR agreed to
establish a 30-foot setback as the southern limits of AS#4 and AS#5 in accordance
with the contract requirement. (Ex. 201, tab 144) OSI's QC Report of 6 December
2010 noted the dredging was completed in AS#4 (ex. 201, tab 148).

83. OSI's QC Report of9 December 2010 indicated that Ryan was "digging
shell in AS 5 for five hours on second shift" (ex. 201, tab 152). The Corps QAR's log
of the same day indicated the Corps and OSI representatives "re-staked the perimeter
of the oyster bed[s] in AS#5" as shown on the contract drawings. They also inspected
the layout of AS#6 and probed for oyster beds and hard bottom along the north, west
and south limits and found that the south and southwest limits might have to be revised
north to avoid some of the oyster beds. The log indicated that the 30-foot setback
would not work along the south and southwest comer of AS#6 because of the irregular
shape of the oyster beds. (Ex. 201, ex. 151)

84. OSI's QC Report of 11December2010 noted that Ryan was "digging shell
in AS 5 for 6.75 hours on second shift" (ex. 201, tab 156). Its report of 13 December
2010 noted that Ryan was "digging shell in AS 5 for 2 hours on second shift" (ex. 201,
tab 157). The parties field inspector verified the existing oyster bed as shown in
Drawing CN 106 in AS#5 extended "beyond the limits ... on the contract drawings,"
and "re-staked the oyster bed perimeter to comply with minimum setbacks as
required." (Ex. 201, tab 159)

Deletion of Dredging Areas in AS#5 and AS#6 in December 2010

85. OSI's QC Report of 14 December 2010 indicated dredging was continuing
in AS#5 and Ryan was "digging shell in AS 5 for 3.5 hours on second shift" (ex. 201,
tab 160). The Corps QAR's log indicated that the parties conducted a joint inspection
to exclude areas in AS#5 and AS#6 "where there were inter-tidal oyster beds which
I
had developed after contract drawings were assembled." The parties re-staked the
dredging limits on the south and west side of AS#6 and the north side of AS#5.
(Ex. 201, tab 162) On 15 December 2010, Corps and OSI representatives conducted a

11
Modification No. P00006 dealt with the oyster bed and dock setbacks the parties
discussed on 24 September 2010 and agreed upon (see finding 59; ex. 201,
tab 38 at 2).

27
joint inspection to exclude areas in AS#5 and AS#6 "where there were inter-tidal
oyster beds which had developed." The parties "restaked the dredging limits on the
north, south & west side of AS#6, and the north side of AS#5." (Exs. 386, 387, 388,
389; tr. 3/125-26) On 17 December 2010, dredging continued in AS#5 and Ryan was
"digging shell in AS 5 for 2.6 hours on second shift" (ex. 201, tab 164). Ryan
continued to dig into shells in AS#5 for 1.6 hours on 20 December 2010 and for
4 hours on 21December2010 (ex. 201, tabs 166, 167). Mr. Ryan testified that in
December 2010, Ryan continued to encounter what it believed to be "oyster bed"
every day (tr. 1/198). COR Presley acknowledged that in the areas not deleted "we
made them dredge it" (tr. 4/117).

86. The ACO notified OSI by letter dated 17 December 2010 that its work in
AS#3 and AS#4 was accepted (ex. 201, tab 165). OSI's QC Report for 7 February
2011 notes that "Dredging Rose Bay was completed first shift this date" (ex. 434,
QCR for 7 February 2011). ACO Tolle notified OSI by letter dated 16 February 2011
that its work in AS#5 and AS#6 was accepted (ex. 201, tab 173).

87. Mr. Ryan testified that "oyster beds" were found in all Acceptance Sections
with "[AS#]7 [having] less than some of the other sections, but generally, they all had
them" (tr. 1/192). He testified what the Corps ultimately deleted from dredging in
December 2010 was no different from what the Corps required Ryan to dredge in
October and November 2010, or from what it encountered on the "east side of the
bridge" (tr. 1/193).

88. COR Presley testified there were four reasons the Corps excluded areas
from dredging: (1) oysters; (2) hard bottom; (3) structures; and (4) "to accommodate
the contractor's request. .. to make it easier to manage the dredging operations"
(tr. 4/62). He explained "On the north it was structures, hard bottom and ease of
dredging. On the west end, it was ... for oysters and structures and ... the power line.
And on the south side, it was for hard bottom and oyster beds." (Id.)

89. Structures and hard bottom are not in issue - there is no evidence that Ryan
dredged anywhere close to structures or hard bottom. As for oysters or oyster beds,
the Corps unilaterally deleted certain areas in AS#5 and AS#6 from dredging in
November and December 2010. There is no evidence that the Corps directed and
Ryan dredged those oyster beds shown on Contract Drawings CN 105 and CN 106
(see finding 9). The evidence indicates and we find that, except with respect to the
oyster beds indicated on the contract drawings and those dredging areas deleted in
AS#5 and AS#6, the Corps required Ryan to dredge submerged crusts of shell beds,
first without exception, and then in October 2010, only those less than six inches.
Because the Corps itself was uncertain what qualified as an "oyster bed," it also
required Ryan to dredge non-viable oyster beds and dead oyster beds. The Corps
required Ryan to dredge all but what its biologist and SJRWMD were able to confirm

28
l
as live or viable inter-tidal oyster beds. In all cases, the Corps consistently required
Ryan to dredge to the lines, grades, and limits specified in the contract from May 201 O
until it finished in February 2011. If there were areas the Corps relieved Ryan from
dredging in order to "accommodate" its request or to "make it easier to manage the
dredging operations," the evidence does not indicate where.

The Corps' Defenses

90. In its defense to OSI/Ryan's appeal, the Corps presented an expert report
from Dr. Hudyma. Framing OSI/Ryan's claim as one where it argued it had "no
expectation of shells to be present in the dredging area" (ex. 101at32), Dr. Hudyma
opined that based upon "numerous indicators," it was "a reasonable expectation that
shells and shell fragments would be present in a once productive estuary in which an
aquatic ecosystem restoration project is being performed" (id. at 34 ). He pointed to
the following indicators:

•The description of the regional geology indicates the
potential for the presence of shells.

• The description of the material encountered states the
presence of gravel to sand-sized shell particles.

• The description of the upper soft sediments in the boring
logs clearly states the presence of shell fragments.

• Oyster beds are shown in the dredging area on CN 104,
CN 106, and CN 108.

• Oyster beds are shown in the vicinity of the dredging area
on CN 105 and CN 107.

(Id.)

91. This analysis missed the point of OSI/Ryan's claim. OSI/Ryan was not
complaining about encountering shell and shell fragments. Rather, it was complaining
about the presence of submerged firm crusts of shell beds on top of the silt layer and
above the hard bottom it encountered in patches scattered around the acceptance
sections, and about the concentrations of large broken and whole shells in various
areas not indicated in the Geotechnical Data Report and the contract borings.
I
I

92. Dr. Hudyma compared the actual volumes of sand and shell Ryan dredged
f
with the volumes of sand and shell it could expect to dredge based upon the
descriptions provided in the boring logs. According to Dr. Hudyma, out of a total

29
gross quantity of approximately 259,000 CY estimated to have been actually dredged
Ryan estimated it dredged approximately 31,000 CY of sand (12%) and approximately
32,000 CY of shell (12%). (Ex. 101at36) He concluded that by following the ASTM
D2488-00 definition of "Trace," "Few," "Little," "Some" and "Mostly" (id. at 18), the
volumes of sand and shell fragments to be dredged in the acceptance sections could be
calculated (id. at 25). He suggested that had the contractor made such calculations
when it bid the contract, and assuming the contractor only dredged the upper sediment
of the acceptance sections, it should have expected to dredge between 64,747 and
103,323 CY of sand and between 5,169 and 18,611 CY of shell fragments (id. at 28).
Thus, the conclusion to be drawn was that the contractor did not encounter a differing
site condition because the sand and shell fragments actually dredged were less than the
volumes that could be expected.

93. Assuming "the contractor only dredged the upper sediments and the I
descriptions of the upper sediments in the boring logs are representative of the upper
sediment throughout each acceptance section," Dr. Hudyma compared the contract
dredged volumes with the final calculated dredged volumes and concluded the
contractor over-dredged 98,557.78 CY of material (ex. 101 at 28-29). He posited that
"if the contractor over dredged near the edges of the dredging area, it could be possible
the contractor dredged hard bottom material," and "[i]fhard bottom material was
dredged, the contractor would have dredged significantly more sand and shell" (id.
at 29) (emphasis added). Focusing on only one out of nine acceptance sections,
Dr. Hudyma concluded "in Acceptance Section 1, the contractor over dredging has
resulted in the dredging of hard bottom material. The over dredging into the hard
bottom material can account for any unanticipated dredging of sand and any
unanticipated dredging of shells and shell fragments." (Id. at 30) At the hearing, he
testified he investigated only AS# 1 for over dredging because he only had a "limited
amount of time ... for the report" and he "cannot speak to ... the other areas" (tr. 4/181).

94. At the hearing, Dr. Hudyma acknowledged that he made "a big mistake"
using the wrong hard bottom elevations for his AS#l analysis (tr. 4/188-89). Instead
of relying upon the much deeper hard bottom elevations provided by Drawing CN 108
(tr. 4/187), Dr. Hudyma relied on the erroneous hard bottom elevations provided to
him by the Corps (tr. 4/237).

95. Dredging is not an exact science. With no tolerance specified, a dredger
would over-dredge in order to leave the required dredging depth "everywhere" and to
avoid having to re-dredge if a later survey finds a "high spot" (tr. 1/64). Since
over-dredging was a "non-paid" item (tr. 1/147), there was no incentive for a
contractor to over-dredge more than necessary. The Corps expected the dredging
contractor to over-dredge "between a half of a foot and a foot" (tr. 1/65). Ryan
over-dredged by "probably less than a foot and a half' (tr. 1/55) or "1.2 feet on an
average over the area ... dredged" (tr. 1/211), in a dredging prism of "two feet of water

30
and about 15 inches [of] material" (1/55). OSI/Ryan's dredging expert testified that
based upon WOR or WOH materials shown in the boring logs, reaching "way below
any depth that the dredge would ever reach," over-dredging would not have
contributed to the amount of shells Ryan ultimately dredged (tr. 1/65, 149). Other than
Dr. Hudyma's theoretical analysis - "if the contractor over dredged near the edges of
the dredging area" (finding 93)- there is no evidence that OSI/Ryan dredged hard
bottom (gov't reply hr. at 16).

Submission of REA, Certified Claim, and Appeal of CO Decision

96. On 30 August 2012, OSI submitted to the ACO Ryan's Request for
Equitable Adjustment (REA) (R4, tab 3 at 33). Ryan's REA, dated 31July2012,
sought $1,247,932 and a time extension of93 calendar days (ex. 200, tab D at 4).
Ryan contended that it incurred extra costs as a result of a constructive change and a
differing site condition because it was "required to dredge oyster beds although oyster
bed dredging was specifically excluded under the terms of the contract." It contended
that it "worked an additional 93 calendar days to complete the dredging at Rose Bay."
(Id.) With field and home office overhead plus profit, the REA sought "$1,877,057.79
and an additional duration of 93 calendar days":

RIS - REA Cost $1,247,932.00
Field Office Overhead $ 279,536.77
Home Office Overhead $ 248,366.42
Profit @ 5. 7% $ 101,222.60
TOTAL $1,877,057.79

(R4, tab 3 at 32, 36)

97. In her 13 December 2012 letter, the CO advised OSI and Ryan that she
planned to provide a response by 31January2013. Ryan's 14 December 2012 letter to
OSI complained that since submission of its REA three and one-half months ago, there
had been "no substantive correspondence," "no discussions," "no meetings," and had
received no questions or any requests for further information from the Corps. The
letter said that "as a result of the apparent lack of progress," it was in Ryan's best
interest to convert its REA to a claim. (R4, tab 3 at 33) Ryan furnished a certification
signed by its president (id. at 35). OSI submitted a certified claim to the CO by letter
dated 20 December 2012 seeking an equitable adjustment of $1,877,057.79 including
home and field overhead and an "additional duration of 93 calendar days" (id. at 32,
36).

98. The CO's 3 April 2013 decision denied OSI/Ryan's claim (R4, tab 2). On I
II
the question of constructive change, the CO took the position that the terms "oyster
shell" and "oyster bed" are not "interchangeable." According to the CO, "an oyster

I
31
bed must contain live oysters and provide a viable environment for sustaining those
live oysters." She observed that "[s]hell fragments, even if highly concentrated, do not
constitute an oyster bed if no live oysters are present and the environment is not
conducive for producing oysters." Based on SJRWMD Mr. Haydt's observation that
oyster beds were only sustainable in inter-tidal habitats, she concluded that a
concentration of shells in a sub-tidal area did not qualify as an oyster bed. (Id.
at 27-28) She concluded there was no constructive change because she found no
evidence that Ryan was directed to dredge oyster beds:

Throughout the performance of the contract, ifthe
Corps verified the existence of an oyster bed, the dredging
limits were adjusted. If the Corps found no viable oyster
bed but only shell and shell fragments, Ryan was directed
to continue dredging to the lines, grades and limits
established by the contract. This was the process
contemplated by the contract documents and the one
consistently followed throughout this dredging project.

(R4, tab 2 at 27-28)

99. On the question of differing site condition, the CO denied the claim on
three grounds. First, the CO contended that while the contract showed approximately
8, 700 square feet of oyster beds, the additional 240,000 square feet of "intertidal"
oyster beds the Corps ultimately excluded and deleted was completely in accordance
with what was contemplated by Note 4, Drawings CN 105 and CN 106. (R4, tab 2
at 28) She attributed Ryan's numerous equipment breakdowns to using a larger
dredge than necessary and over dredging (id. at 29). Second, on the character of the
material dredged, she contended that the contractor actually encountered less shell,
sand and shell fragments -24.4% based on the contractor's measurement- comparing
with the Corps' after-dredge surveys of 35.8%, and the sieve analysis of C[B]-RB-1
and CB-RB-10 showing 55.3% versus 40.2% sand (id. at 30). Third, she contended
that while it was unclear whether Ryan was claiming a differing site condition based
on low tides, she found "Tides are a phenomenon related to weather and as such are
not properly the subject of a differing site condition claim" (id.).

100. OSI for itself and its subcontractor Ryan timely appealed the CO decision
by notice dated 27 June 2003. The Board docketed the appeal as ASBCA No. 58755.
A five-day hearing on entitlement was held from 12-16 May 2014 in Jacksonville,
Florida. By agreement, the parties treated the extent of the delay claimed- 93
calendar days - as a quantum issue.

32
DECISION

As a part of the Rose Bay Task Force's multi-phased project to restore Rose
Bay's ecosystem, the Corps entered into a contract with OSI to reconstruct an existing
disposal area and to remove unconsolidated sediments from the bay. OSI
subcontracted the dredging work to Ryan. Dredging was to be performed by
Acceptance Sections. There were nine Acceptance sections: AS#l -AS#9. Upon the
start of dredging in May 2010, Ryan immediately ran into what it believed to be hard
bottom at a much higher elevation in AS#9. The Corps determined what Ryan
encountered was not hard bottom and required Ryan to continue to dredge through the
firm layers of crust encountered. The crusts typically consisted of whole oyster shells,
sand, and shell fragments interlocked together with mud and sand.

Except in AS#7, Ryan continued to run into and dredge firm layers of crust in
AS# 1, AS#2, AS#3 and AS#4. By the end of October 2010, five months after Ryan
began dredging, the Corps confirmed that crusts "on top of the silt layer" and "dredged
material with heavy shell content" were found "in patches scattered around the
acceptance sections" (finding 69). In December 2010, the Corps deleted certain areas
in AS#5 and AS#6 from dredging. In areas not deleted, Ryan continued to run into
crusts and high concentrations of shell. The Corps acknowledged in areas not deleted,
''we made them dredge it." (Finding 85) Ryan completed its dredging in February
2011 (finding 86), three months longer than planned (finding 36).

OSI/Ryan's certified claim sought an equitable adjustment on the bases of
constructive change and encountering a differing site condition (findings 96, 97). Its
post-hearing brief tells us that both claims "were based on basically the same
evidence," and its constructive change case "is essentially subsumed" in its differing
site condition case (app. br. at 1 n.1 ). OSI/Ryan contends it encountered a Type I
differing site condition.

The Elements ofa Type I Differing Site Condition

The DIFFERING SITE CONDITIONS clause at FAR 52.236.2(a)(l) described a
Type I differing site condition as "subsurface or latent physical conditions at the site
which differ materially from those indicated in this contract." To establish entitlement
to an equitable adjustment due to a Type I differing site condition claim, a contractor
must prove, by a preponderance of the evidence, that: ( 1) the condition indicated in
the contract differs materially from those actually encountered during performance;
(2) the conditions actually encountered were reasonably unforeseeable based on all
information available to the contractor at the time of bidding; (3) the contractor I
reasonably relied upon its interpretation of the contract and contract-related
documents; and (4) the contractor was damaged as a result of the material variation
between expected and encountered conditions. Stuyvesant Dredging Co. v. United
I
!
I
33
States,

834 F.2d 1576

, 1581 (Fed. Cir. 1987); Comtrol, Inc. v. United States,

294 F.3d 1357

, 1362 (Fed. Cir. 2002).

       What Materials did the Contract Documents Indicate the Contractor would
       Encounter?

       A Type I differing site condition is dependent on what is "indicated" in the
contract documents. Foster Constr. C.A. & Williams Bros. Co. v. United States,

435 F.2d 873

, 881 (Ct. Cl. 1970). A contractor cannot be eligible for an equitable
adjustment for a differing site condition unless the contract indicated what those
conditions would supposedly be. P.J Maffei Bldg. Wrecking v. United States,

732 F.2d 913

, 916 (Fed. Cir. 1984). Where the contract is silent, a Type I differing site
condition claim cannot arise. Neal & Co. v. United States,

36 Fed. Cl. 600

, 617
(1996). Contract indications, however, need not be explicit or specific; they must be
reasonably plain or positive indications that the subsurface conditions would be
materially different from those actually encountered. P.J

Maffei, 732 F.2d at 916

In this case, the Rose Bay environmental restoration solicitation told bidders
that the project involved the removal of up to approximately 152,000 CY of
"unconsolidated sediment" from the Bay (finding 4) (emphasis added). It is
undisputed that the term "unconsolidated" referred to "a very loose [and] soft
material" and "something [with] very soft consistency" (finding 12). The dredging
portion of the specifications(§ 35 20 23, if 3.4.6) told bidders that the materials to be
removed were described in§ 00 31 32 of the Geotechnical Data Report and hard
bottom material was not to be dredged (finding 7).

The "Character of Materials" clause of the Geotechnical Data Report (if 1.2.2.1)
told bidders that "[t]hefirst materials encountered in the bay are unconsolidated fine
sediments," consisting of "predominantly organic sandy silt with gravel to sand-sized
shell particles with a very soft consistency, as indicated by the absence of blow
counts." This clause also told bidders that "[s}ediments within Rose Bay are
represented through borings CB-RB-I through CB-RB-JO." (Finding 11) (Emphasis
added) All nine borings inside the dredging area indicated "SILT" to be the
predominant material that would be encountered (finding 19). All nine borings
indicated the presence of various amounts (some, little) of fine quartz sand, and
various amounts (trace, little) of sand to medium size shell fragments. Eight of the
nine borings indicated "WOR" material, and one boring indicated "WOH" material.
(Finding 19) Because sand is a very high friction material, and very little sand is
needed to hold up the split spoon drill rod, "WOR" material indicated very little or
trace amounts of sand and shell fragments, not much more than five percent of the
material to be dredged (finding 23).

34
The "Character of Materials" clause,~ 1.2.2.1, indicated that the unconsolidated
fine sediment ranged in depth from 9 to 27 feet. That meant that the hard bottom
would be from 9 to 27 feet below the top of sediment. Because the dredging prism
only extended to a depth of -4 feet NGVD, bidders could reasonably assume that they
would not dredge into hard bottom three or four feet below the top of sediment.
(Finding 14)

Since ~ 1.3 .2 of the Geotechnical Data Report defined "Coarse Gravel-Sized" to
mean particles up to 3 inches in diameter (finding 13), bidders should expect to dredge
up broken or whole shells up to three inches from time to time. We do not interpret
~ 1.2.2. l to indicate that a bidder should expect to encounter heavy concentrations of
broken and whole shells. Our reading is consistent with the context in which
"gravel-sized particles" is mentioned, i.e., the material to be dredged remains of a
"very soft consistency, as indicated by the absence of blow counts" (finding 11).

What Materials Did the Contractor Actually Encounter During Performance?

What conditions were actually encountered by the contractor is a question of
fact. Arundel Corp. v. United States,

515 F.2d 1116

, 1123 (Ct. Cl. 1975). In this case,
as soon as Ryan began dredging in May 2010, it encountered what its project manager
described as "a consolidated sandy sandbar shelly bar nature" material sufficiently
hard to carry the weight of a person. Erroneously believing what it encountered was
an unexpectedly high hard bottom, OSI reported what Ryan encountered to the Corps.
(Findings 44, 45) In May and June 2010, the Corps confirmed the existence of firm
layers of crust "on top of the silt" and above the hard bottom probing AS#8 and AS#9
(findings 47, 48). In July 2010, Ryan through OSI formally notified the Corps that it
had encountered a differing site condition because the material encountered was not
"the unconsolidated fine sediments that were reflected in the borings provided"
(finding 50).

In mid-August 2010, Ryan mobilized to the west side of the US-1 Bridge. It
encountered very little shells and had no problems dredging AS#7; it finished AS#7 on
time. (Finding 55) When Ryan reached AS#2 west of AS#7, it ran into crusts again
which hampered its dredging efforts (finding 56). Ryan continued to encounter the
same crusty material it had been dealing with dredging AS# 1 in September 2010
(finding 58). In October 2010, Ryan's production was impacted while dredging over a
shell bed and shell banks at two locations within the dredging prism in AS#2
(finding 65).
I
In his 21 October 2010 email to the Corps' project manager, the Corps' on-site
QAR confirmed the existence of crusts "on top of the silt layer" (as distinguished from
I
the hard bottom). These crusts were said to be found "in patches scattered around the
acceptance sections," and "getting worse ... towards the western reaches of the project I
I
35
and in shallow areas along the northern, southern, and western dredging limits." He
estimated there were 10 to 12 newly developed mounds of sand and shells not shown
on the contract drawings covering 20% to 25% of the areas shown in AS#5 and AS#6.
He also reported that "at times the shell content is heavy" coming out of the discharge
pipe. (Finding 69)

The Corps did not relieve Ryan from dredging crusts until October 2010 when
it allowed Ryan not to dredge crusts exceeding 6 inches (finding 76). Ryan continued
to dredge AS#3 and AS#4 in November and early December 2010 (findings 81, 82). It
dredged into heavy concentrations of shell in AS#5 in December 2010 (finding 83,
84 ). Even after the Corps deleted from dredging in December 2010 certain areas in
AS#5 and AS#6 where inter-tidal oyster beds had developed, Ryan continued to run
into shells and what it believed to be "oyster bed[ s]" every day. In areas not deleted,
the Corps required Ryan to continue to dredge. (Finding 85)

We have found that except with respect to the oyster beds indicated on the
contract drawings and those deleted dredging areas in AS#5 and AS#6, the Corps
required Ryan to dredge submerged crusts of shell beds, first without exception, and
then in October 2010, only those less than 6 inches. Because the Corps itself was
uncertain what qualified as an "oyster bed," it also required Ryan to dredge non-viable
oyster beds and dead oyster beds. The Corps required Ryan to dredge all but what its
biologist and SJRWMD were able to confirm as live or viable inter-tidal oyster beds.
In all cases, the Corps consistently required Ryan to dredge to the lines, grades, and
limits specified in the contract from May 2010 until it finished in February 2011.
(Finding 89)

Did the Conditions Indicated in the Contract Differ Materially from Those
Actually Encountered During Performance?

In defense, the Corps frames OSI/Ryan's claim as one where it "did not expect
to dredge any sand or shell within the Rose Bay, a historic shellfish habitat" (gov't br.
at 12) (emphasis added). The Corps maintains "[t]he contract specifically states that
the Appellant should expect both sand and shell in addition to silt" (id. at 13)
(emphasis added). The Corps' defense does not address the differing site condition
claim advanced by OSI/Ryan. OSI/Ryan has never argued encountering shell and
sand in the dredging area was a differing site condition. Nor has it argued that
encountering shell above sand-size shell in and of itself was a differing site condition.
The Corps' attempt to minimize or ignore the firm layers of crust and the high
concentrations of shell OSI/Ryan encountered throughout Rose Bay highlights the I
I
weakness of its defense.

The Corps also maintains that "the Contract was silent as to Quantity of

I
Shell above Sand-size and the Concentration of the Shell" (gov't. br. at 12). We do

36
not agree. Of the ten borings in the contract documents, nine of them indicated the
presence of "WOR" or zero blow-count material. According to expert testimony, this
indication told bidders that "the sum o[ f] sand and shell could not have been much
more than five percent in that material" (finding 23). The Corps' own expert read the
borings to indicate that "[t]he consistency of the material is very soft as indicated by
the blow counts. In nine of the ten borings, the weight of the rods alone caused the
sampler to move eighteen inches into the sediment.. . . All of the descriptions note the
presence of fine sand and medium and coarse sand-sized shell fragments in the upper
sediment." (Finding 20)

OSI/Ryan's geotechnical engineering expert testified that ifthe Corps were to
take 10 borings just before the solicitation was issued in 2009 at the same locations as
it did in 2000, the new borings would show a "totally different geotechnical profile"
and would show the presence of "shells" and "packed sand," cemented "oyster beds"
and "gravel-size shell," and the more recent borings would not have described the shell
contents to include only "shell fragments." (Finding 24) Thus, the "zero blow-count"
or "the absence of blow counts" indication in the contract documents (il 1.2.2.1) told
bidders that they would not encounter any high concentrations of large broken and
whole shells. If large quantity or large concentration of shell had been present when
borings were taken in 2000, the borings would not have indicated zero blow-count
material. There was no differing site condition in AS#7. AS#7 thus exemplifies what
OSI/Ryan should have encountered based on the representations in the Corps' contract
documents (findings 55, 56).

We found that the Rose Bay Task Force's restoration efforts over the years in
controlling runoff pollution, eliminating leaking septic systems, removing the old
causeway and replacing the US-1 Bridge had worked to improve the benthic substrate
and hydrological process of Rose Bay. These improvements in the intervening years
had changed the nature and character of the materials in the bay by the time dredging
work took place in 2010 and 2011. (Finding 70)

We also reject the Corps' argument that the blow-counts were specific to the
exact locations of the 10 borings and were not a guarantee of the subsurface condition
of the entire bay (gov't hr. at 17). The "Character of Materials" clause (il 1.2.2.1)
flatly represented to bidders that "[ s]ediments within Rose Bay are represented
through borings CB-RB-1 through CB-RB-10" (finding 11) (emphasis added). See
Weeks Dredging & Contracting, Inc. v. United States,

13 Cl. Ct. 193

, 220 (1987) ("a
reasonable and prudent contractor would conclude, based on the contract boring logs,
that the government was positively representing the overall character of the type of
materials to be expected ... where such materials would be found within the contract
area"). We have said that contract borings are the most significant indicator of
subsurface conditions. Optimum Services, Inc., ASBCA No. 57575, 13 BCA ,-i 35,412

37
at 173,724 (citing Nova Group, Inc., ASBCA No. 55408, 10-2 BCA ~ 34,533
at 170,322).

Finally, the Corps contends that OSI/Ryan cannot demonstrate that the
conditions encountered differed materially from those represented in the contract
documents because it in fact dredged "predominantly sandy silt" (gov't br. at 33). The
Corps tells us that OSI/Ryan's own calculations showed it dredged 76% silt, 12%
sand, and 12% shell of all sizes (id. at 33-34). The Corps tells us by applying the
definition in ASTM D2488-00, Dr. Hudyma had calculated the borings showed up to
40% sand and 7% sand-sized shell fragments (id. at 34). The Corps posits that another
5% was shell "up to gravel size that could not be captured in the borings" (id. at 35).
The Corps argues that "if anything the material encountered was actually more
favorable than described by the borings" (id. at 34). (Finding 92)

As the Corps recognized in its brief (gov't br. at 16), differences, or similarities
in this case, in the quantity of materials, are not the same as differences or similarities
in the nature or character of the materials. Quantity differences or similarities do not
prove or disprove a differing site condition. Renda Marine, Inc. v. United States,

66 Fed. Cl. 639

, 655-56 (2005); Spirit Leveling Contractors v. United States,

19 Cl. Ct. 84

, 94 (1989); Weeks

Dredging, 13 Cl. Ct. at 221

.

       We conclude OSI/Ryan has proved, by a preponderance of the evidence, that
the materials it actually encountered (firm layers of crust in patches and high
concentrations of broken and whole shell at various locations) in Rose Bay differed
materially from those the contract documents indicated (zero blow-count
unconsolidated sediment with little to some sand, and trace to little sand-size shell
fragments).

       The Actual Subsurface Conditions were Reasonably Unforeseeable

        The Rose Bay contract included the Site Investigation and Conditions Affecting
the Work clause. This clause required the contractor to acknowledge 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." (Finding 29) A contractor is charged
with knowledge of the conditions that a pre-bid site visit would have revealed. HB.
Mac, Inc. v. United States,

153 F.3d 1338

, 1346 (Fed. Cir. 1998).

       Before bidding on the contract, OSI personnel did visit the site and did not see
anything different from what was represented in the Geotechnical Data Report and the
boring logs to warrant further geotechnical investigation (finding 30). Before entering
its subcontract with OSI, Ryan personnel also visited the site and "did a couple probes



                                             38
just west of the bridge" with a steel rod and found nothing inconsistent with what the
borings showed as WOR material (finding 32).

        Evidence in the record indicates that the submerged algae-covered crusts would
be difficult or impossible to see depending upon the time of day and the color of the
water (finding 30). OSI/Ryan's geotechnical engineering expert opined that a
reasonably prudent contractor would not have discovered the firm layers of shell beds
below the water that permeated the 73-acre Rose Bay unless it "spent money and time
putting in a drill rig" which none of the seven bidders did (finding 33). Contractors
are not expected to conduct their own expensive tests. Foster

Constr., 435 F.2d at 886

(charging contractor with notice of condition not apparent to bidders on visual
inspection of the site but was discoverable through geological studies beyond those
bidders had reason to make held erroneous as a matter of law).

       We have found that even if a contractor were to visit the site at low tide and
came across a firm layer of shell crust, it could easily have mistaken the crust to be a
hard bottom or newly developed oyster beds required to be reported for setback
purposes but need not be dredged (finding 34). The Corps itself had mistaken the firm
layers of crust to be hard bottom: When the Chief of the Architect Engineering and
Construction Branch in the Corps' Contracting Division expressed concern to the CO
in February 2010, three months before Ryan began dredging about a "significant
amount of firm material above the required grade," as probably "out of scope," the
COR and the Corps' project manager believed the firm material to be hard bottom
(findings 39, 40). When Ryan first encountered the firm crust in May 2010, it too,
thought it ran into an unexpectedly high hard bottom (findings 44, 45).

       Indeed, no one within the Corps appeared to understand the difference between
the crusts OSI/Ryan had consistently encountered and an "oyster bed." In late October
2010, five months after Ryan began dredging, the ACO told his colleagues that it was
imperative to have "a marine biologist visit the site ASAP to investigate" whether the
"crust" OSI/Ryan continue to encounter on a frequent basis was "either hard bottom or
recently formed oyster beds" (finding 67).

        The contractor bears the risk associated with not examining the information that
the contract explicitly referred to and make available for inspection. Randa/Madison
Joint Venture Ill v. Dahlberg,

239 F.3d 1264

, 1272 (Fed. Cir. 2001); Flippin Materials
Co. v. United States,

312 F.2d 408

, 414 (Ct. Cl. 1963). SJRWMD's Mr. Haydt
testified that he told the Corps before the project plans and specifications were
finalized that there were "crust" consisting of "shell throughout the bay" that he had to
"juke ... through" while probing (finding 27). There is no evidence the Corps alerted
bidders to any crusts (finding 28). There is no evidence that OSI or Ryan had any
knowledge of the existence of any crusts that that could affect its dredging
(findings 32, 36).


                                           39
        Absent specific provisions in the contract or specific circumstances alerting a
contractor to verify certain conditions, we conclude that neither OSI nor Ryan had to
go out of their way to extensively probe the dredging area to verify the representations
the Corps made in the contract documents. We conclude that OSI/Ryan has
established, by a preponderance of the evidence, that it conducted a reasonable site
investigation and the subsurface conditions encountered - the firm layers of crust and
the high concentrations of large broken and whole shell that OSI/Ryan had to dredge
-were reasonably unforeseeable.

       OSI/Ryan Reasonably Relied on the Contract Indications of the Subsurface
       Conditions

        To prevail on a differing site conditions claim, the contractor must show
reliance on the representations in the contract.

Comtrol, 294 F.3d at 1363

; HB. Mac,
Inc. v. United States,

153 F.3d 1338

, 1345 (Fed. Cir. 1998) ("[T]o establish entitlement
to an equitable adjustment by reason of a Type I differing site condition: ... [t]he
contractor ... must show that it reasonably relied upon its interpretation of the contract
and contract-related documents"). Reliance is unreasonable when a contractor has
reason to doubt the accuracy of a representation, such as knowledge of a flaw in the
information underlying the representation. International Technology Corp. v. Winter,

523 F.3d 1341

, 1352 (Fed. Cir. 2008); H.B.

Mac, 153 F.3d at 1347

.

       The Corps argues that OSI/Ryan cannot demonstrate that it reasonably relied on
the contract representations because ( 1) OSI/Ryan knew and it was well known that
"Rose Bay was once a thriving shellfish habitat" so it was "unreasonable to expect no
shell would be in the dredging prism of the bay"; and (2) "shell was clearly visible in
the bay and along the banks during low-tide" and had OSI/Ryan gone to the bay
during low tide, it "would have been familiar with what an exposed oyster bed looks
like, whether additional beds had formed, and would have been able to observe loose
oyster shells that had washed up on the shoreline." (Gov't br. at 30)

       Here again, the Corps pretends that encountering shells was the problem. It
was not. OSI/Ryan never said it should not encounter shells in the dredging prism.
Given what was indicated in the contract documents, it acknowledged that it would
                                                                                             I
                                                                                             l
encounter stray shells here and there. Nor were exposed oyster beds, newly formed
oyster beds or shells that had washed up on the shoreline the problem. OSI and Ryan
knew they were not supposed to dredge oyster beds or to dredge outside the dredging
prism. (Finding 36)

       What OSI/Ryan was complaining about was that it encountered submerged
                                                                                             Il
                                                                                             J

layers of crust, some of which were sufficiently firm to withstand the weight of a
person at various locations throughout the bay, that it encountered 10 to 12 "newly


                                           40
                                                                                             i
I
    developed mounds of sand and shell" in AS#4, AS#5 and AS#6 (finding 69), and that
    it was "digging shell" in AS#5 (findings 83, 84, 85). As for these conditions, there is
    no evidence OSI/Ryan had any knowledge of their existence before bid. We conclude
    OSI/Ryan did not know that the representations the Corps made in the "Character of
    Materials" clause and the borings were not reflective of the actual conditions in the
    bay.

            Nothing the Corps has argued has dissuaded us from the conclusion that
    OSI/Ryan reasonably interpreted the Character of Materials clause (iJ 1.2.2.1) and the
    borings to indicate that it could expect to dredge unconsolidated, zero blow-count,
    very loose, very soft, predominantly silt material with insignificant amounts of sand
    and shell fragments, and with some large broken or whole shells up to three inches in
    diameter here and there. Reliance upon this interpretation is reflected in the fact that
    OSI/Ryan planned to complete dredging with single shifts in six months using a 10-
    inch dredge (findings 35, 36). That OSI/Ryan reasonably relied upon its interpretation
    is demonstrated by the Corps' own IGE which estimated that 93% of the materials
    expected to be dredged would be "Mud & Silt," 7% would be "Loose Sand," and 0%
    would be "Composite Shell"; and that dredging could be "done in daylight hours in
    less than six months" using a smaller 8-inch dredge than the 10-inch dredge OSI/Ryan
    chose (findings 25, 26).

             We conclude that OSI/Ryan has proved, by a preponderance of the evidence,
    that it reasonably relied on the contract indications of subsurface conditions.

           OSI/Ryan was Damaged as a Result of the Material Variation Between
           Expected and Encountered Conditions

            In dredging, the nature of the material to be dredged and pumped determines
    the productivity and the cost of dredging (finding 38). Based upon what OSI and Ryan
    expected to encounter, they bid to use a 10-inch dredge, work single shifts, and plan to
    complete in six months (findings 35, 36). Instead of dredging zero blow-count
    unconsolidated sediment with sand and shell fragments described in the contract
    documents, however, OSI/Ryan ran into what the Corps itself described as a
    "significant amount of firm material above the required grade" (finding 39) and a high
    concentration of large broken and whole shells at various locations. Most, if not all of
    these materials encountered were developed since the borings were taken nearly ten
    years before the dredging took place (finding 69). These materials slowed OSI/Ryan's
    dredging operations, caused equipment failures (findings 47, 52, 63, 65), and clogging
    of the disposal line (findings 52, 53, 58). Slow productivity forced OSI/Ryan to
    increase its dredging to 11 and 12-hour days in June 2010, and to two 12-hour shifts a
    day beginning the first week of July 2010 (finding 48, 49). OSI/Ryan continued to
    work double shifts into October (finding 65), November (finding 77), and December
    2010 (findings 82, 83, 84).


                                              41
        We do not wish to leave the impression that all nine acceptance sections were
totally engulfed by firm layers of shell crusts or contained high concentrations of large
broken or whole shell (as opposed to sand size shell fragments). As QAR R. Wilson
observed, crusts were found in "patches scattered around the acceptance sections," and
"newly developed mounds of sand and shell" were found in specific locations but
"most of the time the average discharge has been a sandy silt material with an
occasional shell" (finding 69). There was no differing site condition in AS#7 (findings
55, 56). And, not all equipment failure was the Corps' responsibility (finding 52
n.10).

      Nonetheless, we conclude that OSI/Ryan has proved, by a preponderance of the
evidence, that it was damaged as a result of the material variation between the
expected and the encountered conditions.

                                    CONCLUSION

       At its core, this case is about a dredging project as the last phase of a gradually
improving benthic and hydrological ecosystem in which work began nearly a decade
after core boring information at the site was gathered. Relying on the Corps' outdated
contract representations, the contractor ran into subsurface conditions that had
developed in the intervening years. We conclude that OSI/Ryan has proved, by a
preponderance of the evidence, all of the elements of a Type I differing site condition,
and is entitled to an equitable adjustment of its contract price. Having decided in favor
of the contractor, this case is remanded to the parties for determination of the extent of
delay experienced by OSI/Ryan as well as the quantum of adjustment.

       Dated: 25 March 2015




                                                  of Contract Appeals

(Signatures continued)




                                           42
I concur



~E#
Administrative Judge                            Administrative Judge
Acting Chairman                                 Vice Chairman
Armed Services Board                            Armed Services Board
of Contract Appeals                             of Contract Appeals


     I certify that the foregoing is a true copy of the Opinion and Decision of the
Armed Services Board of Contract Appeals in ASBCA No. 58755, Appeal of
Optimum Services, Inc., rendered in conformance with the Board's Charter.

      Dated:



                                                JEFFREY D. GARDIN
                                                Recorder, Armed Services
                                                Board of Contract Appeals

                                                                                      I
                                                                                      I
                                                                                      I
                                                                                      I
                                                                                      I



                                          43

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