Differing Site Conditions An Issue in the Seattle SR 99 Tunnel Litigation

Late last year, the Washington State Department of Transportation (“WSDOT”) and Seattle Tunnel Partners (“STP”) engaged in a nine-week trial of claims arising from construction of the new State Route 99 tunnel under downtown Seattle. One major issue for the jury was whether STP had encountered “differing site conditions.” To understand the issue, let us begin with the legal background.

Traditionally, contractors bidding on public work were responsible to complete the work for the agreed fixed price despite unexpectedly adverse conditions. Experienced contractors addressed the risk of unknowns by adding “contingency” margins to their bids. Public agencies realized that they were paying to manage risks that might not become actual, so they looked for ways to lower bids by accepting some of those risks.

One important variable on infrastructure projects is the nature of subsurface conditions. Conditions beneath the surface may differ from what is visible. It was common for public contractors to include contingency in their bids to deal with unexpected underground conditions. In response, public agencies began to include subsurface information in their contract documents and promised to compensate the contractor if actual conditions differed materially from the information provided. This way, the agency would pay for unexpected conditions only if they were found.

Differing site conditions are usually defined as unknown underground conditions that differ materially from the conditions indicated in the contract documents. To lower bids, public owners promise to compensate the contractor if the work is delayed or made more expensive because of the presence of differing site conditions.

The Seattle project included a tunnel almost two miles long. Over several years, WSDOT retained consultants to study the subsurface conditions. Among other things, the consultants performed “pumping tests,” pumping water out of one well and monitoring the groundwater levels in nearby wells. If a nearby well was affected, that was evidence that granular, permeable soils would be found between the pumping well and the monitoring well.

In December 2013, STP’s tunnel boring machine ran into a steel well casing that had been installed in 2002 for a pumping test. The tunnel boring machine stopped advancing two days later and STP blamed this on the well casing. Assuming STP correctly identified the cause of the stoppage (WSDOT disputed it), the critical question was whether the well casing was a differing site condition, that is, whether it was materially different from what the contract documents indicated.

The first document of interest was the Geotechnical and Environmental Data Report (“GEDR”), which, as the name implies, contained data about subsurface conditions, including soil borings, laboratory tests, and pumping tests. The GEDR included a map showing the well casing (identified as “TW-2”) but it did not say what it was made of. Most of the wells described by the GEDR were identified as being made of PVC. STP argued that this was an indication that TW-2 was made of PVC also, and that TW-2’s steel construction was materially different. One problem with this argument was that all the PVC wells were installed in 2009-2010, while TW-2 was installed in 2002, so it was questionable whether the discussion of PVC wells was intended to convey any information about TW-2.

A second document of interest was the Geotechnical Baseline Report (“GBR”). This document drew conclusions about underground conditions based on the data in the GEDR. The GBR was silent with respect to TW-2, in fact it did not describe the construction of any well. However, it identified “obstacles” at various locations around the site. STP argued that because the GBR did not identify TW-2 as an obstacle, this was an indication that TW-2 was not made of steel, because a steel well would have been an obstacle. One problem with this argument was that the GBR’s discussion of obstacles appeared to focus on construction debris, things abandoned in the ground like concrete and wood pilings, not instruments like wells.

This short article has necessarily simplified the evidence at trial about TW-2, the GEDR, and the GBR, but enough has been said to illustrate what turned out to be the key issue at the trial: whether TW-2 was a differing site condition. That in turn depended on what the GEDR and GBR indicated. The jury considered this question and concluded that TW-2 was not a differing site condition. That was the basis of the jury’s verdict in WSDOT’s favor.

Originally published as “‘Differing site conditions’ and Seattle tunnel project litigation” by the Daily Journal of Commerce, March 19, 2020.