The opinion of the court was delivered by: Colleen Kollar-kotelly United States District Judge
Plaintiff, Guy F. Atkinson Construction Company ("Atkinson"), petitions this Court to overturn an administrative decision rendered by Army Corps of Engineers Board of Contract Appeals ("the Board") denying its claims for additional compensation against the Washington Metropolitan Area Transit Authority ("WMATA"). The claims arose out of excavation work that stretched from 1988 to 1990 on Metro tunnels in the vicinity of College Park, Maryland. During the excavation process, Atkinson encountered excessive water, resulting in delays and additional costs of over $5,000,000. Atkinson claims the water conditions differed materially from those indicated in its contract, and so constitute a "differing site condition" ("DSC") for which compensation is due under the contract with WMATA.
This Court may overturn the Board's decision only if it is fraudulent, capricious, arbitrary, so grossly erroneous as necessarily to imply bad faith, or not supported by substantial evidence. Upon thorough consideration of the filings before the Court, the attached exhibits, the relevant case law, and the entire record herein, the Court declines to overturn the Board's decision denying Atkinson's differing site conditions, additional wells agreement, and defective specifications claims. As such, the Court shall deny Atkinson's Motion for Summary Judgment and shall grant WMATA's Cross-Motion for Summary Judgment.
Prior to 1988, WMATA prepared plans for a Metro tunneling project known as Section E8a, Greenbelt Route, Contract No. 1E0081. Compl. ¶ 5. WMATA issued an Invitation for Bid on the project on February 8, 1988. Id. ¶ 6. The invitation solicited bids under two different tunneling methods: the conventional shield driven tunneling method and the New Austrian Tunneling Method ("NATM"). Id. ¶ 7. Atkinson submitted the low bid based on the conventional tunneling method, and was awarded the E8a contract in the amount of $52,546,462 on June 3, 1988. Id. ¶ 8. The E8a project included approximately 5,600 feet of twin parallel tunnels, an outbound tunnel and an inbound tunnel, from Station 515 to 571 on the Greenbelt route.*fn1 Id. ¶ 9.
The Contract for the project consisted of both the WMATA 1984 General Provisions and Standard Specifications for Construction Projects ("General Provisions"), and the WMATA 1988 Special Provisions, Greenbelt Route Tunnels and Cut-and-Cover Structures Section E8a, Contract 1E0081 ("Special Provisions"). Id. ¶ 10. The General Provisions included standard clauses for approvals, changes, differing site conditions, and disputes. Id. The Special Provisions included, as Appendix G, a Geotechnical Design Report. Id. ¶ 13. Appendix G detailed anticipated subsurface conditions, and commented extensively on methods of tunneling, soil types, and water control for the project. Id. ¶¶ 18-19.
A. Anticipated Subsurface Conditions Indicated in the Contract Documents
Appendix G of the Contract states its purpose as follows: "This report describes geological conditions anticipated along the route of Section E-8a Tunnels. . . . [T]he report is intended to assist prospective bidders in evaluating the requirements for supporting the tunnel; to enable the Contractor to plan his work; and to assist the Engineer in reviewing the Contractor's submittals and operations." Id. ¶ 18 (citing Appendix G, paragraph 1.0, p. 101-G-4). Appendix G incorporated reports on soil conditions along the route produced by WMATA's general soils consultant ("GSC"). Id. ¶¶ 11-17. It provided bidders with the results of soil permeability tests performed by the GSC, and described boring samples, pumping data, and other technical measures of soil conditions. Id. ¶ 21.
Appendix G described in detail the types of soil that bidders could expect to encounter during excavation. These soil types included P1 Plastic Clay, P1 Sandy Clay, P2 Silty or Clayey Sand, P2 Sand with Trace Silt, P2 Sand some Gravel, and P-1-P-2. Id. ¶ 23 (citing Appendix G, paragraph 4.1.3, pp. 101-G-24 through 26). P1 type soils are stiff clays, impermeable to water, and generally favorable for tunneling. Id. ¶¶ 23, 25 (citing Appendix G, paragraph 5.1.3, p. 101-G-31). The appendix indicated presence of P1 soils in more than half the excavation. Id. ¶ 121 (citing Appendix G, paragraph 5.1.3, p. 101-G-31). P2 soils, on the other hand, are sandy and had "proven to be distinctly unfavorable in other" tunneling projects. Id. ¶ 23 (citing Appendix G, paragraph 4.1.3, pp. 101-G-24 through 26); see also Granite-Groves v. Wash. Metro. Area Transit Auth., 845 F.2d 330, 334 (D.C. Cir. 1988) ("It is common knowledge among contractors that sand is less firm and more permeable to water than is clay."). Appendix G indicated presence of P2 soils at localized areas. Compl. ¶ 121 (citing Appendix G, paragraph 5.1.3, p. 101-G-31).
Appendix G described numerous times, in some detail, the locations, unfavorable behavior, and expected tunneling problems associated with the P2 soils. For instance, the Appendix described P2 sands as "[a] less favorable tunneling material" because "[t]he stand-up time in this stratum tends to be short and it is expected that the inflow of ground water may present problems." Id. ¶ 25 (citing Appendix G, paragraph 5.1.3, p. 101-G-31). Tunneling problems in the sandy soils should be anticipated due to "vertical drainage mak[ing] these sands vulnerable to piping, erosion, and sloughing in the tunnel heading, even with general drawdown of ground water." Id. ¶ 23 (citing Appendix G, paragraph 4.1.3, pp. 101-G-24 through 26). A section of Appendix G on "Anticipated Construction Problems, Ground Behavior," stated that P2 sand may be "highly permeable" with "the capacity to transmit significantly larger quantities of ground water than other soils which will be encountered," "potentially unstable," and containing "ground water which, because of the lenticular nature of the soils, especially the P-2 soils, will not be able to be rapidly drawn down." Board Opinion ¶ 22 (citing Appendix G, paragraph 10.1, R-71, p. 80-82). Appendix G noted that a particularly pervious type of P2 sand "appears at several locations, generally between Stations 525 and 540, between the top and base of the tunnels." Id. ¶ 23 (citing Appendix G, paragraph 4.1.3, pp. 101-G-24 through 26).
Appendix G included geological section diagrams sketching the locations of the different soil types. It emphasized, however, "that the stratification of the Cretaceous soils portrayed in the geological sections should be taken as only an approximate representation of a much more complex situation. . . . All of the lines separating individual 'strata' within the Cretaceous are indistinct or gradational and actually represent a change in depositional phase rather than an abrupt discontinuity." Board Opinion ¶ 18 (citing Appendix G, paragraph 4.0, R-71, p. 21-26).
Appendix G noted, when discussing water conditions, that "the ground water level, as measured in 1985, is consistently well above the tunnel crown except for a limited length extending from the western limit of work at Station 512 to approximate Station 519. The topographic low areas are at the east end, ahead of Station 580 and center of the project, Stations 547 to 551, lying within the floodplains of the Northeast Branch of the Anacostia River, and a tributary of the Northeast Branch, respectively." Compl. ¶ 24 (citing Appendix G, paragraph 3.3, p. 101-G-19).
Appendix G addressed the subsurface conditions from Stations 538 to 545 (the areas in dispute) in detail:
The tunnel between Stations 535 and 554 will be driven primarily through plastic clays of Stratum P1 and sandy clays of P1 (CL), overlain by sands of Strata P2 and P2 (SP-SM). The existing ground water level in this segment is generally about five to 20 feet below the ground surface and 40 to 50 feet above the tunnel crown. Because of the presence of relatively pervious material directly above much less pervious Cretaceous clays, the tunneling could encounter a perched water table which will continually deliver water to the crown regardless of the condition of drainage in the tunnel face and invert. Dewatering within the Cretaceous clays will have relatively little influence on the upper water levels which respond to rainfall or leaking utility effects. A potentially troublesome area is centered on Boring No. ERK-17U where the Cretaceous cover is only about 15 feet in thickness beneath a channel cut in the Cretaceous surface. Coarse grained Pleistocene terrace deposits of Stratum T3 are present directly above the Cretaceous soils, bottoming at about elevation , and clean sands of Stratum P2 (SP-SM) are present near the tunnel invert. Water from a stream directly above, which is a tributary of the Northwest Branch of the Anacostia River, probably infiltrates into the pervious Stratum T3. There is the potential for water seepage at the tunnel face if pervious channels are present within the plastic clay layer underlying the T3 stratum.
Three control piezometers will be installed between Station 548 and Station 552 with specified drawdown of ground water . . . . The range in ground water elevations is . . . lowest but closest to the ground surface in the vicinity of the stream at Station 549. . . .
Id. ¶ 26 (citing Appendix G, paragraph 5.1.3, p. 101-G-33); Board Opinion ¶ 17 (citing Appendix G, paragraph 3.3, R-71, p. 19-20) (emphasis added). Paragraph 10.1 of Appendix G advised bidders that dewatering and possibly chemical stabilization would be required between Stations 535 and 540 as well as Stations 544 and 547 due to pervious sand in the P-2 stratum overlying much less pervious clay in the P-1 stratum. Compl. ¶ 27 (citing Appendix G, paragraph 10.1). The Appendix contained additional information on several stations, including Stations 545 and 538, in a section pertaining to the NATM tunneling alternative. At Station 545, it noted a "Layer of P2 (SP-SM) material (sand, trace silt) within the tunnel section, with possible hydraulic connection to the stream at Station 549." Board Opinion ¶ 21 (citing Appendix G, paragraph 5.2.9) (emphasis added). At Station 538, it noted a "Layer of P2 (G) material (sand, some gravel) above the crown of the tunnels, partly covering the drifts up to 10 feet, and with possible connection to nearby drainage courses." Id. (emphasis added). The report section on "Anticipated Construction Problems" further alerted bidders that conditions between 535 to 540 and 544 to 547 in particular "will require dewatering of the sand and possibly chemical stabilization." Board Opinion ¶ 22 (citing Appendix G, paragraph 10.1, R-71, p. 80-82).
B. Original Contract Dewatering Requirements
The Contract required installation by the contractor, i.e., Atkinson -- of a dewatering system (wells, pumps, etc.) to facilitate tunnel excavation, as well as devices to monitor water control (piezometers). It required "procedures for control of groundwater performed under the supervision of specialist" and a "dewatering system which will effectively reduce hydrostatic pressure and control groundwater in soil surrounding each tunnel . . . ." Id. ¶ 27 (citing Contract Specifications Section 205). The Contract placed responsibility for design, installation, and monitoring of the dewatering system on the contractor. See id. ¶ 23-26 (citing Appendix G, paragraph 10.3.2, R-71, p. 90, paragraph 10.3.5, R-71, p. 94-95, paragraph 10.4, R-71, pp. 96-99, Contract Specifications Section 101); Compl. ¶ 35 (citing Contract Specifications Section 205). It mandated specifically that, for the conventional tunneling method, at nine specified locations between Stations 523 to 531 and 548 to 553, the water be drawn down to a specified level at least four weeks in advance of tunneling. Compl. ¶¶ 31, 36 (citing Appendix G, paragraph 10.3.5; Contract Specifications Section 205). Further, "[a]t other than the specified locations where control piezometers are located, ground water control will also be necessary to lower the ground water level to at least one foot below the tunnel invert, or to at least one foot above the base of a permeable stratum; however, the extent of control will be determined in the field at the time of construction." Compl. ¶ 31 (citing Appendix G, paragraph 10.3.5). For the NATM alternative, "six additional control piezometers are required at locations where P-2 sand with expected high permeability is anticipated to occur at the tunnel crown," at Stations 552, 545, 538, 536, 519 and 515. Board Opinion ¶¶ 21, 23 (citing Appendix G, paragraph 5.2.9, R-71; Appendix G, paragraph 10.3.2, R-71, p. 90). According to the Contract, the contractor had to collect and submit water monitoring data, detailed dewatering system plans, and its specialist qualifications to WMATA for approval. Compl. ¶¶ 35, 38 (citing Contract Specifications Section 205; Contract Specifications Section 228). The Contract Special Provisions, again emphasizing the importance of dewatering due to potential problems, stated that "[d]ewatering criteria will be rigidly enforced." Id. ¶ 36 (citing Contract Specifications Section 205).
C. Atkinson's Value Engineering Change Proposal ("VECP")
After its bid was accepted, Atkinson submitted a Value Engineering Change Proposal ("VECP") in order to save both parties money. Atkinson's VECP proposed a new tunnel liner design. Id. ¶ 68. WMATA accepted Atkinson's VECP on October 6, 1988. Id. ¶ 71. As a condition of acceptance, WMATA required that dewatering be in accordance with the requirements for the NATM alternative, due to concerns about water leakage through the new tunnel liner.*fn2 Id. ¶ 72. The parties signed a general Memorandum of Agreement ("MOA") to that effect on May 1, 1989. Id. ¶ 75. Details of the VECP costs, savings, liner, and water barrier would be worked out later. Id. ¶¶ 75-76. On August 8 and 9, 1989, WMATA and Atkinson negotiated the costs and savings of the VECP. Id. ¶ 77. Atkinson suggested that removal of the NATM dewatering requirements would save $500,000 and help achieve the $3 million total savings WMATA desired. Id. WMATA agreed to change the six additional piezometers specified for the NATM alternative from control (for which drawdown requirements would be rigidly enforced before tunneling was allowed to proceed) to observation (to provide monitoring, but for which drawdown requirements would not be rigidly enforced). Board Opinion ¶¶ 55-56, 64, 71. Atkinson was still, however, responsible for controlling ground water under the terms of the original agreement, albeit now without strict pre-tunneling enforcement. See Compl. ¶ 31 (citing Appendix G, paragraph 10.3.5).
The VECP savings agreement was finalized on August 11, 1989. Compl. ¶ 78. Two notes on the last page of the agreement memorialize an understanding wherein WMATA agreed to pay for additional wells beyond those required by the initial contract. The Summary Record of Negotiations Worksheet, initialed by Atkinson and WMATA representatives, included this handwritten note on the last page: "NOTE -- AS OF 8/8/89 CONTRACTOR HAS INSTALLED APPROX. 40 WELLS . . . IF ADDITIONAL WELLS ARE REQUIRED, A SEPARATE CHANGE ORDER WILL BE ISSUED." Id. ¶ 79-80. Subsequently, a second note was written and signed at the August 11, 1989 meeting. The second note is identical to the first, except that it omits the reference to 40 wells. Id. ¶ 81. Only the second note was included in the final Summary Record of Negotiations. Id. ¶ 82. A dispute later arose as to whether "additional" wells meant wells over 28 in number (as Plaintiff alleges the change in the notes shows), or over 40 in number (as WMATA alleges, and as concluded by the Board).
D. Atkinson's Dewatering System Planning, Installation, and Monitoring
As required by the Contract, Atkinson submitted its dewatering system plan to WMATA for approval. Id. ¶ 86. The dewatering system was designed by Atkinson's water specialist, Moretrench American Corporation ("Moretrench"). Id. WMATA approved Atkinson's dewatering system plan on or about December 12-13, 1988. Id. ¶ 89.
Following the plan, Moretrench installed 21 deep wells along the tunnel alignment between mid-December 1988 and late February 1989. Id. ¶ 90. After evaluation, Moretrench subsequently added larger pumps to four wells and seven additional deep wells -- four in the vicinity of Station 548, and three in the vicinity of Station 525. Id. ¶¶ 91-92. Moretrench also installed the nine additional monitoring (non-control) piezometers along the tunnel alignment pursuant to the terms of the VECP agreement. Id. ¶ 94; Board Opinion ¶¶ 56, 61-64.
Atkinson commenced tunneling of the outbound tunnel in early August 1989. Compl. ¶ 111. In November 1989, Atkinson reached Station 550. Despite high water readings and the potential for water inflows as described in Appendix G of the Contract, Atkinson tunneled through Station 550 without incident. Id. ¶¶ 154-156. In a similar fashion, Atkinson tunneled through to Station 546, encountering no problems despite high water readings from NATM observation piezometers. Id. ¶¶ 157-163. After the Christmas holiday, Atkinson continued tunneling until it encountered water at Station 545. Id. ¶ 164. Initially, Atkinson observed water flowing into the tunnel from the contact of the P-1 clay/P-2 sand near the crown of the tunnel. Id. ¶ 167. The water inflows gradually shifted to the right side of the tunnel, just above the midsection. Id. Due to the water inflows, Atkinson's tunneling progress slowed to 28 feet in 24 hours, then to 12 feet, and finally to four or sometimes no feet. Id. ¶ 168.
In a letter dated January 6, 1989, Atkinson informed WMATA that the water entering the tunnel had not stopped and constituted a differing site condition ("DSC"). Board Opinion ¶¶ 110-111. In the letter, Atkinson contended that the amount of water inflows "far exceeds those amounts originally indicated in the Contract Documents." Id. ¶ 111. Contemporaneous records indicate that approximately 45 gpm (gallons per minute) of water flowed into the tunnels. Id. ¶ 112. WMATA denied Atkinson's DSC claim. Id. On January 12, 1989, a sink hole on the ground surface developed almost directly over the tunneling machinery, and a sewer line was broken. Id. ¶ 113. Tunneling was shut down for seven days due to great inflows of water. Id. After water flows decreased, Atkinson continued tunneling by hand mining, advancing only 176 feet in the next eighteen days. Compl. ¶ 173. Anticipating further problems ahead, Moretrench decided to install additional dewatering wells at Stations 539, 538, 530, and 528. Id. ¶ 184. Atkinson continued hand mining until it reached a full face of clay at Station 540 on January 31, 1990. Id. ¶ 187.
On February 7, 1990, Atkinson hit water for the second time at Station 538. Id. ¶ 197. Inflows occurred at a rate of 25 to 50 gpm, initially from the top of the tunnel along the P-1/P-2 contact. Id. Progress again slowed from 56 feet in the previous 24 hours to only eight feet on February 7, and subsequently stopped for 41 days. Id. ¶ 198. Atkinson informed WMATA by letter that the water encountered at Station 538 also constituted a differing site condition ("DSC"). Id. ¶ 200. In mid-February, Moretrench installed nineteen additional wells in the vicinity of station 538. Id. ¶ 210. On March 23, 1990, Atkinson carefully resumed tunneling, soon encountered a full face of clay, and finished the outbound drive without additional problems. Id. ¶ 220-221.
On the inbound tunneling drive, Atkinson once again encountered water problems at Station 545 on October 13, 1990. Compl. ¶ 224. Atkinson again informed WMATA that the water encountered constituted a differing site condition. Id. ¶ 230. WMATA again rejected Atkinson's claim, reaffirming its position that the water encountered was indicated in the contract documents. Id. By careful mining, Atkinson proceeded tunneling, and encountered no further difficulties beyond Station 545. Id. ¶¶ 225, 231.
Neither Atkinson nor WMATA could definitively identify the source of the water responsible for the problems at Stations 545 and 538. Compl.¶ 165. Atkinson contended that the expected perched water alone could not be responsible, as the inflows were too great. Board Opinion¶ 111.Instead, Atkinson's expert Dr. James Mahar proposed that the primary source of the water was an unknown channel which cut through the left side of the tunnel. See Compl. ¶ 205. The broken sewer pipe may have contributed some water. The color and smell of sewer water was noted in the tunnel. Board Opinion ¶ 113. After the sewer was repaired, however, a substantial amount of water continued to enter the tunnel. Id. ¶ 114. There was evidence of the development of "piping," a progressive situation in which a pipe develops through the soil, allowing great water inflows, which in turn expand the pipe. Id. The exact cause of the water inflow was extensively probed at trial by the Board, which concluded that the water may have come from one or more of the sources indicated in the Contract. See infra Section III(A)(1).
Atkinson requested additional compensation for the differing site conditions and additional wells pursuant to its Contract with WMATA. The Contract's General Provisions includes standard clauses for approvals, changes, differing site conditions, and disputes. Id. ¶ 10. The Differing Site Conditions clause provides that:
a. The Contractor shall promptly, and before such conditions are disturbed, notify the Contracting Officer in writing of the following: (1) Subsurface or latent physical conditions at the site differing materially from those indicated in this Contract. (2) Unknown physical conditions at the site, of an unusual nature, differing materially from those ordinarily encountered and generally recognized as inherent in work of the character provided for this [sic] Contract.
The Contracting Officer will promptly investigate the conditions, and if he finds that such conditions do materially so differ and cause an increase or decrease, in the Contractor's cost of, or the time required for, performance of any part of the work under this Contract, whether or not changed as a result of such conditions, an equitable adjustment shall be made and the Contract modified in writing accordingly.
Compl. ¶ 236 (citing Contract, General Provisions, Article 4). Atkinson notified WMATA of the potential differing site conditions on January 6, 1989, February 7, 1989, and October 13, 1989. Board Opinion ¶¶ 110-111; Compl. ¶¶ 197, 230. Atkinson submitted a formal DSC claim for $4,014,234 on July 29, 1991. Compl. ¶ 239. The Contracting Officer later denied Atkinson's DSC claim on November 7, 1991. Id. ¶ 240. On June 21, 1991, Atkinson submitted a claim for $1,807,310.51 for the cost of 24 wells installed by its subcontractor that were required in ...