Background
Grand Enterprises contracted with the Department of Veterans Affairs to expand a parking garage at the George E. Wahlen VA Medical Center in Salt Lake City. The firm-fixed-price contract began at approximately $8.38 million and contemplated completion in November 2017, but the project was not substantially complete until January 2020. During construction, Grand submitted numerous requests for information and change-order requests concerning alleged design discrepancies, site conditions, structural work, the garage roof, and extension of elevator service to the new level.
After the VA denied Grand’s certified claim, Grand sued under the Contract Disputes Act, alleging compensable changes, suspensions of work, Type I differing site conditions, and breach of the implied covenant of good faith and fair dealing. Its operative change proposal sought approximately $6.83 million. The Government moved for partial summary judgment on the elevator work, work addressed by four bilateral contract modifications, and several categories of claimed damages. Grand separately withdrew its claims for lost profits and unabsorbed home-office overhead.
The Court’s Holding
The court granted the Government summary judgment on Grand’s elevator-extension claim. Although the contract documents did not clearly allocate every aspect of that work, CLIN 0001 and several drawings indicated that elevator service was to be extended, while detailed elevator drawings and specifications were absent. The court held that this conflict created a patent ambiguity that Grand had a duty to clarify before bidding; because it did not do so, Grand could not recover the elevator-related costs.
The court also granted summary judgment as to work covered by bilateral Modifications P00002, P00003, P00005, and P00006, and as to the claimed materials line item for an additional six months of roof-reconstruction delay. It denied summary judgment on the remaining direct subcontractor costs; financing, interest, and fees; profit; overhead; surviving materials costs; and equipment costs because factual disputes or sufficient supporting evidence required resolution at trial. The ruling did not establish that Grand is entitled to recover those surviving amounts.
Key Takeaways
- A contractor must seek clarification before bidding when contract documents contain a glaring conflict about whether particular work falls within its scope.
- Grand may not pursue compensation for the elevator extension, work resolved through the four identified bilateral modifications, or the unsupported roof-delay materials line item.
- Challenges to the proof or calculation of several other damage categories raised factual issues for trial rather than grounds for summary judgment.
Why It Matters
The decision underscores the pre-bid consequences of patent ambiguities in federal construction contracts: a contractor that proceeds without clarification may lose the ability to recover for disputed work. It also distinguishes between a damages claim that lacks any adequate evidentiary foundation and one whose proof may be weak or contested but still presents a factual dispute for trial.