International Technology Corporation v. Donald C. Winter, SECRETARY OF THE NAVY

United States Court of Appeals for the Federal Circuit
2007-1276
INTERNATIONAL TECHNOLOGY CORPORATION,
Appellant,
v.
Donald C. Winter, SECRETARY OF THE NAVY,
Appellee.
Peter B. Jones, Jones & Donovan, of Newport Beach, California, argued for
appellant.
David M. Hibey, Trial Attorney, Commercial Litigation Branch, Civil Division, United
States Department of Justice, of Washington, DC, argued for appellee. With him on the
brief were Jeanne E. Davidson, Director, and Deborah A. Bynum, Assistant Director.
Appealed from: Armed Services Board of Contract Appeals
Administrative Judge Jack Delman

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United States Court of Appeals for the Federal Circuit
2007-1276
INTERNATIONAL TECHNOLOGY CORPORATION,
Appellant,
v.
Donald C. Winter, SECRETARY OF THE NAVY,
Appellee.
___________________________
DECIDED: April 18, 2008
___________________________
Appeal from the Armed Services Board of Contract Appeals in no. 54136,
Administrative Judge Jack Delman.
Before LINN, DYK, and MOORE, Circuit Judges.
Opinion for the court filed by Circuit Judge DYK. Circuit Judge Moore concurs in the
result.
DYK, Circuit Judge.
This case involves a claim for breach of a cost-plus-fixed-fee contract for
treatment of contaminated soil at a Navy facility in Stockton, California. The contractor,
International Technology Corporation (“ITC”),1 seeks to recover additional soil treatment
expenses incurred by a subcontractor, Terra Kleen Response Group, Inc. (“TK”),
1 ITC filed a chapter 11 bankruptcy petition on January 16, 2002. The
subcontractor in this case, Terra Kleen Response Group, Inc., was authorized by order
of the bankruptcy court to act on behalf of ITC’s creditors in pursuing ITC’s request for
equitable adjustment.

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because of unexpectedly high concentrations of clay in the treated soil. The Armed
Services Board of Contract Appeals (“Board”) held that ITC was not entitled to an award
of costs and also determined that ITC was not entitled to damages for breach of the
contract. We affirm.
BACKGROUND
I
ITC was awarded a cost-plus-fixed-fee contract on February 23, 1994, by the
Department of the Navy. The contract was for environmental remediation services
designed to remove pesticides and related chemicals at a variety of contaminated sites.
The contract did not describe the services to be performed, but instead provided that
services would be specified in a series of subsequent delivery orders. Because the
contract was awarded on a cost-plus-fixed-fee basis, the contract contained the
“Limitation of Cost” provision of Federal Acquisition Regulation (“FAR”) 52.232-20, 48
C.F.R. § 52.232-20. Pursuant to this clause, “the estimated cost shown in the contract
constitutes a ceiling on the government’s contractual liability,” which can only be
increased if the government modifies the cost ceiling. Advanced Materials, Inc. v.
Perry, 108 F.3d 307, 310 (Fed. Cir. 1997). In the absence of such a modification, “the
contractor is not required to continue performance or incur costs that exceed those
estimated in the contract.” Id. The Limitation of Cost clause also contains a notice
provision, requiring “that the contractor notify the government in writing when it
anticipates that within the next sixty days it will exceed seventy-five percent of the
estimated cost and provide a revised estimate.” Id.
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The delivery order relevant to this case, Delivery Order number 102 (“the DO”),
was issued by the government on August 29, 1997. It called for treatment of pesticide-
contaminated soil at the Naval Communication Station in Stockton, California. The DO
also provided that the period of performance was September 1, 1997, through
September 30, 1998, and stated an estimated cost, for purposes of the Limitation of
Cost clause, in the amount of $1,228,409.2 On approximately April 17, 1998, ITC
awarded a fixed-price subcontract to TK to perform the soil treatment at the Stockton
worksite.
TK had developed a solvent extraction technology for the removal of certain
contaminants, including the pesticide DDT, from contaminated soil, and had earlier
demonstrated its technology in a small-scale pilot soil treatment program at the
Stockton worksite itself. The solvent extraction technology works by dissolving certain
contaminants from the soil into a solvent in sealed treatment bins. The solvent is then
drained and filtered to remove the contaminants, so that the solvent can be reused.
Two reports, entitled Terra Kleen Solvent Extraction Technology Evaluation Report
(“Solvent Technology Report”) and Focused Feasibility Study for DDT-Contaminated
Soil (“Feasibility Study”), prepared by a third-party contractor, discussed and evaluated
the results of TK’s pilot treatment program. TK provided technical input used in the
preparation of both reports.
The Solvent Technology Report and the Feasibility Study were not prepared
pursuant to the government contract involved here. However, the DO briefly referenced
these reports. One section of the DO presented a series of “specific tasks” the
2 The total estimated cost was substantially increased, and the time for
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contractor should perform, each followed by descriptive paragraphs. The first of these
tasks was entitled “Examine Existing Documents.” It directed the contractor to
“[e]xamine the following documents:” and then listed the Feasibility Study and the
Solvent Technology Report. Appellant’s Supplemental App., tab 2, at 5. This provision
also contained the following note: “The contractor is not required to provide written
responses to these documents. Examining these items will assist the contractor in
preparing the plans described in task 2 of this delivery order.” Id. 3
A key focus in this case has been the content of the two reports, and in particular
what they represented about the clay content of the soil at the site. The Solvent
Technology Report described the Stockton site, TK’s solvent extraction technology, the
procedures used, and the results of the pilot study. A single, one-page figure in this
report, Table 2-15, entitled “Soil Characteristics,” presented characteristics for nine soil
samples taken from the site during the pilot treatment program, including the
classification of the soil type for each and the percent of sand, silt, clay, and gravel in
each. For the nine samples, the clay content figures reported in Table 2-15 were: 6%,
7%, 9%, 9%, 9%, 9%, 11%, 10%, and 8%. TK’s President and CEO, Alan Cash, was
present and observed the manner in which at least six of these soil samples were
collected. The Solvent Technology Report also indicated:
Solvent extraction cycles took much longer than expected due to the
reduced [soil] permeability, thereby increasing treatment time and
cost. . . . The soil also tended to form clay lumps when compacted. This
performance extended, by a series of contract modifications.
3 The referenced “task 2” called for preparation of three plans, a
“construction workplan,” a “contractor quality control plan,” and a “site specific health
and safety plan.” Appellant’s Supplemental App. at 6. The four subsequent steps
called for further planning meetings, preparation of a schedule, treatment of the soil,
preparation of a closure report, and documentation of the process through photographs.
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resulted in the formation of soil aggregates which were difficult to saturate
with solvent, resulting in less particle contact and lower DDT removal
efficiencies.
Appellant’s Supplemental App., tab 1, at 3-4.
The Feasibility Study compared the relative merits of several alternative methods
for treatment or disposal of the contaminated soil at the Stockton site, including use of
TK’s solvent extraction technology. The appendix of the Feasibility Study included a
number of tables reporting analyses of samples of the contaminated Stockton soil
before and after TK treated the soil in the pilot program. These tables referenced the
soil composition, and indicated that some samples had a majority of clay, that is,
substantially higher clay content than the figures in the Solvent Technology Report. It is
unclear whether the samples reported in the Feasibility Study were the same as the
samples reported in the Solvent Technology Report.
Pursuant to its subcontract with ITC, TK used its solvent extraction technology to
treat the soil at the Stockton worksite. However, TK experienced problems in treating
the contaminated soil. In a progress report to the government dated February 2, 1999,
ITC noted that processing of the first increment of soil had been delayed, and attributed
the delay in part to higher than expected levels of clay in the soil. TK took samples from
soil in its treatment bins and from the stockpile of untreated contaminated soil for
independent laboratory analysis of clay levels. The clay levels indicated for these
samples ranged between approximately 23.2% and 28.8%, considerably higher than the
clay content for the nine samples listed in the Solvent Technology Report, though less
than some samples described in the Feasibility Study.
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All work under the DO at the Stockton site, including demobilization, was
completed during the week of June 26, 2000. The government accepted the project as
complete on June 30, 2000. During its performance under the subcontract, TK first
made ITC aware of the problems associated with clay in March 1999, but submitted to
ITC a request for equitable adjustment based on the high clay content of the soil for the
first time on November 15, 1999.
II
Although ITC had not provided compensation to its subcontractor, on its claim for
an equitable adjustment, on January 3, 2001, ITC made a formal request to the
government for an equitable adjustment, seeking compensation to cover TK’s claim for
equitable adjustment under the subcontract. In November 2001, ITC revised its claim to
request $965,347 for expenses under the subcontract, and an additional $216,188 for
ITC’s own expenses, apparently representing ITC’s efforts to investigate and
substantiate TK’s claim. The Contracting Officer (“CO”) issued a final decision denying
ITC’s claim on February 28, 2003. The CO concluded that ITC was not entitled to any
equitable adjustment under the contract, because the cost would exceed the total cost
under the Limitation of Cost clause, and ITC had not followed the notice procedures
under that clause or obtained a modification to cover these expenses before incurring
them.
ITC appealed this determination to the Board. After a hearing, the Board issued
a decision, dated July 20, 2006, denying ITC’s appeal. The Board found that ITC’s
requested adjustment would exceed the cost ceiling of the Limitation of Cost clause and
concluded that ITC had not met its burden to prove either that it complied with that
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clause’s requirement to notify the government before exceeding the cost ceiling, or that
ITC was excused from doing so because the cost was unforeseeable. The Board also
concluded that ITC would not be excused from providing the notice required by the
Limitation of Cost clause just because the costs associated with TK’s request for
equitable adjustment were uncertain and subject to ITC’s investigation at the time ITC
first became aware of them.
Finally, the Board rejected ITC’s alternative argument that the government had
breached the DO by inaccurately describing the clay content of the contaminated soil at
the Stockton site. First, the Board determined that neither the Solvent Technology
Report, the Feasibility Study, “nor any DO provisions generally warranted soil content or
soil conditions at the Stockton sites, nor warranted a low clay content of the soil.
Indeed, both reports, when read as a whole, reflect information showing that certain soil
samples were of relatively high clay and silt content.” J.A. at 27. The Board also
concluded that TK could not have been misled about the soil conditions because TK
“earlier treated the soil from these same sites in the pilot study,” and the Solvent
Technology Report “indicated that TK had difficulties with low permeability of soil and
with the clay at the sites at that time.” Id. The Board determined that a breach claim
requires, among other things, a showing of “government culpability” and concluded that
ITC had not made such a showing:
Misrepresentation in the contractual context constitutes a knowing or
negligent untrue representation of fact or failure to disclose, requiring
proof of government culpability beyond showing a mere variation between
conditions stated in the contract and those actually encountered. [ITC]
failed to make a case of misrepresentation on this record.
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Id. at 28 (citing Foster Constr. C.A. v. United States, 435 F.2d 873, 880-81 (Ct. Cl.
1970)).
ITC timely appealed the Board’s decision, and we have jurisdiction pursuant to
28 U.S.C. § 1295(a)(10). We review legal conclusions of the Board, including its
construction of contract provisions, without deference, and accept its factual
determinations “unless they are ‘fraudulent, or arbitrary, or capricious, or so grossly
erroneous as to necessarily imply bad faith, or if such decision is not supported by
substantial evidence.’” England v. Contel Advanced Sys., Inc., 384 F.3d 1372, 1377
(Fed. Cir. 2004) (quoting E.L. Hamm & Assocs. v. England, 379 F.3d 1334, 1338 (Fed.
Cir. 2004)).
DISCUSSION
When this case was before the Board, ITC sought to recover TK’s additional
costs (and its own related costs) as a cost under the contract. The Board rejected this
claim because ITC had not complied with the notice and approval provisions of the
Limitation of Cost clause. We do not understand ITC to challenge this holding on
appeal. In any event, the Board was correct that ITC cannot recover under a cost
theory because of ITC’s failure to comply with the notice provisions of the Limitation of
Cost clause.
ITC instead urges on appeal that it has a valid pass-through claim for breach of
contract. ITC asserts that the government inaccurately represented the site conditions
in the DO and that TK relied on this representation in bidding on the subcontract. ITC
contends that it is liable to TK under the fixed price subcontract and that the government
is liable to ITC on a pass through basis. ITC does not argue that it reasonably relied
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upon and was misled by any representation in its cost-plus-fixed-fee contract with the
government.
I
A pass-through claim allows a prime contactor to assert against the government
a claim for harm caused by the government to a subcontractor where the subcontractor
could hold the prime contractor liable for that harm. “In a pass-through suit, a prime
contractor that is liable for damages sustained by its subcontractor may bring claims
against the government on behalf of the subcontractor.” Metric Constructors v. United
States, 314 F.3d 578, 581 (Fed. Cir. 2002). See generally John Cibinic, Jr. et al.,
Administration of Government Contracts 676-77 (4th ed. 2006) (describing pass-through
claims and the Severin doctrine that governs the allowance of pass-though claims). If
the prime contractor is liable “to the subcontractor for the damages sustained by the
latter[]” caused by the government’s action, the prime contractor can “show injury to it
from the government’s action,” and there is no basis for the government to object to the
subcontractor’s claim due to lack of privity. E.R. Mitchell Constr. Co. v. Danzig, 175
F.3d 1369, 1370 (Fed. Cir. 1999). A typical example of a pass-through claim is a claim
by a subcontractor, under fixed-price prime and sub contracts, for government-caused
delay that resulted in increased indirect overhead costs for the subcontractor. See id. at
1370-72.
None of the cases called to our attention, however, deals with pass-through
claims similar to the claim asserted here. ITC’s pass-through theory in this case
presents a number of difficulties, including (1) whether a subcontractor pass-through
claim can be based on representations appearing in the prime contract and (2) whether
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the Limitation of Cost clause limits the prime contractor’s ability to assert a pass-through
claim based on breach of the subcontract. We need not decide these issues, for we
conclude that ITC would not prevail in this case even if all of these issues were resolved
in its favor.
II
ITC contends that the government breached the DO by incorrectly representing
the amount of clay in the contaminated soil, and that TK relied on this representation to
its detriment in formulating its subcontract bid. ITC explains that the DO referenced the
Solvent Technology Report, which in turn reported significantly lower clay content for
certain soil samples than the clay levels that TK actually encountered in the
contaminated soil while performing under the subcontract. Mr. Cash testified that he
relied on the clay content figures in Table 2-15 of the Solvent Technology Report in
preparing TK’s subcontract proposal, and TK’s proposal stated that “Terra-Kleen has
assumed that the contaminated soil contains an overall clay content of less than 10%
clay.” J.A. at R4 202.19.
A misstatement as to site conditions in a government contract can support a
claim for breach of contract. See Hollerbach v. United States, 233 U.S. 165, 172
(1914). The same requirements apply whether the contractor asserts such a common
law breach claim or a Type I claim under the Differing Site Conditions clause, a clause
which is common in government construction contracts, but was not included in ITC’s
contract with the government.4 Compare T. Brown Constructors, Inc. v. Pena, 132 F.3d
4 The Differing Site Conditions clause differentiates two distinct types of
differing site condition claims: Type I claims, which involve “subsurface or latent
physical conditions at the site which differ materially from those indicated in [the]
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724, 728-29 (Fed. Cir. 1997) (listing elements for common law breach claim) with
Renda Marine, Inc. v. United States, 509 F.3d 1372, 1376 (Fed. Cir. 2007) (listing
elements for Type I differing site conditions claim). See also P.J. Maffei Bldg. Wrecking
Corp. v. United States, 732 F.2d 913, 919 (Fed. Cir. 1984) (applying the same analysis
to a common law breach claim and a Type I differing site condition claim).
In order to prevail on such a site conditions claim, a contractor must establish
four elements. First, the contractor must prove that a reasonable contractor reading the
contract documents as a whole would interpret them as making a representation as to
the site conditions. See Renda Marine, 509 F.3d at 1376 (“[A] contractor must first
prove, as a threshold matter, that the contract contained some identification of the
conditions to be encountered at the site.”); H.B. Mac, Inc. v. United States, 153 F.3d
1338, 1345 (Fed. Cir. 1998) (explaining that the court “place[s] itself into the shoes of a
reasonable and prudent contractor and decide[s] how such a contractor would act in
interpreting the contract documents”). This is a question of contract interpretation
reviewed de novo on appeal. H.B. Mac, 153 F.3d at 1345.
Second, the contractor must prove that the actual site conditions were not
reasonably foreseeable to the contractor, with the information available to the particular
contractor outside the contract documents, i.e., that the contractor “reasonably relied”
on the representations. Renda Marine, 509 F.3d at 1376 (“[T]he contractor must
demonstrate that the conditions encountered were not reasonably foreseeable in light of
contract,” and Type II claims, which involve “unknown physical conditions at the site, of
an unusual nature, which differ materially from those ordinarily encountered and
generally recognized as inhering in work of the character provided for in the contract.”
48 C.F.R. § 52.236-2(a); see also Renda Marine, Inc. v. United States, 509 F.3d 1372,
1376 (Fed. Cir. 2007) (differentiating Type I and Type II differing site conditions).
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all information available to the contractor when bidding[ and] that the contractor
reasonably relied upon its original interpretation of the contract.”). This issue is factual
in nature, and review is deferential. See id. at 1378.
Third, the contractor must prove that the particular contractor in fact relied on the
contract representation. See id. at 1376. Again, this is a fact issue reviewed under a
deferential standard. See id. at 1378.
Fourth, the contractor must prove that the conditions differed materially from
those represented and that the contractor suffered damages as a result, which is again
a fact question. See id. at 1376.5
We conclude that the contractor here cannot satisfy either the first or second of
these requirements.
5 The Board held that a showing of government culpability was also
required, relying on a series of decisions by the Court of Claims. See Foster Constr.
C.A., 435 F.2d at 881 (“Some degree of Government culpability—either untruth or such
error as is the legal equivalent—must . . . be shown, and the plaintiff's burden of proof is
not satisfied merely by proof of a variation between the subsurface conditions as stated
in the contract and as encountered.”); C.W. Blakeslee & Sons, Inc. v. United States, 89
Ct. Cl. 226 (1939); Midland Land & Improvement Co. v. United States, 58 Ct. Cl. 671
(1923). The government has declined to defend this holding, and we are skeptical that
such a showing is required. More recently, when this court listed the elements of a
claim for misrepresentation in a government contract in T. Brown Constructors, Inc. v.
Pena, 132 F.3d 724, 729 (Fed. Cir. 1997), we did not list any element of government
culpability. Under the general law of contracts, essentially the same elements as those
listed in the text above are required to establish a misrepresentation claim, and no
showing of culpability is required if the representation was material. See Restatement
(Second) Contracts, ch. 7, topic 1, introductory note. As discussed below, a similar
approach, which also requires no showing of government culpability, applies in the
context of government contract claims under the Differing Site Conditions clause. See
Renda Marine, 509 F.3d at 1377. In light of our disposition of this case, however, we
need not reach the issue of whether government culpability must be established.
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A
We note first that ITC was required to demonstrate that a reasonable contractor
would read the contract documents as representing that the contaminated soil
contained less than ten percent clay. See Renda Marine, 509 F3d at 1376 (citing H.B.
Mac, 153 F.3d at 1345; P.J. Maffei, 732 F.2d at 916). There cannot be a differing site
condition “unless the contract indicated what that condition would be.” Comtrol Inc. v.
United States, 294 F.3d 1357, 1363 (Fed. Cir. 2002) (concluding that “[b]ecause the
contract made no specific representation as to the type of soil to be encountered, it
cannot be said that [the contractor] encountered conditions materially differing from
those specifically indicated in the specification”); see also T. Brown, 132 F.3d at 729
(requiring proof of the government’s erroneous representation as an element of a
misrepresentation claim). This issue is subject to de novo review, based on how a
reasonable contractor would interpret the contract documents as a whole:
Determining whether a contract contained indications of a particular site
condition “is a matter of contract interpretation and thus presents a
question of law,” which we decide de novo. We also have stated that a
proper technique of contract interpretation is for the court to place itself
into the shoes of a reasonable and prudent contractor and decide how
such a contractor would act in interpreting the contract documents.
H.B. Mac, 153 F.3d at 1345 (internal citation omitted) (quoting P.J. Maffei, 732 F.2d at
916).
Under the Differing Site Conditions clause, we have on a number of occasions
specifically considered whether reports of subsurface soil conditions at particular test or
boring sites could be relied on by a reasonable contractor as an indication of the soil
conditions that would be encountered. For example, in Renda Marine, this court held
that a dredging contractor could not rely on a set of subsurface boring reports indicating
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only soft, not stiff, clays. 509 F.3d at 1376-77. These borings only reported conditions
for soil located substantially further underground than the soil that the contractor was to
dredge, and the contract documents also included boring reports from other nearby
locations indicating stiff clays at the proper depth. Id. at 1376-78; see also Renda
Marine, Inc. v. United States, 66 Fed. Cl. 639, 657-58, 687-88 (2005). Likewise, in
Comtrol, this court held that contract documents stating “[h]ard material . . . may be
encountered” did not represent that only hard material would be encountered. 294 F.3d
at 1362.
ITC has not shown that, in light of the contract documents as a whole, the clay
composition levels listed in Table 2-15 of the Solvent Technology Report were an
indication or representation of the clay content of the contaminated soil stockpile.
The contract itself did not state that the contractor could rely on the
representations appearing in the reports, or in particular on the soil composition data
they provided. Instead, as discussed above, the only mention of the Solvent
Technology Report in the DO was in the first task, which merely directed the contractor
to read the Solvent Technology Report and the Feasibility Study. The DO did not even
refer to the soil content analysis in Table 2-15 of the Solvent Technology Report, but
rather suggested only that reading the two reports would assist the contractor in
preparing a construction workplan, a quality control plan, and a site specific health and
safety plan.
Moreover, the language of the Solvent Technology Report itself suggests that
Table 2-15 was not intended as, and would not have been reasonably interpreted as, a
representative report on the overall composition of the contaminated soil. While the
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Solvent Technology Report indicated that one of its purposes was to “[d]ocument soil
characteristics,” Appellant’s Supplemental App., tab 1, at 1-9, it did not suggest that the
reported soil composition test results were intended to be representative of the overall
average clay content of the contaminated soil stockpile at the Stockton worksite.
Rather, the Solvent Technology Report indicated that these test results were intended
to identify the range of soil types that were actually treated in the pilot study. Soil
sample “[l]ocations were selected based on visual observation of the soil types (such as
fines or sand). Samples were selected to obtain a mixture of soil types representative
of the soils to be treated during the pilot-scale treatability study.” Id. at 4-4.
So too, the soil composition data reported in the Focused Feasibility Study
reflected the presence of amounts of clay substantially exceeding ten percent. As the
Board concluded, this data would have prevented a reasonable contractor from
interpreting the contract documents as indicating that only a low level of clay was
present in the overall soil stockpile. The Feasibility Study described a variety of soil
samples and rated some as “CL.” As the Board noted, a designation of “CL” was
particularly significant because this designation “meant that the majority of the weight of
the soil sample was clay.” J.A. at 18. Two samples reported in Table A-8 of the
Feasibility Study were designated as “CL,” i.e., they were composed of a majority of
clay. Although Mr. Cash testified at trial that he did not rely on these soil composition
descriptions because he did not consider the manner in which they were evaluated to
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be reliable, the Board explicitly rejected his testimony as based on hearsay and “not
credible.” Id. 6
Finally, section three of the Solvent Technology Report, which evaluated TK’s
technology, clearly stated that “[a] soil composed primarily of silt and clay,” such as
some of the samples the Feasibility Study reported at the Stockton site, “may not be
suitable for solvent extraction because of the excessive time required to perform the
necessary number of solvent extraction cycles to remove DDT.” Appellant’s
Supplemental App., tab 1, at 3-4.7 This description should have been a warning to a
6 ITC urges that T. Brown controls this case, suggesting that this case and
T. Brown involve nearly indistinguishable facts. We do not agree. In T. Brown, this
court found that a reasonable contractor could rely on more specific information in the
contract documents (there a “washed sieve” test indicating low clay content of soil)
rather than more general information in the boring logs. 132 F.3d at 729. Critically,
nothing in any boring log at issue in T. Brown revealed the presence of an amount of
clay greater than that elsewhere represented. Even the aggregate boring log figures
(including areas of the quarry that were not to be used) did not show a specific amount
of clay. As we stated, “[i]n sum, as the Board found, the boring logs, ‘when read
together, reported no clay at some locations and strata, very small amounts of clay in
others, and unquantified amounts of clay at other locations and strata. . . .’” Id. at 728;
see also In re T. Brown Constructors, Inc., 95-2 BCA (CCH) ¶ 27,870, at 138,979-80
(DOT BCA Aug. 18, 1995). In this case, however, the Feasibility Study indicated a
majority of clay for some samples, and thus contradicted the data in Table 2-15 of the
Solvent Technology Report for other samples. Given this direct contradiction, we
conclude that a reasonable contractor would not have relied exclusively on the Solvent
Technology Report to conclude that the contaminated soil would contain less than ten
percent clay.
7 In this regard, the Solvent Technology Report explained as follows:
The primary difficulty encountered at NCS Stockton was the low
permeability of the soil. Removal of DDT from soils containing a large
quantity of fine particles was extremely difficult. Particle size analysis
indicated silt and clay levels in the soil ranged from 24 percent to as high
as 63 percent by volume. The solvent extraction cycles took much longer
than expected due to the reduced permeability, thereby increasing
treatment time and cost. A soil composed primarily of silt and clay may
not be suitable for solvent extraction because of the excessive time
required to perform the necessary number of solvent extraction cycles to
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reasonable contractor that permeability problems might prevent the effective use of TK’s
extraction technology.
Accordingly, we cannot conclude that a reasonable contractor would have read
the contract as representing that the soil would contain less than ten percent clay based
only on the nine soil sample compositions reported in Table 2-15 of the Solvent
Technology Report.
B
Even if we could conclude that the Solvent Technology Report represented that
the clay content of the soil stockpile would be less than ten percent, ITC must also show
that “the conditions encountered were not reasonably foreseeable in light of all
information available to [TK] when bidding[ and] that [TK] reasonably relied upon its
original interpretation of the contract.” Renda Marine, 509 F.3d at 1376; see also T.
Brown, 132 F.3d at 729 (common law inaccurate representation claim requires showing
that “contractor honestly and reasonably relied on” government’s inaccurate
representation).
We review the question of whether a contractor reasonably relied upon a
representation as a question of fact. See Renda Marine, 509 F.3d at 1378. Reliance is
remove DDT. The soil also tended to form clay lumps when compacted.
This resulted in the formation of soil aggregates which were difficult to
saturate with solvent, resulting in less particle contact and lower DDT
removal efficiencies. This was a particular problem with the soil at the
base of the treatment tank.
The low permeability of the soil also significantly increased
treatment time and energy costs because providing adequate energy to
the soil to vaporize the solvent was extremely difficult.
Appellant’s Supplemental App., tab 1, at 3-4—3-5 (internal citation omitted).
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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. For
example, in H.B. Mac, logs of underground borings made about three hundred yards
from the site where an underground tank was to be constructed were too far away from
the site to be reasonably relied upon because expert testimony indicated that visible
surface conditions at the worksite would have alerted a reasonable contractor to the
likelihood of highly variable subsurface conditions. 153 F.3d at 1347.
The Board’s determination here that TK could not have reasonably relied on any
representation that clay content would be below ten percent is supported by substantial
evidence. TK in this case had reason to question the clay content figures in Table 2-15
of the Solvent Technology Report because it was aware of a flaw in how those test
samples were obtained. TK’s President and CEO, Alan Cash, testified at trial about the
manner in which the soil samples reported in Table 2-15 of the Solvent Technology
Report were collected. His testimony demonstrates that TK had actual knowledge that
these samples were collected only from the immediate edge of the large soil stockpile
and did not include any samples from deeper within the soil stockpile.
Mr. Cash testified that at the time the soil samples described in Table 2-15 of the
Solvent Technology Report were taken, the contaminated soil stockpile at the Stockton
worksite was piled so that three originally separate stockpiles of contaminated soil from
different locations at the facility were placed together, in adjoining piles, with a diagram
indicating which portion of the stockpile originated from each of three original sites.
“[T]he stockpile looked like an enormous conical pyramid with three smaller peaks.” Tr.
at 1-197. Mr. Cash testified that he was present when an employee of another
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contractor took the soil samples reported in Table 2-15. Mr. Cash explained that the
samples were collected by taking a series of random scoops of contaminated soil from
the outside perimeter of each subpart of the overall stockpile (corresponding to the
three original contaminated sites). He also explained that all of the samples were taken
from the outer surface of the stockpile, because at the time there was no equipment at
the site to enable boring or sampling the contaminated soil deeper inside.
Mr. Cash’s testimony provided no basis for an inference that these samples
could be expected to be representative of the soil deeper inside the stockpile. He relied
exclusively on the randomness of the sampling as the basis for its reliability; however,
his own testimony makes clear that the samples were not random with respect to the
whole soil stockpile, but only with respect to its perimeter. The absence of random
sampling throughout the stockpile was particularly important because, as Mr. Cash
explained, clay is often not evenly distributed through subterranean soil at a site but
instead is often found in underground soil in a concentrated clay layer called a lens.
Significantly, TK itself did not use this surface sampling methodology to test the
clay content of the soil during its performance under the subcontract. Mr. Cash testified
that when TK took soil samples to evaluate the clay content of the soil it was actually
treating, during its performance under the subcontract with ITC, it took these samples
by boring at varying depths into the soil inside its treatment bins, rather than just at the
surface, and that it did so to test whether a concentrated area of clay was present in a
particular area inside the bin.
TK could not have reasonably relied on any representation as to the clay content
of the soil because it knew that, due to flaws in the sampling methodology underlying
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Table 2-15 of the Solvent Technology Report, that table actually revealed nothing at all
about the soil toward the middle of the stockpile.
CONCLUSION
We affirm the Board’s determination because we conclude that ITC has not
established that there was any representation in the contract documents as to the clay
content of the overall stockpile of contaminated soil and, alternatively, because ITC has
failed to establish that it would have been reasonable for TK to rely on any such
representation under the circumstances.
AFFIRMED
COSTS
No costs.
MOORE, Circuit Judge, concurs in the result.

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