This article is an excerpt from The Art of Tendering: A Global Due Diligence Guide, which is available for purchase.
In its October 1978 decision in Jacksonville Port Authority v. Parkhill-Goodloe Co., Inc., the Florida First District Court of Appeal found the Jacksonville Port Authority liable for the extra time and costs required by a contractor to perform unanticipated out-of-scope work. The case involved a dispute over a dredging contract. The contractor encountered unanticipated rock under the surface that significantly increased the complexity of the required work and it sought extra costs from the Port Authority for performing the contract. The Port Authority rejected those claims and, consequently, the contractor sued for the extra costs. The Court of Appeal summarized the findings of the trial court, which found the Port Authority liable for failing to adequately warn bidders of known performance risks:
The Court finds that the Plaintiff relied on the boring reports furnished by the Defendant and had a right to do so and its own ‘on-site’ probings also did not reflect any significant rock to be encountered in the dredging. Further, the Defendant was on notice of rock in the area because of the prior claim from a prior contractor dredging in an adjacent area and the Defendant did not disclose the possibility of rock to the bidders, including Plaintiff, on the contract. The Court finds that Defendant had a duty to make known to the bidders on this project its full knowledge of the possibility of rock in this area. The Plaintiff incurred damages to its equipment and incurred damages for extended time to complete the dredging work for which the Defendant is responsible.”
The Court of Appeal also found that government institutions should bear the onus of collecting and disclosing data about contract performance conditions since it was commercially unreasonable to expect each bidder to bear those costs on their own:
This is one more thought before passing this subject matter. What were the bidders to do? Was each bidder to run these tremendously expensive core boring tests not knowing whether or not he would get the contract? Under defendant’s contention there would be practically no bidders. A bidder would be faced with this dilemma. Shall I bid on what is presented to be and run the risk of loss if the information is not correct or shall I run core boring tests at great expense, amounting to thousands of dollars, which expense I must bear on my own if I do not secure the contract? The county, on the other hand, should know what soil they are dealing with in a project they have under consideration. The information, if gathered by the county, will be useful to the county no matter who gets the job. The county should be the logical one to make the tests or have them made and not the bidders who may or may not get the job. If the county has elaborate tests made and makes its finding known to the bidders, the bidders should be able to rely on these tests in all justice and fair play.
The Court of Appeal therefore agreed with the trial decision and upheld the award of extra contract costs to the contractor due to the unanticipated dredging conditions.
