Opinion ID: 749857
Heading Depth: 2
Heading Rank: 2

Heading: The Subgrade Tolerance Claim

Text: 25 A roadbed is constructed by excavating and embankment, or cut and fill operations. Prior to placing the pavement structure on the subgrade, it is necessary to finish or prepare the subgrade. The subgrade is defined as the top surface of the roadbed upon which the pavement structure and shoulders including curbs are constructed. Subgrade tolerance, as used in this dispute, is the amount of variation in the subgrade plane. 26 Section 105.03 of the Government's standard specifications provides: 27 105.03 Conformity with Plans and Specifications. All work performed and all material furnished shall be in reasonably close conformity (see definition) with the lines, grades, cross sections, dimensions and material requirements shown on the plans or indicated in the specifications. 28 The specifications further define reasonably close conformity as reasonable and customary manufacturing and construction tolerances where working tolerances are not specified. The contract specification also required that 75 percent of the top 18 inches of the subgrade be comprised of material no larger than three inches in diameter. The remaining 25 percent could consist of larger material provided it could be placed in smooth layers not exceeding 8-inches. 29 The plans and specifications for the project did not provide a specific tolerance for finishing the earth subgrade, before placing the sub-base aggregates. Brown accordingly assumed that they would be required to finish the subgrade to plus or minus four inch rock tolerance, which Brown believed to be the reasonable and customary ... construction tolerance in New Mexico at the time the work was performed. As found by the Board, and not challenged by the parties, New Mexico applied a plus zero, minus 8-inch rock tolerance at the time of the contract, i.e., a variation of up to zero inches above and eight inches below the subgrade plane would be tolerated. The FHWA insisted that the subgrade be finished to a plus or minus two inch tolerance. Brown so complied and sought additional compensation for satisfying the stricter standard. 30 The Board concluded that it was unreasonable for Brown to assume that the eight inch rock tolerance would be applied to the subgrade plane in light of the specific requirement that the subgrade be finished with minus three inch material in the top 18 inches. The Board also held, however, that Brown's unreasonable contract interpretation was matched by FHWA's equally unreasonable contract administration. The FHWA directed Brown to finish the road bed with material taken from excavations, the only source specified in the contract. Those excavations, however, yielded only six to eight inch rock. In order to meet the strict tolerance, Brown was required to crush this rock down to minus three size. The Board found that this constituted a change to the contract. Finding both parties partially responsible for the subgrade tolerance problem--Brown for his unreasonable bidding position and the FHWA for requiring Brown to use large rock--the Board concluded that this would be an appropriate case for both parties to share in the increased cost of finishing the subgrade to the plus or minus two inch tolerance, citing Dynalectron Corp. v. United States, 207 Ct.Cl. 349, 518 F.2d 594 (1975). Brown now appeals that decision. 31 Brown argues that its bidding position was reasonable because it expected to excavate and build the embankments in rock, or rock material, since the contract did not specify a borrow source from which the earthen fill materials could be produced nor a pay item in the bid schedule for these materials. As such, the more generous eight inch tolerance should have applied. The Board's decision, according to Brown, gives the Government a price reduction for a changed condition, i.e., a rock substrate. 32 We agree with the Board that it was unreasonable for Brown to have assumed that the eight inch tolerance applied when the contract required Brown to finish the top 18 inches of the subgrade with predominantly minus three inch material. Had such material been available Brown would have been required to finish the subgrade in the manner specified by the contract. The fact that such material was not available does not change Brown's obligation under the contract. Only when the FHWA insisted that Brown use the excavation materials did the FHWA run afoul of the contract. In such a case, we agree with the Board that both parties should assume responsibility. 33 A contract should be interpreted, if possible, to give effect to all provisions. See Fortec Constructors, 760 F.2d at 1292. An interpretation which renders portions of the contract meaningless, useless, ineffective, or superfluous should be eschewed. See United Pacific Insurance Co. v. United States, 204 Ct.Cl. 686, 497 F.2d 1402, 1405 (1974); Restatement (Second) Contracts § 203(a) (1981). The Board's reading of the contract gives effect to all parts of the contract and provides fair compensation to Brown for performing under the contract. Brown's reading, in contrast, renders the finishing requirement ineffective because it would by implication permit the use of greater than three inch material. At the least, the difference between the contract's specific filling requirement for the top 18 inches and the general reasonably close conformity requirement at least created a patent ambiguity, about which Brown had a duty to inquire. See Fortec Constructors, 760 F.2d at 1291. Brown's failure to do so precludes its proffered interpretation. See Grumman Data Sys. Corp. v. Dalton, 88 F.3d 990, 998 (Fed.Cir.1996). Accordingly, we cannot say that the Board's decision on this point was arbitrary, capricious, or not supported by substantial evidence; it is affirmed.