Public agencies must provide a significant amount of information so contractors can accurately bid on a project. After all, once their bid is accepted, there isn’t much wiggle room in either the project’s schedule or budget. But what if the information leading to that bid was inaccurate or incomplete? What if the job will take more time, effort, or materials than initially anticipated? In that situation, a superior knowledge claim may be appropriate.
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What Does “Superior Knowledge” Mean?
In the construction context, superior knowledge refers to the duty of the public entity to disclose vital information for bidders on a construction project. This is because the government knows more about the project than any prospective contractor could. The government is required to disclose any information that isn’t readily accessible if it’s relevant to a contractor’s ability to perform or submit an accurate bid.
In other words, if there’s information that would be important for a contractor to know, but the contractor wouldn’t be able to get that information on their own, then the government should disclose the info. In situations where access is restricted to the project site before bidding, the likelihood increases that an unforeseen issue will give rise to a superior knowledge claim.
On the other end of the spectrum, contractors have a responsibility to anticipate any commonly known difficulties inherent in the work they are performing. So contractors won’t be able to cry foul if an issue arises that could have or should have been reasonably foreseen.
Site Conditions are a Common Basis for Superior Knowledge Claims:
Elements for a Claim of Superior Knowledge
Courts have developed a 4 part test to determine whether the contracting entity had a duty to disclose specific information before the bidding process begins.
To assert a successful claim to superior knowledge, the contractor must prove that:
- (1) The Government had vital knowledge of a fact that directly affects the contractor’s cost or duration of performance;
- (2) The Government knew that the contractor did not have this information and did not have any reason to search for it;
- (3) Nothing in the contract or specifications alerted the contractor of a need to investigate any further; &
- (4) The Government withheld or failed to provide the relevant information.
On top of those factors, a claimant must also show that they were actually injured by the situation and should be entitled to damages.
Information is vital if it is material to the performance of the contract and it is factually based. “Materiality” means that had the information been disclosed, a reasonable contractor wouldn’t have agreed to the same contractual terms absent that information. The other requirement is that the information is factual in nature. Opinions, speculations, or expert reports based on incomplete or unsubstantiated evidence are not considered vital information.
Determining ignorance on behalf of the contractor is the balancing act in superior knowledge claims. Proving this element can be tricky. The contractor must show that the government had an obligation to disclose specific information. That duty needs to outweigh the contractor’s knowledge or ability to obtain that missing information. Factors that the courts will analyze include the nature of the information withheld, industry customs, and the experience and skills of the contractor.
The nature of the information refers to the specialized character of the data. Is that information only available to the government through exclusive, special, or technical knowledge? Did it come to be known through dealing with similar contracts?
Industry custom is also an essential determinant in establishing the contractor’s ignorance. If there is literature on the subject, or if the information is the type that most reasonably prudent contractors are aware of, this will prevent ignorance from being established. Lastly, the experience and abilities of the contractor will contribute to this evaluation. For this reason, contractors that are a small business are presumed to have less knowledge than larger, more experienced contractors.
No Apparent Need to Investigate
Even if the government failed to disclose pertinent information to the contractor, there still needs to be some evidence of being misled by the contract. Meaning, the agreement did not alert them for a need to investigate. This is not limited to the contract terms themselves. It could also include surrounding circumstances of the bidding and executing of the contract. However, if there is the scope of work indicates that research or technical development is needed, the claim for superior knowledge will likely fail.
Failure to Disclose Information
This element deals with the lack or inadequacy of the government’s disclosure. The contractor will need to prove that the information provided was insufficient to complete according to the contract specifications. The contractor won’t necessarily need to show that the information was purposefully or maliciously withheld – just that the government failed to provide the information.
Actual damages are the last element of a superior knowledge analysis, and potentially the most important. To hold the public entity liable, there must be some effect on the price or duration of the contract which requires relief.
When bidding on public projects, be sure that you are prepared to do so! In order to accurately bid, a contractor must feel comfortable with all of the project details. The superior knowledge doctrine can help when there is vital information missing, but it is not a get-out-of-jail-free card for contractors in over their heads.