Appeal of Covco Hawaii Corporation

Covco Hawaii Corporation (Covco) (plaintiff) entered into a construction contract with the United States Army Support Command, Hawaii Installation Club System (government) (defendant), a Department of the Army nonappropriated fund instrumentality. Under the contract, Covco was required to perform excavation work, including unspecified rock excavation work. The excavation area was in Hawaii, an area entirely formed by volcanic processes. After encountering a solid lava rock ledge, Covco petitioned the Armed Services Board of Contract Appeals (Board), arguing that it was entitled to an equitable adjustment under the Differing Site Conditions clause of its contract with the government because (1) the profile drawings in the contract implied that the excavation area contained soil, not rock; (2) solid lava rock ledges were not typically found during excavations to similar depths; and (3) the government had superior knowledge about the subsurface site conditions because it had previously built a pool in the same area but the government failed to disclose that knowledge to Covco. Even though Covco’s contract was a type of nonappropriated funds contract not governed by the Contract Disputes Act, the disputes clause in Covco’s contract granted jurisdiction to the Board. Without the disputes clause, Covco’s contract would have been outside the Board’s jurisdiction.