We have all learned, some of us in school and some of us in the school of “life experience” that parties to a contract are bound by its terms. Not always, if one of the contracting parties is the federal government. We should know that the sovereign reserves certain unique contract prerogatives. One such prerogative is the right to invoke provisions omitted from the contract but required by law.
In G.L Christian & Associates v. United States, 312 F.2d 418 (Ct. Cl. 1963), the government terminated for convenience the contractor’s construction contract. The contractor challenged the termination as a breach of contract since there was no termination clause of this sort in the contract. Seemingly a reasonable argument. The Court of Claims (a predecessor of the Federal Circuit) decided otherwise. The Court held that the termination for convenience clause was required by regulation and expressed a significant public procurement policy. Therefore, even though the clause was omitted from the contract it was incorporated into the contract as a matter of law, and the government was within its contract rights to invoke it.
The Court’s holding became known as the “Christian Doctrine.” This doctrine has been accepted by the courts and boards without question since the issuance of the opinion.
The Federal Circuit recently revisited the Christian Doctrine in K-Con, Inc. v. Army, 908 F.3d 719 (Fed. Cir. 2018). The Army entered into two contracts with KC, each for a pre-engineered metal building. The Army realized that it had omitted from each contract the clause that required performance and payment bonds, FAR 52.228-15. Prior to issuing the Notice To Proceed (NTP), the Army directed KC to furnish these bonds. The contractor refused, contending that the contracts were not expressly identified as construction contracts, and the contracts did not contain any clause requiring bonds of this nature. After considerable delay, KC furnished the bonds under a government contract modification (the government reimbursed the bond fees), and KC filed a claim for NTP delay costs.
The ASBCA denied the claim. In brief, it ruled that the contracts were construction contracts requiring performance and payment bonds as a matter of law and that having these bonds in the contracts reflected a significant public procurement policy. The Board incorporated into each contract the omitted bond clause under the Christian Doctrine. K-Con, Inc., ASBCA Nos. 60686, 60687, 17-1 BCA 36,632, recon den. 17-1 BCA 36,756.
KC appealed, and the Federal Circuit affirmed. The Court agreed with the ASBCA that the performance and payment bonds were required by statute, 40 U.S.C. § 3131(b), and by implementing regulations, FAR 28.102-1. The Court also agreed that requiring these bonds reflected a significant public procurement policy. The Court affirmed the application of the Christian Doctrine and the incorporation of the omitted bond clause in each contract.
A “takeaway” for government contractors? When you review a solicitation and have reason to believe a statutory/regulatory requirement has been omitted by the government, don’t ignore the matter. Contact your Contracting Officer for clarification prior to submitting your proposal. An email early could save you dollars and/or heartache later.
About the Author:
Hon. Jack Delman
Jack Delman served as a judge on the Armed Services Board of Contract Appeals for 29 years and has extensive experience in the adjudication and mediation of large and complex contract disputes, including equitable adjustments, terminations and cost and pricing issues.
Jack has extensive experience with claims analysis, FAR and DOD agency regulations and BCA practice and procedure.