Christian Doctrine Applies to Subcontractors

[Whynot]

Am I reading this case correctly?

https://ecf.dcd.uscourts.gov/cgi-bin/show_public_doc?2009cv1210-26

It is on Bob's blog.

The hospitals have not provided any cogent reason why the government may impose terms on government contracts by operation of law but not on government subcontracts. They offer no persuasive explanation of why the same constructive knowledge of federal procurement regulations should not also be imputed to subcontractors who undertake to provide services that support a government contract.

[wvanpup]

I think you are reading the case correctly. A short summary of the case:

• In 1995, hospitals entered into a contract with an HMO to provide medical services. At that time, the HMO did not have a government contract.
  
• At some point in the future, the HMO entered into a contract with OPM to provide medical services to Government employees under the Federal Employees Health Benefit Program.
  
• At some point after that, the hospitals renewed their contracts with the HMO.
  
• The FEHBP contract was subject to equal employment and other provisions
  
• By executive order and regulation, the equal employment and other provisions applied to subcontractors
  
• The contracts between the hospitals and the HMO did not flow down the equal opportunity requirements
  
• The Dep't of Labor sought to audit the hospitals for equal opportunity compliance
  
• The hospitals resisted, claiming, among other things, that the lack of the clause meant the requirement did not apply to them.
  

The hospitals' arguments and the court's rationale are too long to include here, but the bottom line is that the court cited Christian and said the required clauses applied even if not included in the contract.

What would have happened if the original contracts had been in effect when the HMO entered into its contract with OPM? Would the Christian doctrine apply to an already existing subcontract if the prime and sub never negotiated a change to the subcontract to include the new Government requirement? My guess is that if the sub continued performance Christian would apply, even without the consent of the sub (and even if the sub is actually unaware of the new requirements imposed by the government contract), but can see arguments to the contrary. Would the subcontractor be in breach if it refused to perform because of the new requirement, whether or not the prime tried to flow down the new requirement? My guess is that it would not, but I can again see arguments to the contrary.

[Retreadfed]

I think you may be misreading the case. Note that the district court explicitly states that the DC Circuit has not adopted the Christian Doctrine. The district court did not impose compliance on the hospitals under the Christian Doctrine but through the terms of the Executive Order and statutes that required compliance.

[Whynot]

^{With or without adopting the Christian Doctrine, the implications for the subcontractor appear to the same regardless.}

[Retreadfed]

Maybe and maybe not. Remember, the regulations implementing the EO and the statutes specifically said the clause mandated by them would be a part of any subcontract regardless of whether it was physically included. There is not a similar provision in the FAR.

[Guest Vern Edwards]

The underlying theory of the Christian Doctrine is that contract terms may be imposed on contractors by operation of law, because the law requires that they be so imposed. What the District Court has done is imposed contract terms of subcontractors by operation of law, because the law requires that they be so imposed. "The hospitals have not provided any cogent reason why the government may impose terms of government contracts by operation of law but not on government subcontracts." It sounds to me like the Christian Doctrine has been applied to a subcontractor, even if the court did not say so in so many words.

The worst thing about the decision is that a firm could be a government subcontractor under the various definitions and not know that it is a government subcontractor.

The decisions of the district courts and of the circuit courts of appeals other than the Federal Circuit are not binding on the boards of contract appeals or the Court of Federal Claims.