United States: The Christian Doctrine: The Double-Secret Contract Clause

The typical government contract contains a laundry list of standard Federal Acquisition Regulation (FAR) or Defense Federal Regulation Acquisition Supplement (DFARS) clauses that outline the requirements for the construction or services to be provided. These clauses are either expressly stated, i.e. written out in full length in the contract, or incorporated by reference to a particular provision which the contractor must research for the specific language. But contractors beware: not all contracts are what they seem. Since 1963, courts have held that certain clauses are so integral to public procurements that they are deemed incorporated by operation of law, even if they are omitted from the contract.

The Christian Doctrine

The "Christian Doctrine" arises from the Court of Claims' 1963 decision in G.L. Christian & Associates v. United States.1 The contractor there sought to recover anticipated profits on a contract that terminated by the U.S. Department of the Army. The government sought to avoid liability for anticipated profits, relying on the standard termination for convenience clause, which disclaims government liability for anticipated profits on unperformed work. Interestingly, the termination for convenience clause was not referenced or incorporated in G.L. Christian's contract. The government argued that, despite its absence, the clause should be read into the contract as a matter of law. In support of its argument, the government relied on Section 8.703 of the Armed Services Procurement Regulations ("ASPR"), which requires the termination clause be inserted in all fixed-price construction contracts such as the one at issue.2 The Court agreed, stating that since World War I, the limitation on anticipated profits in a termination case was "a deeply ingrained strand of public procurement policy."3

Following this ruling, various boards of contract appeals and courts took a relatively broad view of the court's holding, incorporating clauses and procurement regulations with little or no consideration for whether such provisions reflected a deeply ingrained strand of public procurement policy. Thus, a series of ancillary clauses were deemed incorporated by operation of law, even though they were not in the contract. For example, one case from the Court of Claims held that the ASPR "Mistake in Bids" clause was incorporated by law into the contract based on a theory that: "If a regulation appears intended to define and state the rights of a class of persons, it is presumptively intended to benefit those persons."4 The Court ruled that the missing clause was intended to benefit bidders, without any analysis as to whether that end was a deeply ingrained in the federal procurement scheme.

The Federal Circuit Reels in the Christian Doctrine

In 1993, the Court of Appeals for the Federal Circuit addressed the expanding scope of the Christian Doctrine in General Engineering & Machine Works v. O'Keefe.5 Emphasizing Christian's reliance on the significant and long-standing policy implemented by the termination for convenience clause, the Court re-iterated that "the Christian Doctrine does not permit the automatic incorporation of every required contract clause."6 Rather, "the Christian Doctrine applies to mandatory contract clauses which express a significant or deeply ingrained strand of public procurement policy."7 In the wake of General Engineering, one set of commentators noted: "They [the courts and boards] have been saved for the last 20 years by being able to mechanically follow the Christian Doctrine to incorporate all mandatory clauses in the contract without analysis or thought. But that day is over. Under the guidance provided by the Federal Circuit, the boards of contract appeals now have to think through each case to determine if the clause meets the General Engineering tests."8

Under the guidance of General Engineering, the Armed Services Board of Contract Appeals (ASBCA) has invoked the Christian Doctrine only twice to incorporate clauses into contracts. And even so, the ASBCA only incorporated clauses that had been previously incorporated under earlier case law.9 In that same time, the ASBCA has refused to invoke the incorporate various other clauses.10

K-Con, Inc.—Mandatory Bonding Requirements

In its most recent decision involving the Christian Doctrine, the Federal Circuit held for the first time that bonding requirements in FAR Part 52.228-15, "Performance and Payment Bonds—Construction," were incorporated in every construction contract at the time of award.11 Not only did the Court find that the purposes of the performance and payment bonds rendered them "a significant or deeply ingrained strand of public procurement policy," it was also persuaded by the fact that government property cannot be subject to subcontractors' and suppliers' mechanic's liens.12 Thus, protecting subcontractors and suppliers represents a deeply ingrained strand of public procurement policy.

The lesson of K-Con: Federal contractors of all sizes must understand: (1) what type of contract is being contemplated by the government's solicitation; (2) which provisions are found in those types of contracts; and (3) which provisions have been, or may be, deemed incorporated by operation of law even if not present in the contract. This will greatly impact how contractors price their proposals in competitive solicitations to better account for potential risks.

Post-1963 Christian Decisions

Case Holding
Rough Diamond Co. v. United States, 351 F.2d 636, 642-43 (Ct. Cl. 1965), cert. denied, 383 U.S. 957 (1966) Incorporates statute containing pricing rules
Schoenbrod v. United States, 410 F.2d 400, 404 (Ct. Cl. 1969) Incorporates clause outlining proper pre-award negotiation procedures
Chris Berg, Inc. v. United States, 426 F.2d 314, 317 (Ct. Cl. 1970) Incorporates "Mistake in Bids" clause required under ASPR [Armed Services Procurement Regulation]
American Elec. Contracting Corp. v. United States, 579 F.2d 602, 612-13 (Ct. Cl. 1978) Incorporates clause addressing when qualified products are to be procured as components of end items
Applied Devices Corp. v. United States, 591 F.2d 635, 640 (Ct. Cl. 1979) Incorporates clause calling for the contracting officer to make a reasonable and realistic estimate of labor learning, and other nonrecurring costs for computation of the 'cancellation ceiling'
SCM Corp. v. United States, 645 F.2d 893, 903-04 (Ct. Cl. 1981) Incorporates clause promoting uniform treatment of "major issues" such as cost and pricing data when more than one military department is purchasing an item
Clem Perrin Marine Towing, Inc. v. Panama Canal Co., 730 F.2d 186, 188 (5th Cir.), reh'g and reh'g in banc denied, 734 F.2d 1479, cert. denied, 469 U.S. 1037 (1984) Incorporates clause requiring plaintiff to exhaust administrative remedies before bringing suit for breach of lease
M.E. McGeary Co., ASBCA 36788, 90-1 BCA ¶ 22512 (1990) Incorporates DAR 7–602.23, Disputes Concerning Labor Standards
Fireman's Fund Insurance Co., ASBCA 38284, 91-1 BCA ¶ 23439 (1990) Incorporates FPR § 1–7.102–12 (1980), Disputes
H&R Machinists Co., ASBCA 38440, 91-1 BCA ¶ 23373 (1993) Incorporates FAR 52.249-8, Default (Fixed-Price Supply and Service)
Rodgers Construction, Inc., IBCA 2777, 92-1 BCA ¶ 24503 (1991) Incorporates FAR 52.232–23, Assignment of Claims
Telesec Library Services, ASBCA 42968, 92-1 BCA ¶ 24650 (1991) Incorporates FAR 52.222-43, Fair Labor Standards Act and Service Contract Act–Price Adjustment
OFEGRO, HUDBCA 88-3410-C7, 91-3 BCA ¶ 24206 (1992) Incorporates FAR 52.249–8, Default
Balimoy Manufacturing Co., ASBCA 43768, 93-1 BCA ¶ 25437 (1992) Incorporates FAR 52.209-3, First Article Approval
Technical & Management Services Corp., ASBCA 39999, 93-2 BCA ¶ 25681 (1992) Incorporates FAR 52.217-1, Limitation of Price and Contractor Obligation
Miller's Moving Co., ASBCA 43114, 92-1 BCA ¶ 24707, 34 (1992) Incorporates Services Contract Act provisions
Ace Services, Inc. v. General Services Administration, GSBCA 11331, 92-2 BCA ¶ 24943 (1992) Incorporates FAR 52.222–43, Fair Labor Standards Act and Service Contract Act–Price Adjustments

 

Post-1993 General Engineering Decisions

Case Holding Comments
S.J. Amoroso Co. Inc. v. United States, 12 F. 3rd 1072 (Fed. Cir. 1993) Incorporates 52.225–1-14 Buy American Act
Unit Data Service Corp. v. Department of Veterans Affairs, GSBCA 10775-P-R, 93-3 BCA ¶ 25964 (1993) Incorporates FAR (FAR 52.219-14, Limitations on Subcontracting
Montana Refining (ASBCA – 1994) Refuses to incorporate FAR 52.249-2, Termination for Convenience 1. "[T]he Termination for Convenience clause in appellant's contract was an authorized deviation from the required clause.... Accordingly, the Christian doctrine is not applicable."

2. It does not appear that there was, in fact any authorized deviation specific to the T for C clause. And, if there was, it appears that it was not permissible.
BellSouth Communications, Sys. (ASBCA – 1994) Refuses to incorporate FAR 52.222-43 1. "Before award, the contracting officer determined that the BellSouth contract was not covered by the Act. That determination was made in good faith.... In these circumstances the Christian Doctrine is not applicable."
Old Dominion Security (ASBCA – 1994) Refuses to incorporate FAR 52.222-43, Fair Labor Standards Act and Service Contract Act 1. "[S]o long as the GSAR 552.222-43 clause remained in effect as an authorized deviation the Christian Doctrine does not require us to read FAR 52.222-43 clause into the contract as a substitute therefore."
Professional Services Unified, Inc., ASBCA 48883, 96-1 BCA ¶28073 (1995) Refuses to incorporate FAR 52.229-4, Federal, State, and Local Taxes for competitive procurement
Shawn K. Christensen, AGBCA 95-188-R, 95-2 BCA ¶ 27724 (1995) Refuses to incorporate FAR ____, Differing Site Conditions for service contracts
C&J Associates v. VA Medical Center, VABCA 3892, 95-2 BCA ¶ 27834 (1995) Incorporates FAR ____, Termination for Convenience

Refuses to incorporate FAR ____, Termination for Default
GAI Consultants, Inc., ENGBCA 6030, 95-2 BCA ¶ 27620 Incorporates FAR FAR 52.243-0001, Changes
Computing Application Software Technology (ASBCA – 1996) Refuses to incorporate NASA FAR 18-52.245-17, Liability for Government Property Furnished for Repair and Services 1. "[A] policy on repair or service contracts is therefore not sufficiently significant ...."

2. The Board did note that "[NASA] does not argue, and we have not found, a legislative basis for procurement policy on Government property."

3. Board looks at Engineering's listing of examples that fit being significant and characterizes them as procedural. That might bode well for our case since our issue is not procedure.
Rehabilitation Services of Northern California (ASBCA 1996) Incorporates FAR 52.245-2, Government Furnished Property 1. Incorporated on strength of two pre-1993 ASBCA cases incorporating the same clause

2. Stong dissent by Kielein
Lambrecth & Sons (ASBCA – 1997) Refuses to incorporate FAR 52.212-11 on the grounds that it does not reflect a significant or deeply ingrained policy 1. No legislative basis for the clause

2. FAR revises several times the contracts into which the clause is to be inserted
MDP Const., Inc. (ASBCA – 1997) Refuses to incorporate FAR 52.212-11 on the grounds that it does not reflect a significant or deeply ingrained policy 1. The decision simply cited to Lambrecth.
F2M (ASBCA – 1997) Refuses to incorporate Incorporates FAR 52.233-3, Protest After Award 1. "[W]e held that the Christian Doctrine is inapplicable to NAF procurements...." (That is, it is inapplicable to contracts awarded with non-appropriated funds."
Lockheed Martin, Librascope (ASBCA – 1999) Refuses to incorporate DAR 7-108.2, Incentive Price Revision finding that it does not reflect a significant or deeply ingrained policy 1. No reference to legislative basis or not

2. "the ... clause contains a methodology for price revision.... It simply had not been demonstrated that the clause is of such importance as to reflect a deeply ingrained strand of, or a legislative intent for, public procurement policy."

3. "[A]ppellant is not receiving a double recovery of profit."
Empresa de Viacao Terceirnese (ASBCA – 2000) Refuses to incorporate DFARS 252.237-7020, Restriction On Severence Payments To Foreign Nationals 1. DFAR required inclusion on two conditions. "While the first criterion was satisfied in that the contract was for bus transportion services on the island of Terceirence ... no facts have be been furnished concerning the other criterion. On this record, the clause was not mandatory and, therefore, not eligible for incorporation therein by operation of law...."
Dawkins General Contractors & Supply (ASBCA – 2003) Incorporates FAR 52.232-7, Payments under Time-and-Material and Labor Hour Contracts 1. Little discussion. Relies entirely on General Engineering which "incorporate[ed] the [DAR] clause required for time and material contracts, the predecessor to the FAR 52.232-7.)
Labat-Anderson v. United States (Ct. Cl. 1999) Incorporates FAR 52.233-3, Protest After Award 1. "[T[he clause expresses a significant strand of public procurement policy because it implements section 2741 of the Competition in Contracting Act [which] requires federal agencies to suspend contract performance if they receive notice of a protest.... This statutory purposes serves the valuable purposes of ...."

2. Notes that the ASBCA had previously incorporated the same clause in Comsi, Inc. (1987).
Gold Line Refining v. United States (Ct.Cl. 1999) Incorporates some FAR EPA clause 1. With only footnote discussion incorporates the clause stating that it reflects a significant and deeply ingrained strand of public procurement policy.

2. Also states that "the law, moreover, does not allow the government to benefit from such violation."

 

Relevant Board Decisions 2007 to Present

Case Holding
Bay Shipbuilding Company, CBCA No. 54, 07-2 BCA 33678 (2007) Incorporates FAR 52.233-1, Disputes (Note that a prior case previously incorporated this clause.)
Costar III, LLC, ASBCA No. 56479, 11-2 BCA 34830 (2011) Incorporates FAR 52.222-43, Fair Labor Standards Act and Service Contract Act and Service Contract Act Labor Standards – Price Adjustment (Multiple Year and Option Contracts)
Spaceway Gateway Support, LLC., ASBCA No. 55608, 13 BCA 35232 (2013) Incorporates FAR 45.302-3(c) (1984) prohibition on profit or fee
ASFA Construction Industry and Trade; ASBCA No. 57269, 15-1 BCA 36034 (2015) Incorporates FAR 52.249-2, Termination for Convenience (Note that a 1984 case previously incorporated the clause at FAR 52.249-2.)
K-Con, Inc. ASBCA No. 60686, 17-1 BCA 36632; recond. denied. (2017) Incorporates FAR 52.228-15, Performance and Payment Bonds

Footnotes

1 312 F.2d 417 (Ct. Cl. 1963).

2 The Armed Services Procurement Regulation ("ASPR") was a precursor to the FAR and DFARS.

3 312 F.2d at 426.

4 Chris Berg, Inc. v. United States, 426 F.2d 314, 317 (Ct. Cl. 1970)

5 991 F.2d 775 (Fed. Cir. 1993).

6 Id. at 779.

7 Id.; see also S.J. Amoroso Co., Inc. v. United States, 12 F.3d 1072 (Fed. Cir. 1993) (incorporating as a matter of law the requirements of the Buy American Act statute and regulations).

8 Ralph C. Nash & John Cibinic, The Christian Doctrine: What is the Rule?, 10 Nash & Cibinic Rept. ¶ 48 (Sep. 1996).

9 Dawkins Gen. Contractors & Supply, Inc., ASBCA No. 48535, 03-2 BCA ¶ 32305 (Jul. 14, 2003) (incorporating FAR 52.232-7, Payments under Time-and-Material and Labor Hour Contracts); Rehabilitation Servs. of N. Cal., ASBCA No. 47085, 96-2 BCA 28324 (Apr. 26, 1996) (incorporating FAR 52.245-2, Government Furnished Property).

10 Id.; see Empresa De Viacao Terceirense, ASBCA No. 49827, 00-2 BCA ¶ 31,120 (Sep. 25, 2000); Lockheed Martin Librascope Corporation, ASBCA No. 50508, 00-1 BCA ¶ 30,635 (Oct. 29, 1999); Lambrecht & Sons, Inc., ASBCA No. 49515, 97-2 BCA ¶ 29,105 (Jul. 7, 1997); F2M, Inc., ASBCA No. 49719, 97-2 BCA ¶ 28982 (May 6, 1997); Computing Application Software Tech., Inc., ASBCA No. 47554, 96-1 BCA ¶ 28,204 (Feb. 14, 1996); Old Dominion Sec., Inc., ASBCA No. 47001, 95-1 BCA ¶ 27,366 (Dec. 13, 1994); BellSouth Comms. Sys., Inc., ASBCA No. 45955, 94-3 BCA ¶ 27,231 (Sep. 27, 1994); Montana Refining Co., ASBCA No. 44250, 94-2 BCA ¶ 26,656 (Jan. 25, 1994).

11 K-Con, Inc. v. Sec. of the Army, 908 F.3d 719 (Fed. Cir. 2018).

12 Id. at 725-26.

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