G. L. Christian and Associates v. The United States
160 Ct. Cl. 1, 1963 U.S. Ct. Cl. LEXIS 166, 312 F.2d 418 (1963)
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Rule of Law:
A mandatory clause required by a government procurement regulation will be incorporated into a government contract by operation of law, even if it has been omitted from the contract's written text, particularly when the clause reflects a significant or deeply ingrained public procurement policy.
Facts:
- The Department of the Army awarded a contract to G. L. Christian and Associates (Christian) to construct a 2,000-unit housing project at Fort Polk, Louisiana.
- Christian sold its entire interest in the project to a joint venture of H. B. Zachry Company and Centex Construction Company (Centex-Zachry) for $250,000.
- The Army, after initially objecting to a formal assignment, approved a plan for Centex-Zachry to perform the entire contract as a subcontractor, with Christian remaining the nominal prime contractor but being fully indemnified from all liability.
- Centex-Zachry began construction and acted as the de facto prime contractor with the Army's full knowledge and assent.
- On February 5, 1958, the Army terminated the housing contract because of its decision to deactivate Fort Polk.
- The written contract signed by the parties did not contain a 'termination for convenience' clause, which would have given the government the right to terminate the contract without it being considered a breach.
Procedural Posture:
- G. L. Christian and Associates filed suit against the United States in the U.S. Court of Claims, seeking damages on behalf of its subcontractor, Centex-Zachry.
- The claim sought recovery for unreimbursed expenses and anticipated profits lost due to the termination of the contract.
- A Commissioner of the Court of Claims conducted a trial and submitted findings of fact and a recommended opinion to the court.
- The judges of the U.S. Court of Claims then reviewed the case for a final decision.
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Issue:
Does a standard 'termination for convenience' clause, required by the Armed Services Procurement Regulations, become part of a government construction contract by operation of law even if it was omitted from the contract's text, thereby limiting the contractor's recovery to costs and disallowing anticipated profits?
Opinions:
Majority - Davis, Judge
Yes, a standard 'termination for convenience' clause is incorporated into the contract by operation of law. The Armed Services Procurement Regulations, which have the force of law, mandated the inclusion of a standard termination clause in all fixed-price construction contracts. Although this contract was initially funded through private loans under the Capehart Act, it ultimately obligated appropriated federal funds, making the regulations applicable. The court reasoned that the policy of allowing the government to terminate defense contracts for its convenience without liability for unearned, anticipated profits is a deeply ingrained strand of public procurement policy dating back to World War I. To enforce the contract as written would contravene this long-standing and significant policy. Therefore, the contract must be read as if it contained the mandatory clause, the termination was not a breach, and the contractor is not entitled to recover anticipated profits.
Analysis:
This case establishes the 'Christian Doctrine,' a foundational principle in government contracts law. The doctrine holds that a mandatory government procurement clause is considered part of the contract by operation of law, even if omitted. This significantly shifts risk to contractors, who are presumed to know the law and are bound by regulations not explicitly stated in their agreement. The doctrine protects the public interest and deeply ingrained procurement policies from being undermined by the administrative oversight or error of a contracting officer. Future cases applying this doctrine will analyze whether a specific regulation is mandatory and if it embodies a significant public policy.
