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Putting it in When you Thought it Was Out

Putting it in When you Thought it Was Out

One of the “cons” to doing business with the government is a principle known as the Christian Doctrine. When I teach this in a class I typically joke that it is the principle that contractors defaulting on their contractual obligations will be fed to the lions. In reality, of course, it has nothing to do with lions, or Christians, or eating, and very little to do with contractors that perform poorly.

The Genesis of the Christian Doctrine

This court-created doctrine gets its name from the seminal case in the area captioned G.L. Christian & Associates v. US[1]. The New Orleans Corps of Engineers awarded the contract for construction work. For reasons that are not completely clear, possibly a result of positive negotiation, the parties omitted the Termination for Convenience clause from the contract.

New CO, New Decision

That was fine until a new contracting officer arrived. This CO determined that the services were no longer needed and issued a termination for convenience. Mr. Christian argued that without the clause, the government had no right to terminate and as a result he would be entitled to recover full commercial damages for the government’s breach of the contract.

These damages would include all consequential and incidental damages, including his lost profits measured by what he would have made if the contract had run its course. These are called “anticipatory profits” and every government contracting student knows that these are damages the government never pays.

The Court of Claims

The Court of Claims (now the US Court of Federal Claims) reasoned that there were some clauses that reflected such an ingrained principle of federal contracting law that their omission could not be tolerated. As a matter of public policy, therefore, if the clause were omitted, it could only have been by accident and it must be read into the contract. As a result Mr. Christian’s contract was deemed terminated for convenience and his damages were limited to the termination for convenience clause limitations, once they were “read into” his contract.

The Public Policy

On the one hand this may seem very unfair to Mr. Christian. Looking at it from the view of the public however, the termination clause itself is so unique to government contracting simply because it does reflect a very important policy. If the government no longer needs whatever the subject of the contract may be, the taxpayer should not be required to continue paying for something it does not need. In commerce generally, this is considered a breach.

For the government, different policies apply. The Christian Doctrine has been developed to provide the following guidance: IF (and only if) there exists a required clause that reflects an important public policy, its omission will be corrected by reading the clause into the contract. So there are two essential elements for invoking this doctrine. First the clause in question must be required by the regulation or statute. Second, it must reflect an important public policy. If it meets those standards, then the Christian Doctrine will apply and the clause will be considered part of the contract, whether or not it appears by reference or full text in the contract.

Which Clauses Trigger the Doctrine? 

Very few clauses have been subject to judicial review under the Christian Doctrine, thus there are many clauses the status of which remains unclear. Courts have held the bonding requirements for construction fall within the Christian Doctrine. There will always be a required bond for construction.

The “Subject to the Availability of Funds” clause, alerting the contractor that funds have not been made available for performance, has been held to NOT fall under the doctrine. A contracting officer was disappointed to learn that his name would be included in an Anti Deficiency Act report for failing to include the clause.

[1] 312 F.2d 418 (Ct. Cl. 1963); rehearing denied, 320 F. 2d 345 (Ct. Cl. 1963); cert denied, 375 U.S. 954 (1964).