Federal Contracts and the Governing Provisions not always Provided for in the Contract

By: Jarett Dillard

Contractors performing on federally funded projects should be aware of mandatory regulations governing the project. Under the Christian Doctrine, a court may insert a clause into a government contract by operation of law if that clause is required under applicable federal administrative regulations, so long as the “clause expresses a significant or deeply ingrained strand of public procurement policy.” See S.J. Amoroso Constr. Co., Inc. v. United States, 12 F.3d 1072, 1075 (Fed. Cir. 1993); citing G.L. Christian & Assocs. V. United States, 312 F.2d 418 (Ct. Cl. 1963).

The Christian Doctrine applies only in situations where the omission of a specific contract provision would constitute a violation of law. This doctrine, however, does not operate as a windfall for contractors who intentionally or negligently omit certain mandatory clauses then later attack the enforceability of the contract due to the absence of such clauses. For example, in Star Operations, Inc. v. Dig Tech, Inc., the Texas Court of Appeals found that it is the responsibility of a contractor contracting with a lower-tiered contractor to incorporate Required Contract Provisions in the contract if such provisions, or rather lack thereof, are sought to limit the responsible contractor’s liability. 03-15-00423-CV, 2017 WL 3263352, at *1 (Tex. App.—Austin July 27, 2017, pet. denied).

In Star Operations, Inc., subcontractor Star Operations, Inc. (“Star”) was awarded a subcontract by Central Texas Highway Constructors (“Central”) to build the infrastructure for the illumination, signal, intelligent-transportation, and toll-collection systems for the Texas Department of Transportation (“TxDOT”). Star subsequently entered into an oral agreement with second-tier subcontractor Dig Tech, Inc. (“Dig Tech”) to perform hole boring work for the installation of electrical conduit. Dig Tech brought suit against Star for breach-of-contract for Star’s failure pay Dig Tech for its performed labor. Star contended that the Christian Doctrine should apply, specifically citing that certain regulations were not incorporated into the oral agreement. Star argued that federal law required Dig Tech to obtain a written contract with Star and approval from TxDOT as conditions precedent to any formation of an enforceable contract. Star further contended that federal law required Dig Tech to provide statutorily compliant certified payrolls as a condition precedent to any liability arising from the project. Although the court found that the Required Contract Provisions governing a project of this kind did not require the provisions at issue to be incorporated into the contract, it is important to glean from this case that certain provisions could be enforced if it is found that the omitted clauses express a significant or deeply ingrained strain of public procurement policy. See Christian, 312 F.2d at 424 (denying contractor’s breach of contract claim when government terminated construction contract for its own convenience even though contract lacked a termination clause; court concluded that standard termination clause required by Armed Service Procurement Regulations must be read into contract). Following other federal opinions, the Texas Court of Appeals reiterated that the Christian Doctrine does not allow all mandatory contract clauses to be automatically incorporated by operation of law into a contract. Id; citing General Eng'g & Mach. Works v. O'Keefe, 991 F.2d 775, 779 (Fed. Cir. 1993).

In short, courts are consistent in concluding that the Christian Doctrine cannot be used as a vehicle to limit liability when the party seeking its employment is in-fact the party that omitted the federal mandatory provisions in the contract. However, contractors are advised to review and incorporate any Required Contract Provisions into the contract at the contract’s inception. This practice grants all parties to the contract with a clear understanding of contract’s governance.

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