Government Contracts Monitor
“It’s in There” -- Miller Act Bonding Requirements Are Read into Construction Contracts under the Christian Doctrine
May 24, 2017
The Armed Services Board of Contract Appeals (ASBCA) recently reaffirmed its January 2017 decision in K-Con, Inc., ASBCA Nos. 60686, 60687, 17-1 BCA ~ 36,632, holding that, pursuant to the Christian doctrine, the bonding requirements set forth in the Miller Act (and codified at FAR 52.228-15) are mandatory clauses that must be included in government construction contracts if they are omitted. In the new decision, the contractor, K-Con, Inc., timely moved for reconsideration of the earlier decision but according to the Board essentially recycled its original arguments. The Board was not moved to change its earlier holding. The new decision does, however, reiterate several important points that government construction contractors must bear in mind.
First, the decision on which K-Con based a significant portion of its argument, Faerber Elec. Co., Inc. v. Atlanta Tri-Com, Inc., 795 F. Supp. 240 (N.D. Ill. 1992), does not address the issue of whether the Christian Doctrine applies to Miller Act bonding requirements. Instead, the U.S. District Court in Faerber Electric held that there is no claim under the Miller Act if no bond has been obtained. Significantly, while the Faerber Electric concluded that the Miller Act is not implicitly incorporated into any federal contract covered by the Act, that decision was reached in the context of determining whether a subcontractor possessed a right of action against a prime contractor based on the presumption that the prime contractor would have obtained a bond pursuant to the Miller Act. Indeed, the Faerber Electric decision did not rest on an analysis of the Christian Doctrine. Rather than delving into whether the bonding requirement is a mandatory contract clause that expresses a significant or deeply ingrained strand of public procurement policy (the Christian analysis), the Court 's analysis focused on whether the Miller Act bonding requirement should be incorporated into the government contract for the purpose of creating a private right of action. For these reasons, the Board did not Faerber Electric persuasive and did not rely on it in our analysis of the Christian doctrine.
Next, FAR 12.301 is not inconsistent with the application of the Christian Doctrine in commercial contraction contracts. K-Con argued that FAR 52.228-15 (the Miller Act bonding requirements) should not be incorporated into the contracts at issue because they were contracts for commercial items. According to K-Con, because FAR 52.228-15 is not among the clauses listed in FAR 12.301which sets forth the solicitation provisions and clauses to be included in a contract for the acquisition of commercial items, FAR 52.228-15 cannot be considered mandatory in commercial items contracts. The Board had rejected the same argument in its original decision, which found that (i) the contracts at issue were both “for the 'construction, alteration, or repair of any public building"' as that phrase is defined in the Miller Act; and (ii) the Miller Act applies to construction contracts and requires the inclusion of FAR 52.228-15 in such contracts, even when those contracts are solicited as commercial items." The Board explained that it saw no reason to abandon that holding merely because the Army elected to use commercial items procurement procedures to contract for the construction of these buildings. In addition, it noted that FAR 12.301, by its terms, does not preclude the extant incorporation of FAR 52.228-15 into commercial items contracts. Instead, FAR 12.30l(a) states that commercial items contracts "shall, to the maximum extent practicable, include only” the specified clauses. It does not expressly prohibit the inclusion of FAR 52.228-15 in commercial item contracts. The Board concluded that its previous conclusion that the contracts must include FAR 52.228-15 was correct and declined to change it.
Finally, litigants before the ASBCA need to remember that “[a] motion for reconsideration is not the place to present arguments previously made and rejected.” Absent good reason, the Board does not allow litigants the opportunity to take a 'second bite at the apple' or to advance arguments that properly should have been presented in an earlier proceeding. Unless you’ve got a new argument, or new basis to revisit the original argument, your motion for reconsideration is not likely to be successful.
Government contractors should bear these points in mind when analyzing their obligations under construction contracts – even when those contracts are for commercial items. FAR 52.228-15 and its Miller Act bonding requirements will be read into federal construction contracts by operation of the Christian Doctrine. Neither the Faerber Electric decision not FAR 12.301 provides a valid basis to argue otherwise. And in any event, when appearing before the Board, attempting to simply re-litigate arguments previously raised and rejected in the matter is a losing strategy.
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