K-Con, Inc. v. Sec’y of the Army, 2018 U.S. App. LEXIS 31196 (Fed. Cir., November 5, 2018)
In September 2013 K-Con, Inc. (“K-Con”) entered into two contracts with the government to supply and construct pre-engineered metal buildings for a laundry facility and a communications equipment shelter. The government issued both contracts using Standard Form 1449, entitled Solicitation/Contract/Order for Commercial Items. The contracts’ terms did not contain any requirement to provide a performance or payment bond. Nor did they include FAR 52.228-15, which requires performance and payment bonds on construction contracts.
In October 2013 the government directed K-Con to supply performance and payment bonds before a notice to proceed could be issued. K-Con initially refused but ultimately provided the bonds two years later. The contracts were then adjusted to add the cost of the bonds.
K-Con submitted a claim under each contract for increases in costs for the two year delay, for a total value of $116,336.56. The Contracting Officer denied the claim on the basis that the agreements were construction contracts, for which performance and payment bonds were mandatory pursuant to FAR 52.228-15, and that that provision was incorporated into the contracts pursuant to the Christian doctrine under which a court may insert a clause into a government contract by operation of law if that clause is required under applicable federal regulations. G.L. Christian & Associates v. Unites States, 312 F.2d 418 (Ct. Cl. 1963). K-Con appealed to the Armed Services Board, which affirmed the denial of the claims. K-Con then appealed to the United States Court of Appeals for the Federal Circuit.
Continue Reading Federal Circuit, Citing the Christian Doctrine, Holds That Performance and Payment Bonds Are Required for All Construction Contracts, Even When the Bonding Requirement Is Not Expressly Stated in the Contract