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