## Facts

- The University of California, San Francisco (UCSF) entered into a scarce medical specialist services contract with the Department of Veterans Affairs (VA) to provide anesthesiology services at the VA Medical Center in San Francisco.
- UCSF submitted cost and pricing documentation that included substantial administrative research costs and did not properly itemize the cost elements supporting the proposed total contract price.
- The contract, as executed, did not include the standard “price reduction for defective cost or pricing data” clause (commonly associated with the Truth in Negotiations Act (TINA)).
- The contract was renewed through several 90-day extensions, resulting in UCSF receiving compensation totaling about 27% more than the original contract price.
- A VA Inspector General audit concluded the VA had overpaid UCSF, citing (1) the VA’s lack of authority to cover administrative research costs and (2) UCSF’s failure to provide adequate cost and pricing support for the contract price.
- The VA sought to recover the alleged overpayment (reported in secondary summaries as approximately $169,400) on a defective-pricing theory.
- UCSF appealed the government’s claim to the Veterans Affairs Board of Contract Appeals (VABCA) and moved for summary judgment, arguing that the government lacked a contractual basis for a TINA price reduction because the contract omitted the price-reduction clause.
- UCSF also argued that the Christian doctrine did not apply because inclusion of the price-reduction clause was discretionary rather than mandatory.
- The VA opposed the motion, contending that TINA required inclusion of the price-reduction clause and that the clause should be treated as part of the contract as a matter of law.

## Issues

1. Whether TINA required inclusion of a price-reduction for defective cost or pricing data clause in UCSF’s negotiated VA services contract.
2. Whether, despite the clause’s omission from the written contract, the clause could be incorporated into the contract by operation of law under the Christian doctrine, allowing the VA to pursue a defective pricing recovery.

## Decision

- The Board denied UCSF’s motion for summary judgment.
- The Board concluded that the price-reduction clause was required under TINA for this procurement and therefore could be read into the contract under the Christian doctrine even though the parties failed to include it in the signed agreement.
- Because the clause was incorporated as a matter of law, the contract’s omission of the clause did not, by itself, bar the VA from asserting a defective-pricing-based overpayment claim.

## Legal Principles

- Under the Christian doctrine, a mandatory government-contract clause that reflects an important public procurement policy may be incorporated into a federal contract by operation of law even if the clause was omitted from the written instrument.
- When TINA applies and requires certified cost or pricing data, the implementing regime calls for inclusion of a defective-pricing price-reduction clause; omission of that clause does not necessarily defeat the government’s ability to seek a contract price adjustment.
- A contractor cannot obtain summary judgment solely by pointing to the absence of a required defective-pricing clause where the government shows the clause was mandatory and therefore part of the contract as a matter of law.
- Disputes about whether the submitted data was defective and whether any defect caused an overstated price are separate merits questions from whether the contract contains (or is deemed to contain) the price-reduction remedy.

## Conclusion

In *Appeal of University of California, San Francisco*, the VABCA rejected UCSF’s effort to end the case at summary judgment based on the contract’s failure to include the defective-pricing price-reduction clause, holding that TINA required the clause and that it was incorporated into the agreement under the Christian doctrine, permitting the VA’s overpayment claim to proceed.


Appeal of University of California, San Francisco, 1996 WL 681971 (1996)