## Facts

- The Corps of Engineers awarded G.L. Christian & Associates a Capehart Act contract to build approximately 2,000 military housing units at Fort Polk, Louisiana, for about $32.9 million.
- After award, Christian arranged for other construction companies to perform much of the work through subcontracting/related arrangements, shifting much of the construction risk away from Christian’s joint venture.
- In 1958 the Army decided to deactivate Fort Polk and, on February 5, 1958, terminated the contract.
- The Government sought to treat the termination as a “termination for convenience,” limiting compensation to incurred costs, settlement expenses, and profit on performed work.
- The written contract, however, did not include the standard termination-for-convenience clause required by Armed Services Procurement Regulations (ASPR).
- Christian sued in the United States Court of Claims seeking breach damages exceeding $5 million, including anticipated profits on unperformed work, arguing the omission made the termination unauthorized.

## Issues

1. Whether a mandatory ASPR termination-for-convenience clause is incorporated into a federal contract by operation of law when omitted from the written contract.
2. If the clause is incorporated, whether the Government’s cancellation due to base deactivation is an authorized termination rather than a breach.
3. Whether the contractor may recover anticipated profits on unperformed work, or is limited to the recovery formula under the termination-for-convenience clause.

## Decision

- The Court of Claims held that the mandatory ASPR termination-for-convenience clause was incorporated into the contract by operation of law despite its omission.
- Because the clause was deemed part of the contract, the Government’s termination was authorized and did not constitute a common-law breach.
- The court rejected recovery of anticipated profits on unperformed work and limited recovery to allowable amounts under the termination-for-convenience framework, adjusting specific cost and profit items accordingly.

## Legal Principles

- Mandatory government procurement clauses required by regulation may be read into a federal contract by operation of law, even if the contract document omits them.
- Incorporation by law is most apt where the omitted clause reflects an important public procurement policy and is required for the contract type.
- A valid termination for convenience limits the contractor’s remedy to allowable termination costs, reasonable settlement expenses, and profit on work performed, and bars anticipated profits on unperformed work.
- Omission of a required clause is treated as a drafting/administrative error, not a waiver of regulatory protections embedded in federal procurement.

## Conclusion

The court treated the ASPR termination-for-convenience clause as part of the contract by operation of law, making the Government’s termination lawful and restricting the contractor’s recovery to termination costs and profit on completed work, not lost profits for work never performed.


G.L. Christian & Assocs. v. United States, 312 F.2d 418 (Ct. Cl. 1963)