Justice Gorsuch Weighs In on Contracts.

AuthorFenster, Herb
PositionGovernment Contracting Insights

* When presented with ambiguous terms in a government contract, courts have debated the best way to interpret those terms. Supreme Court Justice Neil Gorsuch recently hinted at where he stands on the issue.

Some courts--most importantly those tasked with deciding cases involving government procurement contracts--resolve ambiguities in a manner that generally favors government contractors. Yet other courts defer to the government when these disputes arise. In a statement this October regarding Scenic America, Inc. v. Dept. of Transportation, Gorsuch suggested that these latter courts are interpreting contracts incorrectly.

The Federal Circuit, which directs the manner that procurement contracts are interpreted at the boards of contract appeals and the Court of Federal Claims, has long held that commercial contracting principles apply to the interpretation of government contracts.

In particular, the Federal Circuit applies the rule of "contra proferentem," which means that ambiguities in a government contract are resolved against the government. If a phrase in a contract can be equally understood to have two different meanings, the court will generally choose the meaning that is advocated by the government contractor.

The Federal Circuit employs the doctrine on the grounds that the government is the drafter of the contract. As the Court of Claims--the Federal Circuit's predecessor--explained in the seminal 1963 case WPC Enterprises Inc. v. United States: "The government, as the author, has to shoulder the major task of seeing that within the zone of reasonableness the words of the agreement communicate the proper notion, as well as the main risk of a failure to carry that responsibility." If the government is writing the contract, then the government can make sure that the terms of the contract are clear.

Indeed, the Federal Circuit frequently declines to provide the government disproportionately favorable treatment when resolving contractual disputes. In Helene Curtis Industries, Inc. v. United States, for example, the Court of Claims held that "the Government--where the balance of knowledge is so clearly on its side--can no more betray a contractor into a ruinous course of action by silence than by the written or spoken word." And the Federal Circuit holds that the government is obligated to honor contracts even after the governing regulations change.

In contrast to the Federal Circuit's approach, however, some courts have opted to defer to...

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