Public Construction Contracting

• Author: Carol J. Patterson - Ross J. Altman - Stephen A. Hess - Allen Overcash
• Pages: 759-807

CHAPTER

759

Public contracting is an important segment of the construction industry. It pro-

vides an enormous amount of money for construction activities, either directly

via public contracts or indirectly by funding private contracts to which many

public contracting rules apply. Moreover, many of the standard practices and

clauses that are now endemic to construction projects (changes, differing site

conditions, terminations for convenience, etc.) began with public, and espe-

cially federal, contracting.

In most of its workings, public contracting is now very similar to private

contracting, primarily because so many of the tenets of public contracting have

been adopted in private contracting. Indeed, most of this book can be applied

to public contracting and many chapters set out rules and doctrines that apply

specically to government contacts. Still, government contracting—and espe-

cially federal government contracting—includes unique rules that distinguish

it from private contracting and the topic of government contracting deserves

special attention. This chapter examines seven of the most important aspects

Public Construction

Contracting

JAMES F. NAGLE

23

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CONSTRUCTION LAW

760

of government contracting that distinguish it from private contracting. They

are listed here and described in more detail in the following sections.

1. Statutory and regulatory rules. Public contracts are subject to exten-

sive statutory and regulatory requirements and guidance that the con-

tractor ignores at its peril.

2. Criminal law and fraud. Contractors who deal with the government

deal with a sovereign whose responsibility includes the protection of

all its subjects. As a consequence, practices that are commonplace in

private contracting can be prohibited—and even criminal—in public

contracting.

3. Sovereign immunity. The government, unlike a private owner, has

sovereign immunity. Specically, contractors can only sue the public

owner to the extent that the public owner has waived its sovereign

immunity.

4. Sovereign acts. Because the government is a sovereign and any lia-

bility affects the public sc, the government is entitled to special

defenses. As one example, there are often matters in which there is

no doubt that the public owner, through its agents, has interfered with

the contractor’s performance. However, if that public agent was acting

in its sovereign, as opposed to its contractual, capacity, the govern-

ment may be entitled to avail itself of what is called the “Sovereign

Act” defense.

5. The actual authority requirement. In private contracting, an owner

may be bound when its representatives act with apparent authority.

The federal government, on the other hand, is only bound when its

representatives act with actual authority.

6. Socioeconomic requirements. Private owners are typically concerned

with three items: the price, the quality, and the schedule. In public

contracting, there can be a host of other concerns that give rise to

special questions not relevant to most private contracts. Has the con-

tractor agreed to pay its workers in accordance with prevailing wage

determinations? Has the contractor agreed to use domestic components

to comply with the Buy American Act? Is the contractor a member of

a socioeconomic class (small business, small disadvantaged business,

etc.) or has it agreed to subcontract heavily to members of that class?

7. Protests and disputes. Public construction, especially federal, has

unique dispute procedures, both for protesting contract awards and for

prosecuting contract claims.

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Public Construction Contracting 761

.01 STATUTORY ANd REGULATORY RULES1

This section focuses on federal contracting as the prime example of a heavily

regulated system, but other public entities have similar, though less extensive,

regimes.

Federal contracts are normally subject only to federal procurement law,

comprised of federal contracting statutes and regulations, as interpreted by the

U.S. Court of Appeals for the Federal Circuit, the U.S. Court of Federal Claims,

the Boards of Contract Appeals, and the U.S. Comptroller General.2 Sometimes

it will be necessary to review state law, such as those laws regarding warran-

ties under the state’s Uniform Commercial Code.

Federal procurement law also includes the regulations set forth in the

Federal Acquisition Regulation (FAR) and the agency supplements, both of

which are in Title48 of the Code of Federal Regulations (CFR). For example,

chapter2 of title 48 is the Defense Federal Acquisition Regulatory Supplement

(DFARS), and chapter 9 is the Department of Energy Acquisition Regulation

(DEAR). Actually, title 48 in its entirety is often referred to as the FARS—the

Federal Acquisition Regulatory System. The FAR and its supplements (the size

of a large city phone book) implement numerous statutes that apply to federal

procurements, such as the Truthful Cost or Pricing Data Act,3 Competition in

Contracting Act,4 and the Buy American Act.5

In the face of this intricate network of regulations, readers should be aware

of a doctrine in federal contracting known as the Christian doctrine.6 The Chris-

1. The following section relies heavily on my chapter, Introduction, in

federal GOVernMent

cOnstructiOn cOntracts, 2d ed

. (Michael A. Branca, Aaron P. Silberman, John S. Vento, Adrian L.

Bastianelli III, Andrew D. Ness & Joseph D. West, eds., ABA Press 2010).

2. See James F. Nagle & Bryan A. Kelley, Exploring the Federal Forums for Government Con-

tracts, 2

J. aM. c. cOnstr. law

. 189 (2008), for details on these forums and their predecessors.

The clause used in the Sulzer case was as follows: Clause I-79 of the Lockheed-Sulzer Bingham

subcontract states:

This subcontract shall be governed by and construed in accordance with the law of U.S.

Government contracts as set forth by statute and applicable regulations, and decisions by the

appropriate courts and Board of Contract Appeals. To the extent that the law referred to in the

foregoing sentence is not determinative of an issue arising out of the clauses of this subcontract

recourse shall be to the law of the State of California.

3. 10 U.S.C.§2304.

4. 31 U.S.C. §§3551–56; 41 U.S.C. §3306, 3308, 1708, 1705.

5. 41 U.S.C. §§8301–8305.

6. An excellent discussion of the doctrine may be found at K-Con, Inc. v. Secretary of Army,

908 F.3d 719, 724 (Fed. Cir. 2018).

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