G.L. Christian and Associates v. United States

G.L. Christian and Associates (Christian) (plaintiff) entered into a contract with the federal government (defendant), through the Corps of Engineers, to build a military housing project at Fort Polk. The Department of the Army, a branch of the federal government, then decided to deactivate Fort Polk. Because Fort Polk was deactivated, the government terminated the housing-project contract. Christian had only completed 2 percent of the work at the time the government terminated the contract. Christian sued the government for breach of contract, seeking damages for the unearned, anticipated profits Christian expected from the project. The government conceded that Christian was entitled to recover preparation costs, partial-performance costs for the work performed to date, and costs related to the government’s termination of the contract. However, the government opposed Christian’s demand for anticipated-profit damages, arguing that, although the contract did not include a provision expressly authorizing the government to terminate the contract at its convenience, the contract must be read to include the mandatory contract provisions in the Armed Services Procurement Regulations. Under the procurement regulations, all fixed-price government contracts in excess of $1,000 must include a termination clause stating that (1) the government can terminate the contract at any time if termination is in the government’s best interest; and (2) parties to the terminated contract can recover damages for work actually performed but cannot recover unearned anticipated-profits damages.