When interpreting the terms of a government contract, contractors should generally look for the “plain-meaning” of the contract, assigning words their ordinary meaning. However, an equally important rule of federal contract interpretation requires a “whole-text” interpretation of the contract within the context of its structure and the logical relation of its various parts. Pursuant to this rule and the interpretative principles derived from and related to it, when interpreting a federal contract, the whole contract should be taken together such that none of its parts are rendered superfluous or ineffective. Put another way, in determining the meaning the parties intended to assign to specific contract terms or clauses, contractors should read the contract as a whole and within the entire context of the procurement. Furthermore, the meaning assigned by a party to a particular clause or term must be in harmony with the other parts of the contract. Contractors should also be mindful of their duty to enquire about patent ambiguities.
Harmonious Reading and Conflict Avoidance
In reading a federal contract as a whole, contractors should interpret the contract provisions in harmony with each other. That is, provisions should be interpreted in a manner that renders them compatible with each other rather than in contradiction. For instance, in a 2013 case before the Court of Federal Claims (COFC), the contractor attempted to argue that the government was required to exercise all option years in an indefinite delivery/indefinite quantity (IDIQ) contract for supplying leased aircrafts with one base and seven option years. The contractor primarily based its argument on the fact that the contract referred to itself as a “long-term” contract on at least three separate occasions. However, in applying the “whole-text” cannon, the Court disagreed with the contractor’s interpretation. The Court explained that the contractor’s interpretation of “long-term” would convert the word “option” into its opposite and make it an obligation. Instead, the Court harmoniously interpreted “long-term” as merely describing the contract with an assumption that the government would exercise the option years.
Avoiding Interpretations that Render Terms Superfluous
In reading a federal contract as a whole, contractors should typically avoid interpretations that make certain terms, clauses, or portions of the contract superfluous or ineffective. Such an interpretation ensures that the entirety of the contract is afforded its intended meaning and purpose. A Federal Circuit case from 1985 involving a construction contract with patently ambiguous rebar requirements provides an example of the application of this interpretive principle. In that case, the contractor suffered increased costs due to the incorrect rebar installation. In seeking an equitable adjustment, the contractor argued that the government had accepted the contractor’s rebar installation method because it had a quality assurance representative on-site responsible for ensuring that the contractor complied with the government’s plans and specifications. However, clause 10 of the contract’s general provisions specifically stated that no inspection or test by the government would be construed as implying acceptance of the work. In applying the “whole-text” interpretive cannon, the Court ruled that the contractor’s interpretation could not be accepted as it would render clause 10 of the contract’s general provisions redundant. In rejecting the contractor’s interpretation, the Court adopted an interpretation that gave meaning to clause 10 of the contract rather than rendering it superfluous.
Giving Preference to Specific over General Contractual Terms
Despite reading the contract as a whole and attempting to avoid conflict between its various terms, contractors may still find inconsistencies between certain terms or provisions. In such situations, when the different meanings of the terms cannot be reconciled with each other, contractors should accept specifically drafted contractual terms and provisions over general ones. In the COFC case involving the supply of leased aircrafts described above, in addition to pointing out its obligation to read the contract as a whole, the Court also rejected the contractor’s interpretation by explaining that the general description of the contract as “long-term” could not be favored over the specific option provisions. In that case, requiring a mandatory exercise of option years in the absence of other limiting language would require giving the contract’s general description of itself as a “long-term” contract preference over the government’s specifically defined right to exercise its options. In quoting a previous decision by the Federal Circuit, the COFC elaborated that when general and specific terms are in apparent conflict, the terms and provisions of the contract that relate specifically to a particular matter are preferred over the general language.
A federal government contract contains many interdependent parts that provide it context and meaning. In case of ambiguities, various interpretative cannons and principles may be employed to determine the parties’ intent and give meaning to the contract. However, contractors should remember that they have a duty to request clarification from the government regarding patent ambiguities. While the “plain-meaning” interpretation of the contract language is arguably the primary method of contract interpretation, an equally important interpretative principle requires that the text of a federal contract be read as a whole. Several other principles of contract interpretation are directly derived from the “whole-text” interpretation principle and may be employed in conjunction with it. Some derived and related principles include harmonious reading and conflict avoidance, avoiding interpretations that render terms superfluous, and giving preference to specific over general terms. While contractors should always seek early clarification from the government regarding perceived ambiguities, by understanding the “whole-text” contract interpretation and its related framework of interpretive principles, contractors can be better positioned to review solicitation and contract documents and materials at various stages of the federal acquisition lifecycle.
This Federal Procurement Insight is provided as a general summary of the applicable law in the practice area and does not constitute legal advice. Contractors wishing to learn more are encouraged to consult the TILLIT LAW PLLC Client Portal or Contact Us to determine how the law would apply in a specific situation.
