by the reasoning in Strong v. American Fence Const. Co., 245 N.Y. 48, 156 N.E. 92. There the contractor promised the Government that it would furnish bonds. However, it failed to do so. The court of Appeals for New York held not that the plaintiffs had a right to sue upon a bond which had not been given, the contract having been broken in that respect, but that they were entitled to sue the contractor for breach of contract to supply the bond. In other words, the promise having been made for the benefit of the material men, under the venerable doctrine of Lawrence v. Fox, 20 N.Y. 268, the beneficiaries had a right to sue as persons for whose benefit the promise had been made. But that is not our case. Here, no promise was broken; no tort committed; no implied agreement on the part of defendant is justified.
Id. at 731. This should probably be characterized as dictum, but it could be considered an alternative holding. Even if a holding, it should be viewed in light of the fact that the prime contractor in Gallaher was expressly told it did not have to provide bonds. Under those circumstances, it cannot be considered to have broken a promise as did the contractor in Strong which had expressly promised in the contract to obtain a payment bond. Also, Gallaher does not consider the argument made in the present case that the requirements of the Miller Act are incorporated into government contracts by operation of law.
Ortlip is similar to Gallaher. Again, the government agency had expressly waived the bond requirement and the primary holding of the case was that the subcontractor's claim must fail because a bond was not required. 223 F. Supp. at 894. Quoting the above passage from Gallaher, the court indicated that alternatively the subcontractor's claim would fail because there was no contractual promise. Ortlip, 223 F. Supp. at 894-95. It is unclear whether this should be considered dictum or an alternative holding. In any event, Ortlip would not be binding on this court and Ortlip does not consider whether the statutory requirement should be considered to be incorporated into the contract by operation of law.
The existing precedents are understood as holding that, absent a bond being obtained, there is no claim directly under the statute. There can, however, still be a common law third-party beneficiary claim if the federal agency has not expressly waived the bond requirement and a promise to provide a bond exists. The cases, though, do not discuss whether the requirements of the Miller Act should be considered to be incorporated by operation of law into every contract exceeding $ 25,000 "for the construction, alteration, or repair of any public building or public work of the United States." If, as plaintiffs contend, the bond requirements are automatically incorporated into every such federal contract, then the contract between the FAA and Raytheon did indeed contain a promise to provide a bond that was for the benefit of plaintiffs.
The ordinary rule is that statutory provisions are deemed to be incorporated into contracts. Norfolk & Western Ry. v. American Train Dispatchers Association, 111 S. Ct. 1156, 1164, 113 L. Ed. 2d 95 (1991); 2 Tudor City Place Associates v. 2 Tudor City Tenants, 924 F.2d 1247, 1254 (2d Cir.), cert. denied, 112 S. Ct. 83, 116 L. Ed. 2d 56 (1991); G.L. Christian & Associates v. United States, 160 Ct. Cl. 58, 320 F.2d 345, 350-51, cert. denied, 375 U.S. 954, 11 L. Ed. 2d 314, 84 S. Ct. 444 (1963); National Fidelity Life Insurance Co. v. Karaganis, 811 F.2d 357, 362 (7th Cir. 1987) (Illinois law); Western Waterproofing Co. v. Springfield Housing Authority, 669 F. Supp. 901, 903-04 (N.D. Ill. 1987) (same).
In Universities Research Association, Inc. v. Coutu, 450 U.S. 754, 67 L. Ed. 2d 662, 101 S. Ct. 1451 (1981), the Supreme Court was faced with the question of whether a private right of action existed for employees to bring suits to enforce the prevailing wages provision of the Davis-Bacon Act, 40 U.S.C. §§ 276a et seq. In discussing whether a private right of action existed under that statute, the Supreme Court considered whether the provisions of the Davis-Bacon Act should be considered to be incorporated by operation of law into contracts covered by that Act. The Supreme Court held that they were not. To hold otherwise would "ignore[ ] the fact that the Act does not define the terms 'construction, alteration and/or repair,' 'public buildings or public works,' and 'mechanics and/or laborers.' A number of commentators have noted the difficulty of determining whether particular work constitutes 'construction' within the meaning of the Act, . . . . Like other contracting agencies, [the Atomic Energy Commission] and its successors have developed detailed guidelines for determining whether particular work is covered by the Act." Id. at 783-84. The Court distinguished the Davis-Bacon Act from statutes that are self-implementing. Id. at 784 n.38 (distinguishing G.L. Christian, supra).
The Davis-Bacon Act provides that the advertised specifications for federal contracts covered by that Act shall contain a prevailing wage requirement and every contract entered into based on such specifications shall contain a prevailing wages stipulation. 40 U.S.C. § 276a(a); Coutu, 450 U.S. at 756-57. Similar to the Davis-Bacon Act, the Miller Act's provisions as to what contracts are covered contain undefined terms such as "construction, alteration, or repair," and "public building or public work." 40 U.S.C. § 270a(a). Also similarly to the Davis-Bacon Act, the Miller Act provides that before awarding a contract covered by the Act, the bidder shall furnish the required bonds, which shall become binding upon the award of the contract to that bidder. 40 U.S.C. § 270a(a). Like the Davis-Bacon Act, the Miller Act is not self-implementing; under the statute, its requirements are not incorporated into the contract until the bond is provided. Absent an express contractual provision or possibly an express bidding requirement, the only promise to provide the bond is the act of furnishing a bond to the government prior to the award of the contract, not the implicit incorporation of the statutory provision into any federal contract covered by the Act.
No promise to provide a payment bond was contained in the Raytheon-FAA contract absent an express provision to that effect. Since no such provision was in the contract, plaintiffs cannot succeed on their P 37 third-party beneficiary claim.
Plaintiffs make no argument in support of their P 36 estoppel claim. Lacking any supporting argument, that subclaim will also be dismissed.
Without stating any particular cause of action, plaintiffs generally argue that a sub-subcontractor should be able to rely on assuming the parties above it have obtained the statutorily required bonds and that any loss resulting from failure to obtain the bonds should fall on the party that failed to comply with the law. But knowing that there can be no liens on federal property, sub-subcontractors can readily protect themselves by requiring proof of the existence of a bond (or at least by inquiring as to whether a bond has been expressly required, which itself would provide a third-party beneficiary cause of action). Also, the sub-subcontractor is not necessarily left with no recourse whatsoever. The sub-subcontractor may still have a common law claim existing independent of the Miller Act.
IT IS THEREFORE ORDERED that defendant Raytheon Service Company's motion for summary judgment is granted in part and denied in part. Count VII of plaintiff's complaint is dismissed with prejudice. The motion for summary judgment is denied as to Counts VIII and IX.
William T. Hart
UNITED STATES DISTRICT JUDGE
Dated: MAY 1, 1992