by Chief Judge Loren A. Smith

It is indeed an honor for me to give this talk. First, because I have great respect and admiration for my friend Alan Peterson. He has done much for the quality of government contract law practice and much for the success of our court’s judicial conferences. A second reason for my enthusiasm is the leadership of this Section. I have worked with every chair of this Section, and the incomparable Marilyn Neforas, since I became Chief Judge of the United States Court of Federal Claims at the beginning of 1986. They have been, and continue to be, friends, respected colleagues, and exemplars of what is best in our system of liberty under law.

The current chairs, Marcia Madsen, who is outgoing, and David Churchill, who is incoming, typify that relationship. Both have not only worked with the court through the Section, but have also actively worked on task forces and the court’s Advisory Council, along with attorneys for the United States and from the other sections of the private bar, to improve the administration of justice at the court.

Lastly, I am so honored to be giving this lecture because of the deep feelings I have for this Section. It has meant a lot to me personally. My background is not in government contract law. As a judge on a court with a wide-ranging jurisdiction covering every imaginable type of case, including criminal issues in our military personnel jurisdiction, and tort circumstances in several of our jurisdictions, as well as general constitutional questions under our takings jurisdiction, I do not get much exposure to the large and important trends affecting government contract law.

As a judge I often do not get to see the forest,–and often not even specific trees. Instead, each case focuses on the narrowest laser-like slice of a particular branch, often dissecting what is the functional equivalent of an individual leaf.

This Section has filled this gap in my understanding. It has filled it not with a narrow, factional view, but with a set of broad concepts and an appreciation of competing goals and purposes. This Section is truly a place where the spirit of government contract law resides.

The Section has also reinforced in me an idea that I have long held. That idea is that the court is a larger institution than just the judges. It is made up of at least two sides: the bench and the bar. The institution only functions if both do their jobs and if they work together. Whether you think of the two as an extended family, as I do, or as a professional institution, the reality is that bench and bar form a real community. This community is an essential element in the delivery of justice.

I would be remiss if I did not mention one other matter. This Section gave me an outpouring of love and support when the most terrible thing that can happen to a parent occurred at the beginning of 1997. The visits, calls, and letters will never be forgotten. They helped my wife and me get through a horrendous period. When Harry Truman said that if you need a friend in Washington, get a dog, it is clear that he never had the privilege of knowing the members of this Section.

Now that I have told you why I am honored to be giving this talk I feel obliged to provide some insights that may convince you that you have not wasted your invitation. Being somewhat civilized, for a judge, at least, I must do this task in about 30 minutes or less. While trials last somewhat longer than this, I do not want it said that listening to Judge Smith is a real trial.

I thought I might discharge my duties by talking about three broad questions. One is the role of the United States Court of Federal Claims in our legal system; two is the role of the judge in our society; and three is the role of government contract law. Now these are all quite fundamental ideas. I do not want to suggest that any of you has not thought about them before. However, all of us spend most of our days working on specific problems. For example, a lawyer never litigates whether a contract was breached. The lawyer litigates whether the United States, at a specific point in time, by a specific action, breached a specific contractual duty that it owed to the Acme Corporation concerning a certain order of widgets (whatever they are).

Because of this fact of our legal lives we rarely have an opportunity to focus on the broader questions, at least about the law, and that is something we need to do periodically–hence, my three broad questions.

The first question asks, what is the role of the United States Court of Federal Claims? Unlike other judicial fora, it is neither specialized nor general. Over a third of the docket is government contract litigation. But the other two-thirds is made up of very different kinds of cases. About one third is tax litigation. The final third is made up of Fifth Amendment takings claims, patent infringement suits, military and civilian pay cases, Indian tribal claims, congressional reference cases, vaccine appeals, and a host of other statutory-based claims and administrative board reviews. In the past 18 months, 49 postaward protest cases have become a regular part of the court’s diet.

What then can be said about a role of the court other than to decide lots of different kinds of cases?

My approach here is Holmesian. He was a great thinker–at least as chronicled by Dr. Watson–when he was not using cocaine. Holmes, like any good detective, looked at diverse bits of evidence and pieced together a coherent theory. In the case of the United States Court of Federal Claims, my theory is based upon the fact that all the cases involve the federal government as one of the parties. (At this point you are thinking, "he’d better not give up his day job for detective work!" However, bear with me a while longer.) The inference from this fact is simple. Every case has a public aspect. In each case the public interest is at issue. It is at issue in every case because when the government and the individual clash over some specific matter, the two vital elements that make up the public interest come together and must be harmonized.

One element is the fundamental rights of the citizen or other private litigant. These fundamental rights may either be life, liberty or property, or an amalgam of all. The other element is the proper scope of government power. It can be a law affecting savings and loan institutions, the ability to arrest an individual, or the right to impose a tax. The public interest can only be understood as the proper balance of these two elements. Otherwise, it becomes a partisan or factional slogan. The public interest must be defined as the proper balance between private rights and governmental power.

This balance is created not by the judge, but by the Constitution and the laws that the judge is duty- and oath-bound to interpret fairly and honestly. The spirit of the United States Court of Federal Claims, its goal in an Aristotelian sense, is to make real the public interest, the proper balance of individual rights and legitimate government power.

Effecting the proper balance is achieved by deciding cases according to rational and articulated principles based upon logic and historically predictable precedents. The government should only win when it has the law on its side and never because the court feels some duty to preserve the fisc or encourage sovereign actions in the public good. Where the law’s answer does not clearly decide a case, and this is somewhat true in every significant case, the court must fill in the mostly quite narrow interstices with logic. (This is how the law slowly grows in the common-law tradition.)

The court must be careful to preserve the rule of law by filling the gap in such a way that both legitimate government powers and private rights are fully recognized. The gap filling must be honest, cognizant of the integrity of democratic choice by the legislature, and equally sensitive to the rights of individuals. If the gap is too big the court must decline to make the choice but instead honestly identify the gap left by the legislature so that democratic choice can operate.

Thus, the role of the United States Court of Federal Claims is no less than the rule of law. Only when the government is bound, like the citizen, by the law, can a society be called truly free. Law and liberty are not opposites, as some have argued, existing in a kind of perpetual tension. Rather, liberty can only exist within the context of a rationally based, objectively enforced, system of rules and rights. Without such a regime, one has not freedom, but the rule of whim and desire–the whim and desire of those who possess power and force.

At this point I should note one important concept. The rule of law is very different from the positive law. The positive law, statutes or regulations or government commandments, have existed in every society from a time before the written word. They are the commands of a sovereign. What has made our nation, and a few others like Canada, unique is that the rule of law determines the public interest rather than the unilateral command of the sovereign. In a very real sense the idea of contract is at the heart of our nation. Citizen, as well as sovereign, has a legitimate role in interpreting and resolving every legal dispute.

In no legal case does the mere will of the government prevail. The government, like the citizen, must convince the judge of the merits of its position in order to win the legal outcome that it is seeking. This is the rule of law. Making this rule occur is the role of all courts. It is the role of the United States Court of Federal Claims in every case. It is at issue in every government contract dispute that comes before the court, even though this is not generally what the parties focus on or even think about.

This is probably a good place to talk about the role of the judge on the United States Court of Federal Claims. After all, the judge is the point at which the rubber meets the road of the rule of law, to use a tired metaphor.

When the judge makes a principled decision, the rule of law moves from an interesting idea into the real world. When the judge awards money or issues injunctive relief, concrete changes occur in the external world. Contracts only become real when some external force causes people to honor them or imposes consequences for their breach. In most cases, of course, people act voluntarily to honor the promises that they have made. Many would fulfill their promises either for honor or because the promises are mutually beneficial, regardless of the law of contracts. However, the reality of most agreements is created by the potential for enforcement in the courts. This is particularly true of government contracts because government is a legal entity, bound by neither honor nor affection. Its pattern of behavior is by necessity a product of the vitality of the rule of law.

The judge is thus a critical element in the reality of government contracts. Without some judge to make the government pay damages when a contract is breached or order equitable relief when a procurement violates a legal norm, there would be no government contract law. There wouldn’t really be government contracts. All that would exist would be a pattern of government promises, and a pattern of when they were honored and when they were not. The existence of the judge changes all that.

Thus, what can we say about the role of the judge in general and the United States Court of Federal Claims judge in particular? First, the role is to give reality to the rule of law. This requires logical analysis, an empathetic response to both sides so that the judge can understand each side’s best case, and above all, a deep commitment to the rule of law. This commitment is reflected in an appreciation of the facts and circumstances of each and every case, as well as an equal concern for predictability and the logical consistency of the progression of cases through time.

The good judge must avoid becoming a soft touch for every appealing real-world harm, whether legal injury or not. The good judge must equally avoid applying rigid and arbitrary formulas that attempt to put all cases in the same categories regardless of fundamental differences. This is what judgment is about. Here I want to shift to an essential element of importance not only in the role of judge, but in the role of lawyer.

There really is only one trait that the society is seeking in its judges and the client is seeking in his or her lawyer: That trait is good judgment. A good judge or good lawyer is a person of good judgment, and without good judgment you cannot be a good judge or a good lawyer.

What about things like legal skills, statutory knowledge, ethical rules, and all the other attributes of the legal profession? Of course, you need these elements, but they are your tools. Just as a good carpenter has a fine set of chisels, a good hammer, and a sharp saw, you would have use for these legal "tools" as a judge or lawyer. But just as giving the best hammer in the world to someone who is not a carpenter will not make that person a good carpenter, the best legal knowledge or other legal tools will not make a person of poor judgment into a good judge or a good lawyer.

And likewise, a person of good judgment, like an expert carpenter, can produce some fine work with pretty rudimentary tools. Abraham Lincoln is perhaps too easy an example, but he illustrates how a person with relatively simple resources can be a great lawyer because he was a person of great judgment.

James Madison had no Westlaw as he worked on drafts of the Constitution. John Marshall had little precedent when he crafted Marbury v. Madison. In fact, few of the great moments in the history of the law involve anything other than the wise or heroic judgment of great human beings. And these are moral judgments about choices coming from people of good character, as an expression of that character.

Law is not an abstract vision of truth. It is not a social science whereby knowledge supposedly gives power. Far less is it a mere forensic ability or a reflection of quick thinking on your feet. Law is about good judgment, and in great judges and lawyers, great judgment.

Now good judgment is not only a trait that we admire in our profession. It has long characterized what we look for in good teachers, political leaders, spiritual advisors, physicians, and friends. But it falls to our profession to dispense this trait when it comes to the way people live their lives in civil society. We are the guardians of the rule of law.

How does one become a person of good judgment? Judgment is an attribute of character. To be a person of good judgment you must be a person of good character. The two cannot be separated. Good character requires the ability to understand, if not agree, with the values and views of others. This is a kind of sympathy or empathy. It also requires integrity, the ability not to be improperly influenced by outside forces. It can be seen as a reasonably fair and objective perspective from which to see and act in the world. This combination of sometimes contradictory traits is directly rooted in what the Judeo-Christian and other religious traditions have described as virtue.

You cannot have good judgment and be obsessed with money or power. Bigotry, sloppy work habits, failure to follow through, dishonesty, laziness, bad disposition, and any manner of other bad traits all cloud and distort judgment. The classical virtues not only may save your soul, but they also are the only entrances to good judgment. To have good judgment means to be a good person; the two attributes are merely different aspects of the same thing. Your relationships with your family, friends, and colleagues are the very soil out of which these necessary virtues spring. They are a product of the choices each of us makes in our life.

Thus, the role of the judge is to be a person of character and uphold the rule of law. Because I was invited under the pretext of talking about government contract law, I should also say something about it. I did promise this point as my third and last idea!

The role of government contract law is twofold. First, it is designed to benefit the taxpayers, and hence the government, by making government procurement both more fair and more efficient. This is so in several ways. If contractors can adjudicate their claims in an honest and fair system, they will be more willing to deal with the government at a lower price. Also, if the government acts honestly and rationally, the government and the taxpayers will get the best deal for their money and needs. Finally, a fair and efficient system will maximize public accountability and allow for more rational planning for future needs. The second basic purpose is to benefit those who do business with the government. This is partially based on basic fairness or justice. People, whether citizens, foreigners, or even contractors, should be treated fairly. It is also based on sound business practice. It is critical to deal with vendors, suppliers, and customers properly. Otherwise, you may encourage them to treat you badly.

Is government contract law today living up to its high role? Is it truly a vital component of the overall rule of law? First, we should admit that no human creation ever fully lives up to its role. Perfection is limited to a realm the Lord has put elsewhere. By the standards of this world, however, how is it doing? I submit, fairly well.

Almost all the work actually done by judges, whether of our court, the boards of contract appeals, the Federal Circuit or even the Supreme Court, is at the level of the specific and concrete. Our system of case law, with a few statutory inclusions, moves very slowly in its evolutionary development. Practices change slowly. Old precedents, to the benefit of predictability and certainty, are modified slowly. But three developments reinforce my optimistic view, beyond my naturally optimistic nature.

First, there was the certification debate. It took many cases and ultimately legislation, but an irrational, highly unfair, and wasteful procedure and set of precedents were corrected through the efforts of the bar, the court, scholars, the Administrative Conference of the United States, and finally, the Attorney General of the United States. It took longer than we would like but it occurred on a time scale short in relation to the span of the development of government contract law.

Second of my positives is the reform of the bid protest system. Here a different set of players reformed a system that had no discernible rationale. It had grown up in response to legitimate pressures, but in a highly inefficient and unplanned manner. Although this reform has challenged our court, the new jurisdictional structure appears to do justice more thoroughly to both the legitimate needs of the government and the legitimate rights of bidders and contractors. It appears to be serving the public interest more thoroughly than the system it replaced. Thus, it appears to be furthering the role of government contract law. Only time will tell if this is a correct assessment.

The third development is the adjudication of the Winstar cases up to the Supreme Court and beyond. In a claim, unprecedented because of the potential liability to the federal Treasury, the Supreme Court enforced a contract when many felt breach was highly expedient. In past years of this century the integrity of that position would not have prevailed, largely because of a discounting of the rights of contract over and against the claims of sovereign power. The result in Winstar represents real progress.

A final aspect of these cases is the enormous efforts that the parties in the 120-plus large cases have made in modern case management. With tens of millions of dollars spent in litigation costs to date, a rational and innovative structure has been created by the parties working with the court. This effort has the potential of saving much more than has been spent in litigation costs to resolve disputes that the press has put in the tens of billions of dollars. It has allocated a scarce decisional resource with a minimum of stress on the almost 3,000 other cases at the court. This first mass contract litigation is neither pretty nor fun. It is necessary, however, if the rule of law is to mean something in the everyday world. It is also a success story for the role being played by government contract law.