Opinion ID: 209692
Heading Depth: 1
Heading Rank: 7

Heading: Reformation Was Proper

Text: The Government also argues that even if the Nonreconciliation Regulation is invalid, reformation is an improper remedy here. We reject that argument. Where a contract provision is based upon a regulation, and the regulation is deemed to be invalid, reformation is appropriate. See LaBarge Products, Inc. v. West, 46 F.3d 1547, 1552 (Fed.Cir.1995) (holding that reformation was appropriate when a contract has been written in violation of a law or regulation enacted for the benefit of prospective contractors). In LaBarge, we also cited to our decision in Beta Systems, Inc. v. United States, 838 F.2d 1179 (Fed.Cir.1988). We explained the Beta Systems court as having held that if the government violated applicable regulations in setting economic index incorporated into contract, `the government cannot, by law, benefit from it' and contract must be reformed. LaBarge, 46 F.3d at 1552 (quoting Beta Sys., 838 F.2d at 1185). We regard as frivolous the Government's attempt to sustain the regulation on the grounds that it was consented to by a contract that was signed by the carriers. The Nonreconciliation Regulation was non-negotiable. If anything is to be derived from the contract provision, it is an inference that OPM itself had profound doubts about the validity of the regulation.