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Government contractors should take note of the Fifth Circuit’s June 30, 2021 decision in Taylor Energy Co. v. Luttrell, which reaffirmed that contractors can enjoy a broad immunity from third-party liabilities—known as “derivative sovereign immunity,” or “Yearsley immunity.” Yearsley immunity emanates from Yearsley v. W.A. Ross Const. Co., an 80-year-old Supreme Court decision, which established that a contractor is immune when (i) it performed acts pursuant to a valid authorization of Congress and (ii) the contractor did not exceed the scope of that authority.

In Taylor Energy, the court dismissed claims arising out of an oil spill containment project in the Gulf of Mexico. The basic claim in the suit was that the contractor failed to effectively remediate and contain the oil. The Fifth Circuit found that the government: (i) provided direction to the contractor through the statement of work, in the form of “goals” and specific contract deliverables and deadlines; and (ii) periodically met with the contractor and reviewed and approved the work during performance. Based on these core facts, the court held the contractor was immune. The court held that it was irrelevant that the statement of work was “barebones,” and that the contractor—rather than the government—designed certain elements of the remediation effort. Following the Fourth Circuit’s 2018 decision in Cunningham v. GDIT, the Taylor Energy decision is another appellate court victory for contractors in the wake of the Supreme Court reaffirming Yearsley’s core principles in Campbell-Ewald Co. v. Gomez.…

Continue Reading Fifth Circuit Reaffirms Breadth of Yearsley Immunity For Government Contractors

On July 2, 2020, the Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) promulgated a final rule resolving long-standing uncertainty regarding its enforcement authority over health care providers participating in TRICARE, a federal program that provides health care to service members, veterans, and their families.[1] The rule officially removes OFCCP’s regulatory authority over TRICARE providers by amending the definition of “subcontract” set forth in the governing Department of Labor regulations.  Although the amendment carves out TRICARE providers from OFCCP authority by name and leaves the rest of the “subcontractor” definition unchanged, OFCCP expressly raised the possibility that it would issue additional sub-regulatory guidance concerning its jurisdiction over Federal Employees Health Benefit Program (“FEHBP”) and Veterans Administration Health Benefit Program (“VAHBP”) providers.
Continue Reading OFCCP Promulgates Final Rule Eliminating Its Authority Over TRICARE Providers

On November 6, 2019, the Department of Labor’s Office of Federal Contract Compliance Programs (“OFCCP”) issued a Notice of Proposed Rulemaking (“NPRM”) aimed at resolving what OFCCP describes as a “decade of confusion.”[1] At issue is a long-standing question concerning the scope of OFCCP’s enforcement authority over health care providers participating in TRICARE, a federal health care program covering millions of military personnel, veterans, and their families. In particular, the NPRM requests comments on proposed regulations that would amend OFCCP’s definition of “subcontractor” and thereby remove TRICARE providers–and potentially other categories of providers–from OFCCP’s regulatory authority entirely. The deadline for filing comments is December 6, 2019.
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Continue Reading OFCCP Proposes Rule Removing TRICARE Health Care Providers from Its Regulatory Authority

A long-standing dispute over the approach to country of origin determinations under the Trade Agreements Act (“TAA”) may soon be resolved, as the Federal Circuit recently heard oral argument in one of two cases presently examining key aspects of this statute.  Among other questions presented, the court may decide the standard for determining whether a product may be considered a U.S.-made end product — a question that could have far reaching implications for product manufacturers across all industries.
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Continue Reading How Much Is Enough? Federal Circuit Appeal May Decide Level of U.S. Manufacturing Required Under the TAA

Earlier this week, the Federal Circuit unanimously affirmed a 2017 ruling by the Armed Services Board of Contract Appeals (“ASBCA”) that held the United States Government breached its contractual obligation to provide physical security to KBR and its subcontractors during the height of the Iraq War.  The decision awards KBR $44 million, plus interest, in private security costs that the Government unilaterally recovered under the LOGCAP III contract.

The Court’s decision is significant in two respects.  First, it confirms that the affirmative defense of prior material breach is not a Contract Disputes Act (CDA) “claim” that must be presented to a contracting officer under M. Maropakis Carpentry, Inc. v. United States, 609 F.3d 1323, 1331 (Fed. Cir. 2010).  Second, the decision makes clear that a contractor is entitled to CDA interest on its claim to recover amounts taken or held by the Government to enforce a government claim.  We discuss each of these important rulings below.
Continue Reading Federal Circuit Further Clarifies Maropakis and CDA Interest Rule in Significant “Contractor-on-the-Battlefield” Decision

Last week, the Fourth Circuit Court of Appeals affirmed a lower court decision to dismiss a Telephone Consumer Protection Act (“TCPA”) lawsuit against General Dynamics Information Technology, Inc. (“GDIT”), on the basis that GDIT was immune from suit as a government contractor under what is known as the “Yearsley doctrine.”  Craig Cunningham v. GDIT, No. 17-1592 (Apr. 24, 2018). The decision follows a long line of Fourth Circuit decisions in which contractors have been granted protection from liability when they perform work that supports important governmental functions.  …
Continue Reading Fourth Circuit Embraces Expansive View of Derivative Sovereign Immunity for Government Contractors

Earlier this Fall, the Armed Service Board of Contract Appeals dismissed an appeal for lack of jurisdiction because the certified claim lacked a proper signature. Appeal of NileCo General Contracting LLC, ASBCA No. 60912 (Sept. 22, 2017). This simple oversight proved decisive. Although this case does not chart a new course in Contract Disputes Act (CDA) jurisprudence, it serves as a helpful reminder that the Board’s jurisdiction hinges on compliance with basic requirements. Failing to meet any of those requirements could have significant consequences.
Continue Reading Government Contracts 101 Reminder: Certified Claims Must Include a “Signature”

Construction contractors take note: the government contractor defense is alive and well in the Fifth Circuit. In Sewell v. Sewerage and Water Board of New Orleans, the Fifth Circuit recently confirmed that construction companies can successfully assert the government contractor defense in response to tort lawsuits that arise from their performance of federal public works and infrastructure projects. This is a welcomed decision in the Fifth Circuit, which had signaled in recent years that a higher level of proof may be required to establish the first element of the defense ─ i.e., that the government meaningfully reviewed and approved reasonably precise specifications for the allegedly defective construction feature.

The Sewell case illustrates that ─ with the right litigation strategy and a skillfully crafted evidentiary record ─ construction contractors may well prove the defense in cases involving even “rudimentary or general construction features.”…
Continue Reading Construction Contractors: The Government Contractor Defense is Alive and Well in the Fifth Circuit

When must a party’s “defense” be asserted as a Contract Disputes Act (CDA) claim in order to raise that defense during a Court of Federal Claims or Board of Contract Appeals proceeding?

In Kansas City Power & Light Co. v. United States, the Court of Federal Claims moves us one step closer to solving this peculiar government contracts riddle called Maropakis.  In this decision, the court held that the government’s affirmative defense of offset was not a claim under the CDA, and therefore, did not need to be asserted through a contracting officer final decision before it could be raised before the court.  This decision is important because it further limits the applicability of the Maropakis doctrine and reinforces that Maropakis only applies to “defenses” that seek payment of money or the adjustment/interpretation of contract terms.…

Continue Reading The Latest Clue to Solving the Maropakis Riddle: The Affirmative Defense of Offset

EgyptAir Flight 648 was hijacked on November 23, 1985. Fifty-eight of the ninety-eight passengers died. Three years later, Pam Am Flight 103 exploded over Lockerbie, Scotland at 7:03 PM on December 21, 1988. All of the 259 passengers died.

Advancing a novel takings theory, the Plaintiffs in Aviation & Gen. Ins. Co., Ltd. v. United States—insurance companies and an asset management company—asserted that President George W. Bush’s restoration of sovereign immunity to Libya in 2008 constituted an unconstitutional taking of their property interest in insurance contracts. No. 14-687C, 2016 WL 3675437 (Fed. Cl. July 7, 2016). Judge Wheeler granted Defendants’ motion for summary judgment on July 7, 2016.

This post describes the legal background of the case and the Court’s opinion. It also discusses how Aviation & Gen. Ins. Co. should be a warning to clients and attorneys considering filing a takings claim. First, alternative methods of framing the takings claim may increase the likelihood of overcoming summary judgment. Second, litigants and lawyers must use Takings Claims as a strategic part of their larger litigation plan.[1]

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Continue Reading The Foreign Sovereign Immunities Act and the Fifth Amendment’s Takings Clause