Can a Contractor Recover Costs Imposed by COVID Restrictions or Does the Sovereign Acts Doctrine Strike Again?

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A contractor recently tried to recover costs incurred due to COVID restricting. The board denied the claim as barred by the sovereign acts doctrine. In this case, another contractor asserted an almost identical claim seeking to recover costs incurred during a worksite closure. The contractor argued that the sovereign acts doctrine didn’t apply because performance was impossible; the agency could have allowed the contractor on the site with protective measures. But the board found that the contractor was conflating the government’s capacity as a sovereign with its capacity as a contracting party. The government imposed COVID restrictions in its sovereign capacity. The government’s role as a sovereign superseded its contractual obligation to make the worksite accessible.

Appeal of APTIM Federal Services, LLC, ASBCA No. 62982

Background

APTIM Federal Services had a contract for construction on an Air Force base. In April 2020, due to the COVID-19 pandemic, the base’s commander issued an order closing the base to all non-operationally urgent personnel. This included APTIM’s personnel. Two months later, the commander lifted the order and allowed APTIM to enter the base. 

APTIM submitted a claim for almost $100,000 in administrative costs it incurred during the lockout. The Air Force denied the claim under the sovereign acts doctrine. APTIM appealed to the ASBCA.

Legal Analysis

The sovereign acts doctrine is an affirmative defense to a contractor claim. Under the doctrine, whatever acts the government may undertake, so long as they apply to the general public, cannot be deemed to violate a contract. The doctrine has two elements: (1) the government action must be public and general, and (2) the act must render performance of the contract impossible.

The board found that the first element of the sovereign acts doctrine was satisfied. The base commander closed the base to all non-essential personnel to mitigate the outbreak of a global pandemic. The order was directed at the general public. It was not directed at relieving the government of its contractual obligations nor did it apply exclusively to the contractor.

APTIM argued that the government had not established the second, impossibility prong. Herren argued performance was not impossible because the government could have allowed personnel on the base with protective measures. The court analyzed the issue under the test for impossibility: (1) a supervening event had made performance impractical, (2) the non-occurrence of that event was an assumed by the contract, (3) the occurrence of the even was not the invoking party’s fault, and (4) the invoking party did not assume the risk of occurrence.

The board found that all the elements of impossibility were satisfied. The order made performance of the contract impractical. The non-occurrence of the COVID pandemic was assumed by the contract. Issuance of the order was the fault of the government acting in its sovereign capacity, not the government acting in its capacity as a contracting party. Moreover, this was a firm fixed-price contract that placed the burden of loss on the contractor, not the government.

APTIM is represented by Robert G. Barbour, Timothy E. Heffernan, and Joseph Figueroa of Watt, Tieder, Hoffar, & Fitzgerald, L.L.P. The government is represented by Jeffrey P. Hildebrant, Captain Jheremy Perkins, and Lieutenant Colonel Matthew Ramage-White of the Air Force.

ASBCA - APTIM Federal Services