CONNER BROS. CONST. CO., INC. v. Geren
550 F.3d 1368, 2008 WL 5412460, 2008 U.S. App. LEXIS 26811 (2008)
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Rule of Law:
The sovereign acts doctrine shields the United States from contract liability for damages when its actions, as a sovereign, are public and general, and the impact on a particular contract is merely incidental to a broader governmental objective.
Facts:
- On April 21, 2000, Conner Bros. Construction Company, Inc. (Conner) contracted with the Army Corps of Engineers to construct an Army Ranger regimental headquarters facility within the 75th Ranger regimental compound at Fort Benning, Georgia.
- The Ranger compound was a segregated area within Fort Benning under the operational control of General Joseph Votel, the commander of the 75th Ranger regiment.
- On September 11, 2001, in response to terrorist attacks, Fort Benning was placed at force protection condition Delta, and General Votel restricted access to the Ranger compound to mission-essential personnel, ordering Conner's workforce to stop work and vacate immediately.
- Conner's contract work, which involved four buildings at two sites, was approximately 70-75% complete when its workforce left the compound.
- The Rangers subsequently prepared for deployment to Afghanistan, occupying one of Conner's partially constructed buildings, and General Votel decided to shut down Conner's activities to maintain operational security and prevent information leaks.
- Fort Benning lowered its force protection condition on September 17, 2001, allowing other contractors to return to the base, but the Ranger compound remained under condition Delta, and Conner continued to be excluded from its worksites.
- Conner was eventually allowed to return to one worksite on September 27, 2001, and the other on October 15, 2001, fully resuming work on October 21, 2001.
- Conner sought additional time to complete the project and $137,744 in delay damages for 35 of the 41 days it was shut down.
Procedural Posture:
- Conner submitted a monetary claim for delay damages to the contracting officer.
- The contracting officer granted Conner additional time to complete the project but denied the monetary claim.
- Conner appealed the contracting officer's decision to the Armed Services Board of Contract Appeals.
- The Board conducted a three-day hearing and denied Conner's appeal, finding that the exclusion order constituted a sovereign act.
- Conner appealed the Board's decision to the United States Court of Appeals for the Federal Circuit.
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Issue:
Does the sovereign acts doctrine shield the U.S. Army from liability for contract delay damages when it restricts a contractor's access to a military base for national security reasons following a terrorist attack?
Opinions:
Majority - Bryson, Circuit Judge
Yes, the order excluding Conner from the base was a sovereign act that precludes recovery of damages for the delay. The court agreed with the Armed Services Board of Contract Appeals (Board) that the sovereign acts doctrine shields the Army from liability because the exclusion order was not directed at relieving the government of its contractual obligations, but rather its effect on Conner was incidental to a broader governmental objective related to national security. The court reaffirmed that the sovereign acts doctrine is an affirmative defense inherent in every government contract, balancing the government’s need for freedom to legislate with its obligation to honor contracts. Citing Horowitz v. United States and United States v. Winstar Corp., the court explained that for the doctrine to apply, the governmental act must be 'public and general,' not specifically directed at nullifying contract rights or tainted by 'governmental self-relief.' Its impact on public contracts must be merely incidental to a broader governmental objective. The court found that General Votel’s exclusion order was an extension of broader access restrictions implemented to maintain operational security during Ranger deployment preparation post-9/11. This objective was unrelated to the parties’ contractual obligations, and the government gained no economic advantage from barring Conner; instead, it granted contract extensions. The exclusion order applied broadly, affecting various personnel and the public, not just government contractors, by restricting access to mission-essential personnel. The fact that General Votel made particularized judgments about which activities interfered with security did not convert a public and general act into a non-general one. Furthermore, while some non-construction contractors were permitted access, they were deemed 'mission-essential' or were 'qualitatively different' from Conner, or their admission was an acknowledged mistake, none of which undermined the general nature of the exclusion order. The court emphasized that contractors dealing with the government should not receive more favorable treatment than if they had contracted with a private party. Conner's argument regarding the common-law impossibility defense was waived because it was not raised before the Board. Additionally, the contracting officer was not obligated to issue a suspension of work order because the delay stemmed from a sovereign act involving national security, not from the government acting in its contractual capacity.
Analysis:
This case significantly clarifies the application of the sovereign acts doctrine, particularly in contexts of national security and emergency responses. It reinforces the Winstar framework, distinguishing between government actions primarily aimed at contract abrogation (which are not protected) and those genuinely serving a broader public purpose (which are protected). The ruling emphasizes that the 'public and general' nature of an act is not solely determined by the number of affected parties but by its nature, scope, and the absence of governmental self-interest. It also serves as a critical reminder for law students about the importance of timely raising all legal arguments at the earliest possible administrative or judicial level to avoid waiver on appeal.
