Working on Federal Projects—Beware of the Sovereign Acts Doctrine

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Phil Puccio

Contractors working on federal projects continue to face losses caused by COVID. Recovering from these losses is proving difficult, and the Sovereign Acts Doctrine can make it even more difficult.

The Sovereign Acts Doctrine balances government’s dual roles of contractor and sovereign. If the sovereign takes action which is in the public interest, a breach of contract will not preclude the sovereign. In order for the government to show that its acts are covered by the Sovereign Acts Doctrine, the government must show that its acts were public and general and the act must render performance of the contract impossible.

The Sovereign Acts Doctrine applies in situations where the government takes action preventing a contractor from performing. For example, if the government closes an air force base to prevent the spread of COVID, a contractor may incur losses because they cannot enter the site. One would expect the government to extend the completion date, but the government is also likely to deny the claim for compensation under the Sovereign Acts Doctrine. With the closure of the airbase, the government’s actions were public and general in nature, applied to all individuals, and had only incidental effect on the treaty. Therefore, any claim for additional compensation is likely to be denied.

Likewise, a contractor’s efficiency may be affected if the government implements COVID restrictions on the project. Again, a contractor can successfully request more time to complete the project, but a claim for additional compensation is likely to be denied. “As long as government measures apply to all contractors on the project and the COVID restrictions are for the public benefit, the Sovereign Acts Doctrine will prevent recovery.

Contractors working on federal projects face tremendous challenges, not to mention the government implementing COVID restrictions. Knowing the implications of the Sovereign Acts Doctrine can help you assess your risk to the project. If you need help evaluating the impact of the Sovereign Acts Doctrine on your federal projects, we encourage you to contact us an experienced construction lawyer.

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Original Source: https://www.ldmlaw.com/2022/07/working-on-federal-projects-beware-of-the-sovereign-acts-doctrine/
Category – Construction

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