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Past Post – Government Shutdown – Sept. 2013

Is the Government Responsible for Delays and Costs Due to the Recent Shutdown?

Under the Sovereign Acts Doctrine, the Government is not liable for obstructing performance of a particular contract due to the Government's public and general acts as a sovereign. Horowitz v. United States, 267 U.S. 458, 461 (1925); Yankee Atomic Electric Co. v. United States, 112 F.3d 1569, 1574 (Fed. Cir. 1997) This rule balances the “Government's need for freedom to legislate with its obligation to honor its contracts." United States v. Winstar Corp., 518 U.S. 839 (1996)

Because the current Government shutdown is not specifically targeted at any particular contract, it is considered a sovereign act. Hence, while a contractor is entitled to additional time due to shutdown delays, it is not entitled to monetary compensation. M.E.S., Inc., ASBCA No. 56149, 12-1 BCA P 34,958 at 171,856 (no monetary compensation due for delays resulting from a sovereign act) There is a limited exception to this rule.

Specifically, if the contract expressly or implicitly promises that certain resources will be made available, and they are not because of the Government shutdown, there may be case for monetary reimbursement against the Government.  For example, in Raytheon STX Corporation v. Department of Commerce, GSBCA No. 14296-COM (October 28, 1999), the Board awarded a contractor monetary damages because the contract expressly provided that the contractor’s personnel would perform their work at Government facilities. Through no fault of the contractor, these facilities were closed by a Government shutdown.  The Board therefore awarded monetary damages because the Government did not honor its express obligation to provide facilities to the contractor.  This type of provision is rare and recovery will depend on the language in your contract.  Let’s hope this shutdown goes away soon!


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