Garco Construction, Inc. v. Secretary of the Army
2017 U.S. App. LEXIS 8178
| Fed. Cir. | 2017Background
- Garco Construction contracted with the U.S. Army Corps of Engineers to build housing at Malmstrom AFB and subcontracted work to James Talcott Construction (JTC), which historically used workers from a local pre-release facility.
- Contract incorporated FAR § 52.222-3 (permits employment of ex-felons) but also required compliance with the base access policy in effect at award.
- The base access policy directed a 911 dispatcher to run names through NCIC for a "wants and warrants check" and to "scrutinize" unfavorable results on a case-by-case basis.
- After incidents and heightened security scrutiny, Maj. Gen. Finan issued an October 22, 2007 memorandum clarifying that NCIC/background checks could bar access for categories including violent offenders, sex offenders, probationers, and pre-release program participants.
- JTC claimed its inability to bring experienced pre-release facility workers onto base forced it to hire and train less-experienced labor and sought an equitable adjustment for additional costs; the Air Force denied the claim and the ASBCA found the base access policy and the October 2007 memorandum to be sovereign acts shielding the government from monetary liability.
- The Federal Circuit affirmed, holding the October 2007 memorandum was a clarification (not a change) of the preexisting policy and rejecting Garco’s constructive-acceleration claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Maj. Gen. Finan’s Oct. 2007 memorandum changed the base access policy (so as to make denial of workers a compensable change) | Garco: "wants and warrants check" in policy means only outstanding wants/warrants; the Oct. 2007 memo expanded exclusion to criminal-record categories and thus changed the policy | Air Force: NCIC "wants and warrants check" is a term-of-art background check; Oct. 2007 memo merely clarified existing policy; policy is a sovereign act | Court held the Air Force interpretation controls; the memo was a clarification, not a policy change, so no compensable change |
| Whether the Air Force’s enforcement of access (and denial of JTC’s workers) amounted to constructive acceleration entitling Garco to time/cost relief | Garco: stricter enforcement forced JTC to hire/train less-experienced workers, increasing time and cost and amounting to constructive acceleration | Air Force: enforcement was part of sovereign acts and contract assigned risk of complying with base regulations to contractor; JTC never timely requested a time extension | Court held no constructive acceleration: (1) enforcement was not an unforeseeable change if policy unchanged; (2) contractor did not make a timely/sufficient time-extension request |
Key Cases Cited
- Reizenstein v. Shinseki, 583 F.3d 1331 (Fed. Cir. 2009) (agency construction of its own regulations entitled to deference unless plainly erroneous)
- Auer v. Robbins, 519 U.S. 452 (1997) (deference to agency interpretation of its own regulations)
- Gen. Dynamics Corp. v. Panetta, 714 F.3d 1375 (Fed. Cir. 2013) (de novo review of agency regulation interpretation under Contract Disputes Act)
- Conner Bros. Constr. Co. v. Geren, 550 F.3d 1368 (Fed. Cir. 2008) (sovereign acts doctrine is an affirmative defense inherent in government contracts)
- United States v. Winstar Corp., 518 U.S. 839 (1996) (plurality discussion of sovereign acts doctrine and framework for attributing governmental acts)