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February 8, 2017

New ILR Research Shows Government Contractors Face Uncertain Liabilities

The federal government spends hundreds of billions of dollars each year on private contractors, who do everything from paving roads and building bridges, to making uniforms and meals for the armed forces, to providing medicines for seniors. While a government contract can be a boon for a company, it also comes with some of the most detailed and specific rules for how a company must fulfill that contract.

The new administration has promised to increase defense spending and introduce new infrastructure projects, so opportunities for contractors will surely grow. But as their role increases, so does their potential liability.

In Covering the Contractors: The Current State of the Government Contractor Defense, ILR looks at the scope of this liability and the heightened legal pitfalls it brings to government contractors.  

A crucial legal defense available to contractors facing litigation after carrying out orders to the government’s specifications is the “government contractor defense,” which came from the 1988 Supreme Court Case of Boyle v. United Technologies Corp.

In Boyle, the Court held that if a contractor shows that the government approved reasonably precise specifications, the equipment conformed to those specifications, and the contractor warned the government about dangers in the use of the equipment known to the contractor but not the government, the contractor cannot be held liable under state tort law. 

Three decades later, despite numerous petitions for review the Supreme Court has not ruled again in this area, even as lower courts have failed to consistently apply the government contractor defense.  Indeed, the federal government itself has not been uniform in its support of the contractor during litigation.

As America enters an era of increased reliance on government contractors to renew its infrastructure and its military, the threats of increased liability will also grow. ILR’s new research provides a timely review of the current state of the contractor defense and rulings, the role of the federal government in litigation against contractors, and some of the questions that still need to be addressed by the courts. 

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