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Sovereign Acts Doctrine Did Not Bar Negligent Estimates Claim

The sovereign acts doctrine did not shield the government from a negligent estimates claim, according to the Armed Services Board of Contract Appeals, because the laundry services contractor challenged the reasonableness of the government's estimates, not the impact of a troop deployment on the government's performance. The contract for laundry services for five camps in Kuwait estimated there would be an average of 3,500 soldiers in each camp, producing a laundry requirement of 8,820,000 items per camp. Shortly after the contractor commenced performance, the President ordered the invasion of Iraq, which resulted in fewer soldiers in the camps. The actual laundry provided to the contractor was 72.4 percent lower than the estimates. The contractor then filed a breach claim, contending the government knew the invasion would significantly reduce its laundry requirements and therefore knew, or should have known, the laundry estimates were inaccurate. The government moved for summary judgment based on the sovereign acts doctrine, which provides that the government is not liable for obstructions to the performance of its contracts "resulting from its public and general acts as a sovereign."

Estimates at Issue

According to the government, the claim was barred by the doctrine unless the contract provided a specific remedy for the deployment, and here, the contract placed the contractor on notice the government's requirements could decrease to as low as 1,000 soldiers per camp and provided no specific remedy. The government also argued the estimate was not negligent because the invasion was a sovereign act. However, the contractor did not contend the deployment and the resulting decrease in laundry requirements constituted a failure by the government to perform its obligations under the contract or demonstrated the estimates were negligently prepared. Rather, the claim was a challenge to the reasonableness of the estimated laundry requirements communicated by the government to the contractor. Therefore, the sovereign acts doctrine did not apply to the claim. The relevant question was whether the government exercised reasonable care in estimating its needs prior to performance, not whether the government was shielded from liability for a failure to perform. ( American General Trading & Contracting, WLL, ASBCA, 93,339)




(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )


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