United States Court of Appeals
for the Federal Circuit
______________________
GARCO CONSTRUCTION, INC.,
Appellant
v.
SECRETARY OF THE ARMY,
Appellee
______________________
2016-1936
______________________
Appeal from the Armed Services Board of Contract
Appeals in Nos. 57796, 57888, Administrative Judge
Craig S. Clarke.
______________________
Decided: May 9, 2017
______________________
STEVEN D. MEACHAM, Peel Brimley LLP, Henderson,
NV, argued for appellant.
KENNETH DINTZER, Commercial Litigation Branch,
Civil Division, United States Department of Justice,
Washington, DC, argued for appellee. Also represented by
BENJAMIN C. MIZER, ROBERT E. KIRSCHMAN, JR., SCOTT D.
AUSTIN.
______________________
Before WALLACH, HUGHES, and STOLL, Circuit Judges.
2 GARCO CONSTRUCTION, INC. v. SECRETARY OF THE ARMY
Opinion for the court filed by Circuit Judge STOLL.
Dissenting opinion filed by Circuit Judge WALLACH.
STOLL, Circuit Judge.
Garco Construction, Inc., appeals a decision of the
Armed Services Board of Contract Appeals denying
Garco’s damages claim arising out of its contract with the
U.S. Army Corps of Engineers to build housing units on
Malmstrom Air Force Base. Garco argues that a change
in the base access policy prevented its subcontractor from
bringing many of its workers onto the base, requiring its
subcontractor to hire and train more workers, and forcing
it to incur additional costs. Garco also alleges a construc-
tive acceleration of the contract. Because we conclude
that there was no change to the base access policy, we
reject Garco’s arguments and affirm the Board’s decision.
BACKGROUND
Malmstrom Air Force Base in Great Falls, Montana,
is the largest missile complex in the Western Hemisphere.
The base houses the Minuteman III intercontinental
ballistic missiles, which carry a nuclear payload. The
U.S. Army Corps of Engineers put out for bid Contract
No. W912DW-06-C-0019 to build housing units on the
base, and on August 3, 2006, awarded the contract to
Garco Construction, Inc. Garco subcontracted some of the
work to James Talcott Construction (“JTC”) in September
2006. JTC had performed considerable work on the base
in the past.
The Corps of Engineers–Garco contract contained two
provisions especially pertinent here: (1) it incorporated
Federal Acquisition Regulation (“FAR”) § 52.222-3, which
provides that contractors are permitted to employ ex-
felons; and (2) it required contractors to at all times
adhere to the base access policy. The base access policy,
in place since at least 2005, indicated:
GARCO CONSTRUCTION, INC. v. SECRETARY OF THE ARMY 3
A 911 Dispatcher will run the employees[’]
name[s] through the National Criminal Infor-
mation Center [(“NCIC”)] system for a wants and
warrants check. Unfavorable results will be scru-
tinized and eligibility will be determined on a
case-by-case basis by the 341 SFG/CC.
J.A. 51 (emphasis added).
After work on the contract began, JTC began experi-
encing difficulty bringing its crew onto the base. JTC
bussed many of its workers to the base from a local pris-
on’s pre-release facility, and those workers in particular
experienced difficulty accessing the base. Other JTC
workers who were not from the pre-release facility but
who had criminal records were also refused base entry.
JTC’s President testified that JTC had not encountered
similar access denials in its performance of other Malm-
strom contracts over the nearly twenty years it had
worked on the base.
Malmstrom’s Chief of Security Forces Plans and Pro-
grams at the time, Michael Ward, stated in a 2012 decla-
ration that JTC had been “essentially by-pass[ing]
security procedures” at the base. J.A. 279, ¶ 6. Mr. Ward
explained that JTC had been gaining base access for its
bussed-in, pre-release facility workers by having a retired
military member ride on the bus and vouch for everyone
on it, which the base permitted at the time. Eventually,
there was an incident on a Garco jobsite where a pre-
release facility worker beat his manager with a wrench,
and Mr. Ward later discovered that this worker had a
violent criminal background.
In May 2007, JTC voiced concerns to Garco and the
Air Force regarding the difficulty it experienced getting
its workers onto the base, although it acknowledged that
violent criminals and sex offenders should not be granted
base access. Informal communications from the Air Force
indicated that violent criminals and sex offenders would
4 GARCO CONSTRUCTION, INC. v. SECRETARY OF THE ARMY
continue to be denied base access. After numerous ex-
changes between the parties, the Base Commander Major
General Sandra Finan 1—who was ultimately responsible
for base access—issued a memorandum on October 22,
2007, indicating:
The 911 Dispatch Center will input all listed em-
ployees’ name[s] and data into the National Crim-
inal Information Center (NCIC) database for a
background check in accordance with Air Force di-
rectives. Unfavorable results from the background
check will result in individuals being denied ac-
cess to the installation, including, but not limited
to, individuals that are determined to fall into one
or more of the following categories: those having
outstanding wants or warrants, sex offenders, vio-
lent offenders, those who are on probation, and
those who are in a pre-release program. The defi-
nition of sex offender and violent offender can be
found at Montana Code Annotated § 46-23-502.
J.A. 151 (emphases added).
Two days after Maj. Gen. Finan issued her base ac-
cess memorandum, JTC submitted a request for equitable
adjustment (“REA”) of the contract. JTC explained in the
REA that its inability to use convict labor on the base
greatly reduced the size of the experienced labor pool from
which it could hire in the Great Falls, Montana, area.
JTC claimed that, as a result, it incurred nearly half-a-
million dollars ($454,266.44) of additional expenses from
additional time interviewing and hiring new workers,
paying overtime to new workers, and training new and
1 Maj. Gen. Finan was the rank of Colonel at the
time, but has since been elevated to Major General. This
opinion refers to Maj. Gen. Finan by her elevated rank.
GARCO CONSTRUCTION, INC. v. SECRETARY OF THE ARMY 5
less experienced workers. Notably, the REA only request-
ed additional money; it did not request a time extension.
The Air Force denied the REA, and JTC, through
Garco, requested reconsideration by the contracting
officer. Eventually the claim reached the Armed Services
Board of Contract Appeals. The Board first granted
partial summary judgment, “holding that [Maj. Gen.]
Finan’s 22 October 2007 base access memorandum was a
sovereign act and the Air Force was not liable for damag-
es from that date forward.” Appeals of—Garco Constr.,
Inc., ASBCA No. 57796, 15-1 B.C.A. (CCH) ¶ 36,135
(Sept. 22, 2015). In a later decision, the Board held that
the base access policy in place at contract award in Au-
gust 2006 was also a sovereign act, and moreover, was not
changed by the October 2007 memorandum. The Board
therefore rejected Garco’s argument that prior to October
22, 2007, the Air Force could only deny access to workers
who had outstanding “wants or warrants.” Instead, the
Board found that a “wants and warrants” check was
synonymous with a background check and Maj.
Gen. Finan’s memorandum was simply a clarification of—
not a change to—the base access policy, and therefore the
Air Force was not liable for damages before the memo-
randum issued either. The Board also concluded that the
Air Force’s increased enforcement of the base access
policy did not constitute a constructive acceleration of the
contract, and that JTC could not recover under that
theory.
Garco appeals the Board’s decision, and we have ju-
risdiction under 28 U.S.C. § 1295(a)(10) and 41 U.S.C.
§ 7107(a)(1).
DISCUSSION
On appeal, Garco raises two narrow issues, which we
address in turn below: (1) that Maj. Gen. Finan’s October
2007 memorandum changed the base access policy and
the policy it allegedly supplanted did not authorize the
6 GARCO CONSTRUCTION, INC. v. SECRETARY OF THE ARMY
exclusion of workers with criminal records; and (2) that
the Air Force’s sovereign act of denying base entry to
JTC’s workers constituted a compensable constructive
acceleration of the contract. Notably, Garco concedes that
if we determine Maj. Gen. Finan’s October memorandum
did not change the base access policy, then their argu-
ments fail. See Oral Arg. at 4:28–4:48,
http://oralarguments.cafc.uscourts.gov/default.aspx?fl=20
16-1936.mp3. Garco does not challenge the Board’s
determination that the base access policy is a sovereign
act. 2
2 Because Garco does not challenge the Board’s de-
termination that the base access policy is a sovereign act,
and in fact agrees that the Air Force had the right to limit
base access, see Oral Arg. at 2:17–2:31, we do not address
the doctrine generally. Moreover, we do not address the
issues raised by the dissent because Garco “failed to argue
that the government did not satisfy the ‘impossibility’
requirement of the sovereign acts defense, [and thus] it
has waived that argument for purposes of appeal.” Con-
ner Bros. Constr. Co. v. Geren, 550 F.3d 1368, 1379 (Fed.
Cir. 2008). We disagree with the dissent’s contention that
the sovereign acts doctrine is a jurisdictional defense that
cannot be waived. Through the Contract Disputes Act,
Congress waived the government’s sovereign immunity in
this case, establishing the court’s jurisdiction. The sover-
eign acts doctrine, in contrast, has no effect on jurisdic-
tion; it is, instead, an affirmative defense that serves only
to prevent the United States from being “held liable for an
obstruction to the performance of the particular contract
resulting from its public and general acts as a sovereign.”
Horowitz v. United States, 267 U.S. 458, 461 (1925) (em-
phasis added). Like other affirmative defenses ruled on
by the Board, an appellant waives its right to challenge
the Board’s ruling by failing to raise the issue on appeal.
GARCO CONSTRUCTION, INC. v. SECRETARY OF THE ARMY 7
I.
Garco first asserts that the base access policy did not
authorize the Air Force to prohibit workers with a crimi-
nal record from entering the base until Maj. Gen. Finan’s
October 2007 memorandum issued, and therefore JTC’s
request for equitable adjustment (or REA) should have
been granted. As support, Garco turns to the language of
the base access policy, particularly its reference to the
NCIC “wants and warrants check” that the 911 dispatch-
er was to perform under the policy. Garco argues that
this language is plain on its face and means that only a
search for outstanding wants or warrants was to be
performed. Garco argues that anything more, such as a
search of a criminal record, falls outside the stated re-
strictions on access. Garco also directs us to a line from
Maj. Gen. Finan’s testimony where she stated that deny-
ing access from those with a violent background or in pre-
release programs was a “large change” to the base access
policy. Appellant Br. 37 (citing J.A. 299). As further
support, Garco notes that Maj. Gen. Finan’s October 2007
memorandum refers to a “background check,” rather than
a “wants and warrants check.”
Addressing Garco’s argument requires us to interpret
the base access policy, an agency regulation. This is a
legal issue which, under the Contract Disputes Act,
41 U.S.C. §§ 7101–09, we review de novo. Gen. Dynamics
Corp. v. Panetta, 714 F.3d 1375, 1378 (Fed. Cir. 2013).
However, “[t]he agency’s construction of its own regula-
tions is ‘of controlling weight unless it is plainly erroneous
or inconsistent with the regulation.’” Reizenstein v.
Shinseki, 583 F.3d 1331, 1335 (Fed. Cir. 2009) (quot-
ing Cathedral Candle Co. v. U.S. Int’l Trade Comm’n,
400 F.3d 1352, 1364 (Fed. Cir. 2005)); see also Auer v.
Robbins, 519 U.S. 452, 461 (1997). Garco does not chal-
lenge this proposition, but instead argues that no defer-
ence is due when the agency’s interpretation contradicts
8 GARCO CONSTRUCTION, INC. v. SECRETARY OF THE ARMY
the plain and sensible meaning of the regulation. Roberto
v. Dep’t of the Navy, 440 F.3d 1341, 1350 (Fed. Cir. 2006).
We disagree with Garco that the plain text of the base
access policy unambiguously resolves the dispute. As
when we construe statutory language, we must consider
the regulation as a whole and the term “wants and war-
rants check” in the context in which it was used. See
Textron Lycoming Reciprocating Engine Div., Avco Corp.
v. United Auto., Aerospace & Agric. Implement Workers of
Am., 523 U.S. 653, 657 (1998) (“[I]t is a fundamental
principle of statutory construction (and, indeed, of lan-
guage itself) that the meaning of a word cannot be deter-
mined in isolation, but must be drawn from the context in
which it is used.” (internal quotation marks omitted));
Robinson v. Shell Oil Co., 519 U.S. 337, 341 (1997) (“The
plainness or ambiguity of statutory language is deter-
mined by reference to the language itself, the specific
context in which that language is used, and the broader
context of the statute as a whole.”). While there may be
some merit to Garco’s argument that the plain meaning of
“wants and warrants check” in isolation suggests a check
only for wants or warrants, the surrounding language
casts doubt on that interpretation.
For example, the sentence immediately following the
disputed “wants and warrants check” language reads:
“Unfavorable results will be scrutinized and eligibility
will be determined on a case-by-case basis.” J.A. 51. This
directive for a case-by-case analysis of unfavorable results
suggests that the check is more searching than a simple
check for outstanding wants or warrants. Indeed, the
government introduced testimony that anyone with a
want or warrant would be immediately detained and
would not be “scrutinized” with “eligibility . . . determined
on a case-by-case basis.” J.A. 25. Garco’s explanation
that this sentence could mean that the Air Force may
grant base access to those with old, but still outstanding,
warrants is not convincing. At bottom, we find that this
GARCO CONSTRUCTION, INC. v. SECRETARY OF THE ARMY 9
sentence cuts against Garco’s plain meaning interpreta-
tion such that we must consider the Air Force’s interpre-
tation. Reizenstein, 583 F.3d at 1336–37 (considering
agency interpretation of its own regulation when “the text
of the regulation does not unambiguously answer the
question” presented).
The Air Force interprets the base access policy as
providing for a criminal background check. The Air Force
presented significant evidence to support this interpreta-
tion. JTC’s own statements and actions during the rele-
vant timeframe support the Air Force’s interpretation.
Meeting minutes from a project meeting held around the
time JTC executed the subcontract with Garco indicate
that worker “names will be sent to dispatch for back-
ground checks. . . . No one with outstanding warrants,
felony convictions, or on probation will be allowed on
base.” J.A. 270–71. The minutes directed the recipients
to “review these minutes and respond within ten days in
writing should any discrepancies or omissions be noted.”
J.A. 270. Neither JTC nor Garco contacted the Air Force
about how the minutes characterized the base access
policy. Further, when JTC first experienced base access
issues with its workers, it specifically requested that
certain workers be granted base access but “recognize[d]
that this would not apply to sexual offenders or violent
offenders.” J.A. 281.
In addition to JTC’s own statements and actions, the
government presented testimony from Michael Ward,
Chief of Security Forces Plans and Programs for the base
at the time the dispute arose. Mr. Ward provided con-
sistent testimony that a “NCIC wants and warrants
check” is a term of art denoting a specific type of back-
ground check in the NCIC system, explaining that
“[b]ackground check is a very generic term. Wants and
warrants is what is titled out of the NCIC check that
provides the data that is being reviewed.” J.A. 316, l. 17 –
317, l. 2. He further explained that the NCIC wants and
10 GARCO CONSTRUCTION, INC. v. SECRETARY OF THE ARMY
warrants check includes a search for criminal background
information:
Q: What is your understanding of a wants and
warrants check?
A: A wants and warrants check is the background
check. Basically what it is, is it’s the information
that is loaded into the actual 9-1-1—or the NCIC
system. Probably the name, date of birth, Social
Security Number, driver’s license number, or a
combination of that information would reveal the
background, any wants or warrants, registration
in the—any formal programs such as sexual of-
fender or violent offender programs and their
criminal history would be listed as well.
J.A. 306, ll. 5–20 (emphases added). Mr. Ward also
described an NCIC “wants and warrants check” and a
“background check” as “synonymous.” J.A. 313, ll. 15–20.
Finally, he explained that Maj. Gen. Finan’s October 2007
memorandum was not a change to the base access policy.
J.A. 315, ll. 16–19 (“Q: Was this list [of those banned from
the base in the October 2007 memo] different than your
understanding of Malmstrom’s current policy described in
the background paper? A: No, sir, it was not.”).
Maj. Gen. Finan’s testimony supports the testimony of
Mr. Ward. During her testimony, Maj. Gen. Finan de-
scribed an “unfavorable result,” which the access policy
instructs should be scrutinized, as “convictions, arrests,
you know, drug use, sex abuse, domestic abuse, anything
like that, that would come up on the background check.”
J.A. 295, l. 18 – 296, l. 5; see also J.A. 300, l. 8 – 301, l. 1.
Garco makes much of Maj. Gen. Finan’s testimony that
barring those with a criminal record from entering the
base was a “large change” to the access policy. Appellant
Br. 37 (quoting J.A. 153, l. 17). But this testimony is less
precise than Garco claims. It is unclear whether
Maj. Gen. Finan meant that her October 2007 memoran-
GARCO CONSTRUCTION, INC. v. SECRETARY OF THE ARMY 11
dum itself effected the change, or if the change was the
institution of the base access policy her memorandum
clarified. Indeed, only moments before mentioning the
large change, Maj. Gen. Finan testified that allowing
violent and sex offenders on the base would have been a
“dramatic change” to the base access policy at the time
she drafted her memorandum. J.A. 298, ll. 5–13; J.A. 284.
Ultimately, Maj. Gen. Finan’s less-than-clear testi-
mony about a “large change” in the access policy—which,
under Garco’s interpretation, is at odds with the rest of
Maj. Gen. Finan’s testimony—does not render the Air
Force’s interpretation of the access policy plainly errone-
ous. Neither does the fact that Maj. Gen. Finan used the
term “background check” in her memorandum instead of
the term “wants and warrants check” as used in the
access policy. The purpose of Maj. Gen. Finan’s memo-
randum was to clarify the base access policy, so it makes
sense that she would use a different term than the one
that was generating confusion.
Garco also argues that the Air Force’s interpretation
is flawed in light of the fact that the contract incorporated
FAR § 52.222-3, which permits contractors to employ ex-
felons. We disagree that the incorporation of this provi-
sion makes the Air Force’s interpretation of the access
policy inconsistent with the contract. For example, this
provision could apply to JTC off-site employees who were
not working on the base. Further, as Garco has acknowl-
edged, the contract expressly required contractors to
comply with the base access policy. And Garco does not
dispute that Maj. Gen. Finan had the authority to ban ex-
felons from entering the base. We therefore are not
persuaded to draw the inference that Garco would have
us draw from incorporation of the FAR provision.
After considering the ample support for the Air
Force’s interpretation, we conclude that the interpretation
is not plainly erroneous or inconsistent with the regula-
12 GARCO CONSTRUCTION, INC. v. SECRETARY OF THE ARMY
tion, and we therefore must give it controlling weight. See
Reizenstein, 583 F.3d at 1335. As a result, Maj.
Gen. Finan’s October 2007 memorandum was not a
change to the base access policy, but rather clarifying
guidance on the existing policy, and the Board properly
denied JTC’s REA on the basis of a changed base access
policy.
II.
Garco also argues that the Air Force’s sovereign act
effectuated a constructive acceleration of the contract.
Although actions taken by the United States in its sover-
eign capacity shield the government from liability for
financial claims resulting from those acts, the contractor
may be allowed additional time to perform. See Conner
Bros., 550 F.3d at 1371, 1380 (affirming Board’s ruling
that the sovereign acts doctrine relieved the government
of liability for damages but recognizing that the contrac-
tor received additional time to complete its project).
Garco cites to a provision in the contract that allowed for
delay in completing work if unforeseeable causes arose,
including sovereign acts. Garco posits that by not allow-
ing JTC to bring its more experienced workers on base,
the Air Force compelled JTC to hire more workers, who
had less experience and required training. Garco reasons
that this additional hiring and training increased the
time required to complete the work due under the con-
tract.
This argument lacks merit. Our conclusion that the
October 2007 memorandum was not a change to the base
access policy significantly undermines Garco’s assertion
that there was an unforeseeable action that impacted
JTC’s work. But to the extent Garco argues that the
unforeseeable action involved changes in the Air Force’s
enforcement of its base access policy, which JTC contends
the Air Force had not fully enforced during JTC’s past
contracts on the base, we also disagree that such action
GARCO CONSTRUCTION, INC. v. SECRETARY OF THE ARMY 13
gives rise to constructive acceleration. The contract
assigned the risk of adhering to Air Force regulations and
orders to the contracting party. Thus, this risk must be
borne by Garco.
In any event, Garco fails to make a prima facie case of
constructive acceleration for an additional reason. Con-
structive acceleration typically requires a party to show
both that it made a timely and sufficient request for a
time extension and that its request was denied. Fraser
Constr. Co. v. United States, 384 F.3d 1354, 1361
(Fed. Cir. 2004). JTC never formally requested a time
extension, and the government, therefore, could not have
denied JTC’s non-existent request.
Citing John Cibinic & Ralph Nash, Administration of
Government Contracts 451 (3d ed. 1995), Garco asserts
that a formal request for additional time is not always
required if the parties understand there to be a request
for additional time. First of all, the Cibinic & Nash
treatise Garco cites indicates that “many cases” require
“that the contractor have actually submitted a request for
time extension,” which did not occur here. Cibinic & Nash
at 451. Moreover, even if we were to accept Garco’s legal
position, it would not save Garco’s constructive accelera-
tion claim in this case. While JTC did submit an REA
seeking additional money, there is no record evidence that
any party interpreted that REA as also being a request
for additional time. Further, while Cibinic & Nash cites a
case from the Postal Service Board of Contract Appeals
where an administrative judge held that a formal request
is not always necessary when “there is a very clear indica-
tion from the contracting officer that no delay in the
schedule will be tolerated,” id., such a “clear indication”
did not occur here. For these reasons, we reject Garco’s
constructive acceleration claim.
14 GARCO CONSTRUCTION, INC. v. SECRETARY OF THE ARMY
CONCLUSION
We have considered Garco’s remaining arguments and
find them without merit. We affirm the decision of the
Board denying Garco’s claims for contract damages.
AFFIRMED
COSTS
Costs to Appellee.
United States Court of Appeals
for the Federal Circuit
______________________
GARCO CONSTRUCTION, INC.,
Appellant
v.
SECRETARY OF THE ARMY,
Appellee
______________________
2016-1936
______________________
Appeal from the Armed Services Board of Contract
Appeals in Nos. 57796, 57888, Administrative Judge
Craig S. Clarke.
______________________
WALLACH, Circuit Judge, dissenting.
The instant appeal is about the sovereign acts doc-
trine. 1 It hinges entirely on whether that doctrine, an
1 The sovereign acts doctrine is part of the principle
of sovereign immunity, i.e., “[a] government’s immunity
from being sued in its own courts without its consent.”
Sovereign Immunity, Black’s Law Dictionary (10th ed.
2014). “Absent a waiver, sovereign immunity shields the
Federal Government and its agencies from suit.” Dep’t of
the Army v. Blue Fox, Inc., 525 U.S. 255, 260 (1999)
(internal quotation marks and citation omitted). The
Contract Disputes Act of 1978, 41. U.S.C. §§ 7101–7109
(2012), is one such waiver of sovereign immunity, as it
2 GARCO CONSTRUCTION, INC. v. SECRETARY OF THE ARMY
affirmative defense, shields the U.S. Army Corps of
Engineers, the U.S. Air Force, and the Secretary of the
U.S. Department of the Army (collectively, “the Govern-
ment”) from liability for preventing James Talcott Con-
struction, Inc.’s (“JTC”) employees from accessing the
Malmstrom Air Force Base (“Malmstrom”) in Montana. 2
Nonetheless, the majority never applies the sovereign acts
doctrine to the analysis of the case.
“Ordinarily, it is incumbent on the defendant to plead
and prove [an affirmative] defense . . . .” Taylor v.
Sturgell, 553 U.S. 880, 907 (2008) (citation omitted). Our
precedent is clear that “[t]he [sovereign acts] doctrine is
an affirmative defense that is an inherent part of every
government contract.” Conner Bros. Constr. Co. v. Geren,
550 F.3d 1368, 1371 (Fed. Cir. 2008) (citation omitted).
The Armed Services Board of Contract Appeals
(“ASBCA”) found that the Government met its burden of
proving entitlement to this affirmative defense, see Garco
Constr., Inc. (Garco III), ASBCA Nos. 57796, 57888, 16-1
BCA ¶ 36,278 (J.A. 31–34); Garco Constr., Inc. (Garco II),
ASBCA Nos. 57796, 57888, 15-1 BCA ¶ 36,135 (J.A. 4–
waives the [G]overnment’s sovereign immunity for claims
brought by prime contractors in privity of contract with
the Government. E.g., Winter v. FloorPro, Inc., 570 F.3d
1367, 1371–72 (Fed. Cir. 2009). The sovereign acts doc-
trine is an affirmative defense to contract claims brought
pursuant to this waiver of sovereign immunity, permit-
ting the Government to reassert its sovereign immunity
despite entering into privity of contract with a contractor.
See United States v. Winstar Corp., 518 U.S. 839, 860,
891–99 (1996) (plurality opinion) (discussing the sover-
eign acts doctrine as a defense to a breach of contract
claim).
2 Appellant Garco Construction, Inc. (“Garco”) hired
JTC as a subcontractor. J.A. 9.
GARCO CONSTRUCTION, INC. v. SECRETARY OF THE ARMY 3
28); Garco Constr., Inc. (Garco I), ASBCA Nos. 57796,
57888, 14-1 BCA ¶ 35,512 (J.A. 37–48), and the majority
bypasses this determination under the guise of waiver in
affirming the ASBCA, see Maj. Op. 6 n.2. However,
because the sovereign acts doctrine is grounded in the
Government’s sovereign immunity, see supra n.1, I believe
that finding waiver is inappropriate, see Fed. Deposit Ins.
Corp. v. Meyer, 510 U.S. 471, 475 (1994) (“Sovereign
immunity is jurisdictional in nature. Indeed, the terms of
the [Government’s] consent to be sued in any court define
that court’s jurisdiction to entertain suit.” (internal quota-
tion marks and citations omitted)); City of Gainesville v.
Brown-Crummer Inv. Co., 277 U.S. 54, 59 (1928) (“Of
course a question of jurisdiction cannot be waived. Juris-
diction should affirmatively appear, and the question may
be raised at any time.” (citations omitted)).
The majority’s conclusion suffers from two additional
flaws. First, although the ASBCA correctly treated the
sovereign acts doctrine as an absolute bar to finding the
Government liable, see, e.g., J.A. 28, 33, 47, it failed to
consider whether the Government satisfied the second
factor in the two-factor test for applying the doctrine. The
majority compounds that error by ignoring the application
of the doctrine altogether. Second, even though the
ASBCA’s conclusion that the sovereign acts doctrine
applied would preclude a merits analysis and liability
determination, the majority misinterprets the ASBCA’s
opinions below and incorrectly considers the merits. For
these reasons, I respectfully dissent.
I. The Sovereign Acts Doctrine
I begin by articulating the two-factor framework we
apply to determine whether the Government is entitled to
the affirmative defense of the sovereign acts doctrine.
After articulating this framework, I turn to the ASBCA’s
analysis.
4 GARCO CONSTRUCTION, INC. v. SECRETARY OF THE ARMY
A. Legal Framework
The U.S. Supreme Court has not established the pre-
cise contours of the sovereign acts doctrine. Indeed, the
Supreme Court has applied the sovereign acts doctrine in
only two cases, the second of which produced a highly
divided court without a majority opinion.
In Horowitz v. United States, the Supreme Court ex-
plained that the sovereign acts doctrine distinguishes
between the Government’s distinct roles as a private
contractor and as a sovereign, providing that “the [Gov-
ernment] when sued as a contractor cannot be held liable
for an obstruction to the performance of the particular
contract resulting from its public and general acts as a
sovereign.” 267 U.S. 458, 461 (1925) (citations omitted).
The Supreme Court did not address the doctrine again for
the next seventy years. See Winstar, 518 U.S. at 923
(Scalia, J., concurring-in-the-judgment) (stating that the
sovereign acts doctrine “has apparently been applied by
th[e Supreme] Court in only a single case, our 3-page
opinion in Horowitz . . . , decided in 1925”).
In Winstar, Justice Souter authored a four- (and as to
some portions, three-) Justice plurality opinion explaining
that
[t]he sovereign acts doctrine . . . balances the Gov-
ernment’s need for freedom to legislate with its
obligation to honor its contracts by asking wheth-
er the sovereign act is properly attributable to the
Government as a contractor. If the answer is no,
the Government’s defense to liability depends on
the answer to the further question, whether that
act would otherwise release the Government from
liability under ordinary principles of contract law.
Id. at 896 (plurality opinion) (footnote omitted). The
Supreme Court has not revisited the sovereign acts doc-
trine since Winstar.
GARCO CONSTRUCTION, INC. v. SECRETARY OF THE ARMY 5
Lacking a definitive framework for applying the sov-
ereign acts doctrine from existing Supreme Court prece-
dent, 3 we have adopted the standard articulated by the
plurality opinion in Winstar. See, e.g., Conner Bros., 550
F.3d at 1374 (stating that “this court has treated th[e
plurality] opinion [in Winstar] as setting forth the core
principles underlying the sovereign acts doctrine”).
Pursuant to this framework, we evaluate the applicability
of the sovereign acts doctrine using a two-factor test.
Klamath Irrigation Dist. v. United States, 635 F.3d 505,
521 (Fed. Cir. 2011); Stockton E. Water Dist. v. United
States, 583 F.3d 1344, 1366 (Fed. Cir. 2009). First, we
ask whether the governmental act “is properly attributa-
ble to the Government as contractor” or to the Govern-
ment as sovereign, i.e., whether the act was designed “to
relieve the Government of its contract duties” or was a
“genuinely public and general act that only incidentally
falls upon the contract.” Stockton, 583 F.3d at 1366
(internal quotation marks and citation omitted). Second,
if the governmental act was a genuine public and general
act, we ask “whether that act would otherwise release the
Government from liability under ordinary principles of
contract law.” Id. (internal quotation marks and citation
omitted).
As explained above, the sovereign acts doctrine “is an
affirmative defense that is an inherent part of every
government contract.” Conner Bros., 550 F.3d at 1371
(citation omitted). As an affirmative defense, the Gov-
ernment, as defendant, bears the burden of establishing
its entitlement to the sovereign acts defense. See Taylor,
553 U.S. at 907. This burden applies to both factors of
3 It does not appear that our sibling circuits have
elaborated substantively on the guideposts provided by
Winstar. See, e.g., Biodiversity Assocs. v. Cables, 357 F.3d
1152, 1172 n.10 (10th Cir. 2004) (discussing Winstar).
6 GARCO CONSTRUCTION, INC. v. SECRETARY OF THE ARMY
our two-factor framework. See Klamath, 635 F.3d at
521−22 (stating that “the [G]overnment has the burden of
establishing” all elements of the sovereign acts defense).
Determining whether the Government has met its burden
is a legal conclusion based on underlying factual findings
reviewed for substantial evidence. Conner Bros., 550 F.3d
at 1378; see 41 U.S.C. § 7107(b)(2) (stating that the
ASBCA’s “decision . . . on a question of fact . . . may not be
set aside unless the decision is,” inter alia, “not supported
by substantial evidence”).
B. The ASBCA Erred in Determining That the Sovereign
Acts Doctrine Shielded the Government from Liability
The majority does not articulate or address the test
concerning the sovereign acts doctrine. See generally Maj.
Op. Because I believe both the ASBCA and this court are
bound by the two-factor framework articulated above, I
evaluate whether the Government satisfied its burden as
to each factor. In my opinion, it did not.
1. Substantial Evidence Supports the ASBCA’s Finding
That the Government’s Acts Were Public and
General Acts
The first factor, i.e., “whether the sovereign act is
properly attributable to the Government as contractor,” is
a subjective inquiry that examines the purpose of the
governmental act. See, e.g., Yankee Atomic Elec. Co. v.
United States, 112 F.3d 1569, 1573, 1575 (Fed. Cir. 1997)
(stating that the parties’ “characterization [of the gov-
ernmental act] frames the dispositive issue” and then
evaluating whether the Government was “acting for the
purpose of” increasing prices charged to plaintiffs or
solving problems related to uranium enrichment). We
evaluate whether the act was “genuinely public and
general” or “specifically directed at nullifying contract
rights.” Stockton, 583 F.3d at 1366, 1367 (internal quota-
tion marks and citation omitted); see Conner Bros., 550
F.3d at 1374 (similar). This inquiry can be informed by
GARCO CONSTRUCTION, INC. v. SECRETARY OF THE ARMY 7
“whether the governmental act[] applies exclusively to the
contractor or more broadly to include other parties not in
a contractual relationship with the [G]overnment.”
Conner Bros., 550 F.3d at 1375.
The dispute here concerns the Government’s decision
to deny JTC’s employees access to Malmstrom. Although
JTC had not encountered difficulty obtaining base access
for its employees for prior contracts at Malmstrom, the
Government began denying access to JTC employees with
criminal records soon after JTC commenced performance
of the contract at issue here, forcing JTC to hire a less
experienced work force and increasing JTC’s cost of
performance. J.A. 10–12. The ASBCA determined that
the denial of access to JTC’s employees pursuant to three
documents—the July 21, 2005 341st Space Wing Pam-
phlet 31-103 (“the 31-103 Pamphlet”) (J.A. 49–54), the
July 26, 2005 341st Space Wing Instruction 31-101 (“the
31-101 Instruction”) (J.A. 55–76), and the October 2007
base access memorandum (“the October 2007 Memoran-
dum”) (J.A. 144–46)—constituted sovereign acts that
shielded the Government from liability. 4 J.A. 22–24, 46.
In support, the ASBCA noted that each of these docu-
ments applies “to all contractors and contractor person-
nel” and that “[t]here is no evidence that the policy was
intended to nullify contract rights or that it provided to
the [G]overnment an economic advantage.” J.A. 24, 46;
see J.A. 24–25 (evaluating the October 2007 Memoran-
dum), 46–47 (evaluating the 31-103 Pamphlet and 31-101
Instruction).
4 Garco does not contest the ASBCA’s finding that
denying base access pursuant to the October 2007 Memo-
randum was a sovereign act but, instead, contends that
the Government is liable for the delays caused by the
denial of base access to JTC prior to October 2007. Appel-
lant’s Br. 11.
8 GARCO CONSTRUCTION, INC. v. SECRETARY OF THE ARMY
Substantial evidence supports the ASBCA’s factual
findings that the Government’s base access policy was a
public and general act. It is true that there is ample
evidence that the Government’s base access policies were
subject to the “whim[s]” of the Wing Commander.
J.A. 173; see J.A. 119 (stating that, over twenty years and
dozens of projects, no JTC employees had been denied
access prior to the contract at issue here), 153 (stating
that the October 2007 Memorandum was a “large
change”), 173 (“Good luck on this one, the policy appears
to be undefined and pretty hard to defend.”). However,
the relevant provisions in both the 31-103 Pamphlet and
the 31-101 Instruction applied to “contractors” generally
rather than specifically to Garco or JTC, J.A. 51, 71; see
J.A. 49 (setting forth the “policy for contractors who
require[] entry” to Malmstrom), and the October 2007
Memorandum was addressed to “all contractors and
contractor personnel,” J.A. 145 (emphasis added) (capital-
ization omitted). In addition, the record is replete with
evidence indicating that the purpose of the base access
policy was to ensure Malmstrom’s security. See, e.g.,
J.A. 284 (assessing the security impacts of three separate
base access policies), 287 (“The purpose of [a National
Crime Information Center] check i[s] to determine if there
is any unfavorable information which may be detrimental
to the security of the installation and preservation of good
order and discipline on the installation.”). Finally, Garco
has not identified any evidence either below or before this
court that demonstrates that the 31-103 Pamphlet, the
31-101 Instruction, or the October 2007 Memorandum
were directed at nullifying Garco’s or JTC’s contract
rights. J.A. 24 (“There is no evidence that the policy
[articulated in, inter alia, the 31-103 Pamphlet or 31-101
Instruction] was intended to nullify contract rights or that
it provided to the [G]overnment an economic advantage.”),
46 (“[Garco] presents no evidence contradicting [Major
General] Finan’s declaration” as to the general purpose of
the policy.); see generally Appellant’s Br. Thus, I agree
GARCO CONSTRUCTION, INC. v. SECRETARY OF THE ARMY 9
with the ASBCA that the Government’s denial of access to
Malmstrom was a public and general act.
2. Substantial Evidence Does Not Support the ASBCA’s
Finding That the Government’s Acts Would Release It
from Liability
Because I would find that substantial evidence sup-
ports the ASBCA’s determination that the Government’s
denial of access to Malmstrom was a public and general
act, I believe we must consider the second factor of the
test, i.e., “whether that act would otherwise release the
Government from liability under ordinary principles of
contract law.” Stockton, 583 F.3d at 1366 (internal quota-
tion marks and citation omitted). “This second [factor]
turns on what is known in contract law as the ‘impossibil-
ity’ (sometimes ‘impracticability’) defense.” Id. To estab-
lish this defense, the Government must show that both
full performance and substantial performance of the
contract by the Government are “impossible.” Winstar,
518 U.S. at 905; Carabetta Enters., Inc. v. United States,
482 F.3d 1360, 1365 (Fed. Cir. 2007). To make this show-
ing, the Government must demonstrate that the event
“rendering its performance impossible was an event
contrary to the basic assumptions on which the parties
agreed[] and . . . that the language or circumstances do
not indicate that the Government should be liable in any
case.” Winstar, 518 U.S. at 904; see 12 No. 7 Nash &
Cibinic Rep. ¶ 37 (“The determination of whether the
nonoccurence of a specific sovereign act was a basic as-
sumption of the contract will depend on the nature of the
act and the circumstances surrounding the formation of
the contract as well as its terms.”). If the Government
does not carry its burden of showing impossibility, then
its invocation of the sovereign acts defense fails. See
Klamath, 635 F.3d at 522 (stating that the trial court
“erred in holding that impossibility of performance is not
a factor to be taken into account in considering the sover-
eign acts doctrine”).
10 GARCO CONSTRUCTION, INC. v. SECRETARY OF THE ARMY
The ASBCA neither made any findings as to impossi-
bility nor referenced it at all, see J.A. 4–28, 31–34, 37–48,
and nothing in the record indicates that the Government
raised impossibility before the ASBCA. On appeal, the
Government does not argue impossibility or provide
evidentiary support for a finding of impossibility. See
generally Appellee’s Br. Indeed, neither “impossibility”
nor its variants appear in the parties’ briefs or in the
Joint Appendix. See generally Appellant’s Br.; Appellee’s
Br.; Appellant’s Reply; J.A.
Where the ASBCA has failed to make factual findings
as to impossibility in prior cases, we have reached three
different results. In one instance, we vacated and re-
manded for additional fact finding “so that the
[G]overment [would] have the opportunity to carry [its]
burden” of “establishing that performance of the various
contracts at issue was impossible.” Klamath, 635 F.3d at
522 (footnote omitted). In another, we reversed and
remanded the trial court’s application of the sovereign
acts doctrine because “[t]he [G]overnment c[ould ]not
avail itself of the impossibility defense to save it from this
breach of contract claim.” City Line Joint Venture v.
United States, 503 F.3d 1319, 1323 (Fed. Cir. 2007).
Finally, in a third, we found that the plaintiff waived its
arguments as to impossibility by failing to raise them
before the ASBCA and affirmed the ASBCA’s application
of the sovereign act defense. See Conner Bros., 550 F.3d
at 1379.
I would find vacating and remanding to be the most
appropriate result here. 5 See Fla. Power & Light Co. v.
5 “[W]e retain case-by-case discretion over whether
to apply waiver . . . .” Xianli Zhang v. United States, 640
F.3d 1358, 1371 (Fed. Cir. 2011) (citation and footnote
omitted). Unlike the majority, Maj. Op. 6 n.2, I would
GARCO CONSTRUCTION, INC. v. SECRETARY OF THE ARMY 11
Lorion, 470 U.S. 729, 744 (1985) (“[I]f the agency has not
considered all relevant factors, . . . the proper course,
except in rare circumstances, is to remand to the agency
for additional investigation or explanation. The reviewing
court is not generally empowered to conduct a de novo
inquiry into the matter being reviewed and to reach its
own conclusions based on such an inquiry.”). “Appellate
courts do not make factual findings; they review them.”
Mittal Steel Point Lisas Ltd. v. United States, 542 F.3d
867, 875 (Fed. Cir. 2008). Because the ASBCA did not
make any factual findings as to impossibility, I believe
that it is inappropriate for us to do so in its stead. When
both the ASBCA and the Government have failed to
address one of the requisite factors, I believe the proper
course is to vacate and remand “so that the [G]overment
may have the opportunity to carry [its] burden” of “estab-
lishing that performance . . . was impossible.” Klamath,
635 F.3d at 522 (footnote omitted). 6 Therefore, I would
decline to find waiver here for two reasons. First, the
sovereign acts doctrine is grounded in the Government’s
sovereign immunity, shielding the Government from
liability for its actions as a sovereign. See supra n.1;
Horowitz, 267 U.S. at 461. Therefore, I believe questions
regarding the doctrine’s application cannot be waived.
See, e.g., Meyer, 510 U.S. at 475; Brown-Crummer, 277
U.S. at 59. Second, the Government did not meet its
burden of establishing impossibility in this case and, thus,
did not meet its burden of establishing the sovereign act
defense. Because the Government had not met its burden
of establishing each factor of the sovereign act defense,
Garco was under no obligation to rebut the Government’s
position on impossibility. See Klamath, 635 F.3d at 522
n.14.
6 This course aligns with our practice in other ad-
ministrative proceedings. See, e.g., In re NuVasive, Inc.,
12 GARCO CONSTRUCTION, INC. v. SECRETARY OF THE ARMY
vacate the ASBCA’s opinions and remand for additional
fact finding and explanation as to the impossibility fac-
tor’s applicability. 7
II. The Majority Misinterprets the ASBCA’s Conclusions
In addition to failing to consider the sovereign acts
doctrine and progressing directly to the merits, the major-
ity further errs by misinterpreting the ASBCA’s conclu-
sions as being directed to the merits. The majority
characterizes the ASBCA’s opinions as concerning a
matter of regulatory interpretation, i.e., interpreting the
base access policy at Malmstrom. Maj. Op. 7–12. I be-
lieve that this characterization is inaccurate.
In each of its three opinions, the ASBCA determined
that the Government is not liable because the sovereign
acts doctrine shields it from liability. In Garco I, the
ASBCA determined that “[t]he implementation of the
842 F.3d 1376, 1382, 1385 (Fed. Cir. 2016) (vacating and
remanding so that an agency could fulfill its obligation to
“make the necessary findings and have an adequate
evidentiary basis for its findings” and to “articulate a
satisfactory explanation for its action” (internal quotation
marks and citations omitted)).
7 Having determined that the sovereign acts doc-
trine shielded the Government from liability, the ASBCA
additionally found that constructive acceleration “does not
provide [Garco] a path to entitlement to monetary damag-
es resulting directly from the sovereign act of limiting
access to” Malmstrom. J.A. 27; see J.A. 33 (affirming that
conclusion on reconsideration). If the Government were
to fail on remand to carry its burden as to impossibility of
the sovereign acts doctrine, the ASBCA should reconsider
Garco’s claim for constructive acceleration, as well as any
other liability theory that the Government previously
advanced before the ASBCA.
GARCO CONSTRUCTION, INC. v. SECRETARY OF THE ARMY 13
base access policy by the October 2007 [M]emorandum
was a sovereign act and the [G]overnment is not liable in
damages that may have been caused from October 2007
forward.” J.A. 46−47. In Garco II, the ASBCA deter-
mined that: “JTC presented ample credible evidence that
it was harmed by the . . . change in . . . enforcement of
[the] base access policy”; “JTC was not able to hire as
experienced a work force as it had in the past”; and “this
had an adverse impact on JTC’s labor hours and associat-
ed costs of performance.” J.A. 21, 21–22. On these bases,
the ASBCA determined that the Government “could be
liable for this damage unless it is protected by the sover-
eign act defense.” J.A. 22 (emphases added) (footnote
omitted). Nonetheless, the ASBCA “extend[ed] the sover-
eign act protection” from Garco I “back to the spring of
2007 or whenever the [Government] first started denying
access” to JTC’s employees. J.A. 27; see J.A. 28 (“Conclu-
sion” section of the opinion stating in its entirety: “The
[Government]’s enforcement of its base access policy
commencing on or about the spring of 2007 was a sover-
eign act. To the extent JTC suffered as a result of the
denial of access to its desired workers, the [Government]
is not liable in monetary damages. The appeals are
denied.” (emphases added)). Finally, in Garco III, the
ASBCA denied Garco’s request for reconsideration of
Garco II. J.A. 33. In so doing, the ASBCA stated in its
penultimate sentence that “[w]e are unwilling to establish
a new limit on the breadth of the sovereign act doctrine.”
J.A. 33 (footnote omitted).
It is evident from each of these three decisions that
the foundation of the ASBCA’s conclusions is that the
sovereign acts doctrine shields the Government from
monetary liability. Considered in the context of the
ASBCA’s full opinions, the ASBCA’s discussion of the
October 2007 Memorandum’s text and the parties’ other
arguments is part of its analysis of whether the sovereign
acts doctrine applies to the Government’s acts prior to
14 GARCO CONSTRUCTION, INC. v. SECRETARY OF THE ARMY
October 2007. Indeed, the very section of Garco II that
the majority cites (see Maj. Op. 8) is entitled “JTC’s Inter-
pretation Argument/Scope of the Sovereign Acts,” and this
section concludes by stating “[w]e have already held that
th[e National Crime Information Center check] process is
embodied in documents that qualify for sovereign act
protection.” J.A. 24 (italics omitted), 25 (emphasis added).
Instead of acknowledging the context in which the
ASBCA made its findings, the majority engages in an
analysis of the merits. The ASBCA did not decide against
Garco on the merits. In fact, the ASBCA expressly
acknowledged that the Government “could be liable” on
the merits but for the sovereign acts doctrine. J.A. 22
(footnote omitted). The ASBCA determined that its
sovereign acts analysis in Garco I applied equally to the
Government’s acts both before and after the issuance of
the October 2007 Memorandum. But, as explained above,
the ASBCA’s analyses as to pre- and post-October 2007
governmental acts are equally deficient—neither address-
es impossibility. It is unclear why the majority under-
takes an analysis of merits when (1) it is unknown at this
time whether the Government properly pleaded the
affirmative defense and (2) the ASBCA did not consider
the merits. See Singleton v. Wulff, 428 U.S. 106, 120
(1976) (“It is the general rule, of course, that a federal
appellate court does not consider an issue not passed
upon below.”).
Finally, the majority’s analytic framework produces
more questions than answers. For example, if the majori-
ty reached a different conclusion on the merits—i.e., if it
found that the Government’s interpretation was errone-
ous and that the October 2007 Memorandum was a
change in base access policy—Garco still could not recover
damages. Recovery would require consideration and
reversal of the ASBCA’s application of the sovereign acts
doctrine, the very threshold issue that the majority by-
passes here. See Horowitz, 267 U.S. at 461 (stating that
GARCO CONSTRUCTION, INC. v. SECRETARY OF THE ARMY 15
the Government “cannot be held liable” when the sover-
eign acts doctrine applies (citations omitted)). Because
the approach employed by the majority sows confusion
and does not comport with what precedent demands, I
decline to follow it.
III. Conclusion
The sovereign acts doctrine was the sole issue decided
below. Yet, this threshold inquiry is entirely absent from
the majority’s analysis, which focuses on the merits. Maj.
Op. 7–13. However, affirming the ASBCA’s finding that
the sovereign acts doctrine applies here precludes a
finding that the Government is liable, rendering this
analysis superfluous. I believe that the more appropriate
course is to follow our clear precedent that the sovereign
acts doctrine is an affirmative defense for which the
Government bears the burden as to both factors. Because
the Government did not satisfy its burden as to the sec-
ond factor, I would vacate the ASBCA’s opinions and
remand with instructions to consider the second factor.