In recent years, U.S. civilian personnel, military personnel, and other parties have sued federal contractors under state tort law, alleging that contractors intentionally or accidentally injured them during the course of performing a federal contract. Contractors have responded to these tort suits by raising the Federal Tort Claims Act (FTCA), the political question doctrine, and derivative immunities in seeking to avoid liability. Some have also alleged that the government is obligated to indemnify them for any liability they may incur to third parties. Contractors have argued that the protections of some of the FTCA's exceptions should be extended to them under the doctrine of preemption. Under the Supremacy Clause of the U.S. Constitution, federal law is "the supreme Law of the Land" and applies instead of, or preempts, state law to the degree that the two are incompatible. It is the tension between this FTCA exception, known as the discretionary function exception, and imposing tort liability on government contractors for harms caused by defects in some government-approved designs that spurred the Supreme Court to create the government contractor defense in its 1988 decision in Boyle v. United Technologies Corporation . After the Boyle decision, lower courts were left to determine whether the Supreme Court's rationale applies only to design defect claims, or whether it also supports immunizing contractors from manufacturing defect claims and claims originating in the performance of service contracts. In response, the defendant contractor argued that the Court should recognize contractor immunity from liability for harms caused by defects in government-selected designs through a judicially created tort immunity based on the FTCA's discretionary exception. Specifically, in determining the scope of preemption, the Court sought to avoid frustration of the discretionary function exception's underlying policy of preventing the government from bearing the costs of liability caused by its discretionary acts, while simultaneously preventing contractors from perversely altering their behavior because of overly broad immunity from tort liability. Some courts have declined to extend the exception to immunize contractors from tort liability. Therefore, Bentzlin could potentially be said to have extended to contractors broad immunity against any tort claims arising out of combatant activities much like the government's own immunity under the combatant activities exception, and some courts have subsequently construed it as doing so. In accordance with Supreme Court precedent, "no justiciable 'controversy' exists when parties seek adjudication of a political question," which is generally a question that courts should refrain from deciding because the Constitution has entrusted its resolution to the legislative or executive branches of government. Though these cases have diverged greatly in their outcomes, it would appear that courts are more likely to find the political question doctrine applicable when (1) the military largely controls the contractor's actions; (2) the plaintiff's claims are not seen as presenting an "ordinary tort suit"; (3) the record before the court is sufficiently developed; (4) the government intervenes on the contractor's behalf; or (5) the applicable state law recognizes the tort doctrine of contributory negligence, whereby plaintiffs may not recover in a negligence claim when their own negligence is a proximate cause of their injuries, and the plaintiff is a government employee. Some lower courts have recognized such derivative immunity, but have required, pursuant to Westfall v. Erwin , that the act giving rise to potential liability be a discretionary function that occurred within the scope of the contractor's employment or duties. Courts in the Fourth Circuit have also held that contractors have derivative absolute immunity against tort liability arising from their participation in official investigations under certain circumstances. Initially, some lower courts held that the Feres doctrine proscribed only suits against the government in which a servicemember caused harm to another servicemember. In the context of tort suits against contractors, when the government has agreed to indemnify a contractor, the government may be obligated to compensate the contractor for certain damages paid to third parties. In such contracts, military departments can include indemnification clauses to protect contractors against losses that arise out of direct contract performance, but only to the extent that they are not compensated by insurance or otherwise.
Contractors have played a considerable role in U.S. military operations over the last decade, and some commentators anticipate they will continue to do so in the future. Due in part to their heavy involvement in military operations, contractors have faced numerous tort suits, or suits seeking remedy for civil wrongs, in recent years. Many of these tort suits have alleged that contractors' negligence, or failure to take due care, in performing contractual obligations has caused harms to third/private parties (as opposed to the contracting agency). Contractors have often responded to such suits by raising the Federal Tort Claims Act (FTCA), the political question doctrine, and derivative immunities in seeking to avoid liability. They may also, to the extent permitted by their contract, seek indemnification from the government if found liable.
The Supremacy Clause of the U.S. Constitution provides that federal law is the "supreme law of the land" and preempts, or applies instead of, inconsistent provisions of state law. The FTCA is a federal law through which the government largely waives its inherent sovereign immunity from tort liability, although it retains sovereign immunity if one of the FTCA's exceptions applies (e.g., against any claim arising in a foreign country). Although the FTCA does not apply directly to federal contractors, they have long argued that the FTCA's exceptions can preempt state tort law claims against them in addition to federal agencies, and the Supreme Court agreed in its 1988 decision in Boyle v. United Technologies Corporation. There, the Court held that failure to find that one such FTCA exception, the discretionary function exception, preempts state law tort claims against contractors in narrowly prescribed circumstances would frustrate the exception's underlying purpose of shielding the government from liability caused by its discretionary decisions. The Court thus fashioned a rule immunizing contractors from tort liability caused by defects in some government-selected designs. Lower courts subsequently grappled with questions regarding the Boyle rule's scope (e.g., does it protect against manufacturing defect claims?), as well as whether the FTCA's combatant activities exception immunity may be extended to contractors under the Boyle Court's rationale. Based largely on the terms and performance of particular contracts, some courts extended the combatant activities exception to contractors, whereas others did not.
Contractors have also asserted that the political question doctrine—which recognizes limitations on justiciability, or the appropriateness of a court hearing a claim—bars particular tort suits against them because determining whether they are liable would require the court to decide questions that the Constitution commits to the legislative or executive branches of government. Though the outcomes in such cases have varied, it would appear that courts may be more likely to find a political question when a case presents certain characteristics.
In addition, contractors have argued for immunities deriving from federal employees' absolute immunity under the Westfall Act, pursuant to which they cannot be liable for any harms that occur within the scope of their employment. Contractors have also argued that the judicially created Feres doctrine, which provides that the government cannot be liable to servicemembers for torts arising in the course of, or incidental to, military service, should apply to them. Some courts have recognized a derivative absolute immunity for contractors, but have held that it applies only to harms caused by contractors' performance of discretionary, rather than ministerial, functions. Courts have generally rejected contractors' derivative Feres immunity arguments.
In some cases, the government may also have agreed to indemnify a contractor, or promised to pay certain liabilities to third parties that the contractor may incur through contract performance.