Amicus Curiae Brief — The GEO Group, Inc., Petitioner v. Alejandro Menocal, et al.

No. 24-758

IN THE

Supreme Court of the United States

__________

THE GEO GROUP, INC.,

v.

Petitioner,

ALEJANDRO MENOCAL, ET AL.,

Respondents.

_____________

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the Tenth Circuit

____________

BRIEF OF AMICUS CURIAE THE

PROFESSIONAL SERVICES COUNCIL-THE

VOICE OF THE GOVERNMENT SERVICES

INDUSTRY IN SUPPORT OF PETITIONER

_____________

Daniel L. Russell Jr.

Counsel of Record

Raymond B. Biagini

Evan K.W. Matsuda

COVINGTON & BURLING LLP

One CityCenter

850 Tenth Street, NW

Washington, DC 20001

drussell@cov.com

(202) 662-6000

Counsel for Amicus Curiae

i

TABLE OF CONTENTS

Page(s)

TABLE OF AUTHORITIES ...................................... iii

INTEREST OF AMICUS CURIAE.............................1

SUMMARY OF ARGUMENT .....................................2

ARGUMENT ...............................................................4

I.

Contractors Provide Critical Support for

an Immense Quantity and Wide Variety

of Vital Government Functions. .......................4

II.

In Recent Decades, Contractors Have

Been Increasingly Targeted in Lawsuits

Arising Out of a Broad Spectrum of

Federal Programs. ............................................7

III.

By Denying Contractors the Right to

Immediate Appellate Review When

Yearsley Immunity May Apply, the

Tenth Circuit’s Decision Harms the

Contracting Community and

Undermines the Government’s Ability

to Efficiently and Effectively Carry Out

Critical Functions. ..........................................10

A.

The Tenth Circuit’s Decision

Heightens the Substantial

Business Risks Associated with

Performing Federal Contracts,

Which Will Reduce the Number

of Contractors Willing and Able

ii

to Support Key Government

Programs. .............................................12

B.

The Tenth Circuit’s Decision

Increases Costs to the

Government and Further Strains

Limited Agency Resources...................14

CONCLUSION ..........................................................16

iii

TABLE OF AUTHORITIES

Page(s)

Cases

Abernathy v. Carlyle Grp., Inc.,

No. 22-3603, 2024 WL 5331993

(D.D.C. Sept. 27, 2024) ............................................9

Adkisson v. Jacobs Eng’g Grp., Inc.,

790 F.3d 641 (6th Cir. 2015)....................................9

Al Shimari v. CACI Premier Tech., Inc.,

775 F. App’x 758 (4th Cir. 2019) ..................... 10, 12

Am. Fed’n of Gov’t Emps., Local 2119 v. Cohen,

171 F.3d 460 (7th Cir. 1999)..................................14

Berman v. Penn. Higher Educ. Assistance Agency,

No. 23-1414, 2024 WL 1615016

(4th Cir. Apr. 15, 2024) ............................................9

Boyle v. United Techs. Corp.,

487 U.S. 500, 507 (1988) ........................................15

Butters v. Vance Int’l, Inc.,

225 F.3d 187 (4th Cir. 2009)..................................11

Campbell-Ewald Co. v. Gomez,

577 U.S. 153 (2016) ..................................................8

Corrie v. Caterpillar, Inc.,

503 F.3d 974 (9th Cir. 2007)..................................10

Cunningham v. Gen. Dynamics Info. Tech., Inc.,

888 F.3d 640 (4th Cir. 2018).......................... 8, 9, 11

iv

Equal Emp. Opportunity Comm’n v. Fluor Fed. Glob.

Projects, Inc.,

No. 22-cv-1960-HMH, 2022 WL 17406568

(D.S.C. Oct. 31, 2022) ..............................................9

Feres v. United States,

340 U.S. 135 (1950) ..................................................8

Filarsky v. Delia,

566 U.S. 377 (2012) ..................................................8

Gay v. A.O. Smith Corp.,

No. 23-2078, 2024 WL 2558735

(3d Cir. May 24, 2024) .............................................9

Harlow v. Fitzgerald,

457 U.S. 800 (1982) ................................................16

Hunter v. Bryant,

502 U.S. 224 (1991) ................................................11

In re Aearo Techs. LLC,

642 B.R. 891 (Bankr. S.D. Ind. 2022)....................13

In re Johns-Manville Corp.,

26 B.R. 405 (Bankr. S.D.N.Y. 1983) ......................13

In re KBR, Inc., Burn Pit Litig.,

268 F. Supp. 3d 778 (D. Md. 2017) ........................16

In re KBR, Inc., Burn Pit Litig.,

744 F.3d 326 (4th Cir. 2014)....................................9

In re KBR, Inc., Burn Pit Litig.,

893 F.3d 241 (4th Cir. 2018)..................................16

v

In re World Trade Ctr. Disaster Site Litig.,

521 F.3d 169 (2d Cir. 2008) .....................................9

McMahon v. Presidential Airways, Inc.,

502 F.3d 1333 (11th Cir. 2007)................................9

McManaway v. KBR, Inc.,

554 Fed. App’x 347 (5th Cir. 2014) ................. 11, 14

Mitchell v. Forsyth,

472 U.S. 511 (1985) ..........................................10, 16

Salim v. Mitchell,

183 F. Supp. 3d 1121 (E.D. Wash. 2016) ................9

Sanders v. Dep’t of Health and Hum Servs.,

No. 10-172, 2010 WL 5055823

(E.D. La. July 16, 2010) ...........................................9

Simmons v. Naphcare Inc.,

No. CV 19-01329-CJC, 2019 WL 13177046

(C.D. Cal. Nov. 7, 2019) ...........................................9

Stencel Aero Eng’g Corp. v. United States,

431 U.S. 666 (1977) ..................................................8

Taylor Energy Co. v. Luttrell,

3 F.4th 172 (5th Cir. 2021) ......................................9

United States v. Gaubert,

499 U.S. 315 (1991) ..................................................8

Yearsley v. W.A. Ross Constr. Co.,

309 U.S. 18 (1940) ....................................................3

vi

Statutes

28 U.S.C. § 2680(a) ......................................................8

41 U.S.C. § 253 ..........................................................14

Other Authorities

48 C.F.R. § 19.201(a) ...................................................6

48 C.F.R. § 31.205-19 ................................................15

48 C.F.R. § 31.205-47 ................................................15

48 C.F.R. § 52.228-7 ..................................................15

A Snapshot: Government-Wide Contracting, Gov’t

Accountability Off. (2024),

https://files.gao.gov/multimedia/Federal_Governme

nt_Contracting/index.html ..................................4, 6

Advanced Search, USAspending.gov,

https://www.usaspending.gov/search ..................5, 7

Al Shimari, et al. v. CACI, Ctr. for Const. Rts. (last

updated Jan. 14, 2025),

https://ccrjustice.org/AlShimari ............................10

Corrie et al. v. Caterpillar, Ctr. for Const. Rts. (last

updated Nov. 19, 2018),

https://ccrjustice.org/home/what-we-do/ourcases/corrie-et-al-v-caterpillar...............................10

vii

Defendants’ Status Report on Insurance Coverage

Proceedings, In re 3M Combat Arms Earplug

Prods. Liab. Litig.,

No. 19-md-2885 (N.D. Fla. May 20, 2024) ...... 12, 15

Discretionary Spending in Fiscal Year 2023: An

Infographic, Cong. Budget Off. (2024),

https://www.cbo.gov/publication/59729 ...................4

Hiring Freeze: Memorandum for the Heads of

Executive Departments and Agencies, 90 Fed. Reg.

8247 (Jan. 20, 2025) .................................................5

Master Settlement Agreement, In re 3M Combat

Arms Earplug Prods. Liab. Litig.,

No. 19-md-2885 (N.D. Fla. filed Aug. 29, 2023) ...12

S. Rep. No. 98-50 (1984) ............................................14

Stephen L. Schooner & Daniel S. Greenspahn, Too

Dependent on Contractors? Minimum Standards

for Responsible Governance, 6 J. Cont. Mgmt. 9

(Summer 2008).........................................................6

U.S. Gov’t Accountability Off., GAO-22-104621,

Small Business Contracting: Actions Needed to

Implement and Monitor DOD’s Small Business

Strategy (2021) .........................................................7

1

INTEREST OF AMICUS CURIAE1

The Professional Services Council–The Voice of the

Government Services Industry (“PSC”) is the national

trade association for the government professional and

technology services industry. Many of PSC’s more than 400

small, medium, and large member companies directly

support the U.S. Government, both domestically and

abroad, through contracts with federal agencies.

Approximately 40 percent of contracts held by PSC

members principally support the Department of Defense,

while 60 percent principally provide services to civilian

agencies. PSC’s members provide a wide range of

professional

and

technology

services,

including

information technology, engineering, logistics, facilities

management, operations and maintenance, consulting,

international development, and scientific, social, and

environmental services. Two-thirds of PSC’s members

qualify as small businesses. Collectively, PSC’s members

employ hundreds of thousands of Americans in all 50

States, the District of Columbia, and abroad.

The wide range of services provided by PSC

members include projects that support inherently

dangerous,

high-risk,

and

politically-controversial

government functions. As a result of carrying out federal

directives under such projects, PSC members face a

heightened risk of litigation. Given the potential for

protracted litigation, PSC members have a profound

1 This brief was not authored in whole or in part by counsel for any

party, and no person or entity, other than amicus curiae, its members,

or its counsel, made a monetary contribution to the preparation or

submission of this brief. The parties received timely notice of the intent

of amicus curiae to file this brief.

2

interest in certainty and predictability regarding the early

resolution of the threshold defense of derivative sovereign

immunity. The availability of a clear procedural pathway

to resolving this immunity defense at an early stage is

critical for members’ willingness to participate in the

procurement process at the outset.

The erroneous rule of law adopted by the Tenth

Circuit and four other circuits escalates uncertainties faced

by PSC members. If left undisturbed, the holding will have

grave real-world impacts on the federal procurement

system. The holding not only harms PSC members, but also

increases costs to the government and hinders the

government’s ability to carry out essential functions.

SUMMARY OF ARGUMENT

The federal government relies on contractors to

support a staggering quantity and variety of vital

government functions. Our nation’s reliance on contractors

has become so ubiquitous that the government would not

be able to function as currently comprised without a robust

business base participating in the federal procurement

system.

As the government’s reliance on contractors has

grown in recent years, those contractors have become the

target of an increased number of lawsuits related to

contract performance. The proliferation of claims against

contractors is, in part, a product of the inherent challenge

in suing the government, which enjoys broad immunity

and has been remarkably effective at defending itself from

suit. As a result, plaintiffs often elect to sue contractors

who have partnered with the government, rather than the

government itself.

3

Many suits arising in this context should fail as a

threshold matter because, under this Court’s longstanding

precedent, contractors are immune from suit for executing

the will of the government, and “[t]he action of the agent is

the act of the government.” Yearsley v. W.A. Ross Constr.

Co., 309 U.S. 18, 22 (1940). But in practice, the basic

purpose of derivative sovereign immunity under Yearsley—

shielding the performance of government functions against

disruptive litigation—is only served if contractors can

resolve immunity claims early in the litigation process.

The Tenth Circuit’s holding creates increased, yet

unwarranted, uncertainties for contractors. In turn, the

holding will harm the federal procurement system and will

have a substantial and deleterious impact on key

government functions.

First, by denying contractors the right to an

immediate interlocutory appeal where Yearsley immunity

may apply, the rule adopted by the Tenth Circuit and four

other circuits will reduce the number of contractors willing

to compete for contracts that are critical to the functioning

of the government. Under the Tenth Circuit’s approach,

contractors face the risk of insurmountable and enterprisethreatening litigation costs—even in cases where

immunity applies but is incorrectly denied. Faced with this

increased risk, rational, cost-sensitive contractors will

choose not to do business with the government.

Second, the Tenth Circuit’s holding will harm the

federal government by increasing procurement costs and

wasting government resources. A smaller pool of

contractors competing for contracts means less

competition, which inflates prices. As to those contractors

willing to compete for this work, the government will

4

inevitably have to pay higher prices to offset higher

potential litigation costs. Beyond that, contractors faced

with an increased threat of protracted litigation will be

stuck paying higher insurance costs and legal costs, both of

which pass on to the government under cost-type contracts

or through higher fixed-price offers. Finally, litigation

against contractors—even where the government itself is

not a party—inevitably impacts the government’s ability to

execute the affected contracts and programs, and this type

of litigation typically requires discovery against the

government, which further diverts limited agency

resources and personnel.

ARGUMENT

I.

Contractors Provide Critical Support for an

Immense Quantity and Wide Variety of Vital

Government Functions.

The federal government is the single largest

purchaser of products and services in the world. In fiscal

year 2023, the federal government obligated $759 billion

through six million contracts—over 44 percent of federal

discretionary spending for the year. $478 billion of the $759

billion funded service contracts; in one year alone, the

government relied on contractors for nearly half a trillion

dollars’ worth of services provided to and on behalf of the

government.

See

A

Snapshot:

Government-Wide

Contracting,

Gov’t

Accountability

Off.

(2024),

https://files.gao.gov/multimedia/Federal_Government_Con

tracting/index.html; Discretionary Spending in Fiscal Year

2023: An Infographic, Cong. Budget Off. (2024),

https://www.cbo.gov/publication/59729.

5

The government’s reliance on contractors is growing.

Between fiscal years 2008 and 2016, procurement spending

fluctuated between $439 billion and $561 billion.2 Since

2016, coinciding with President Trump’s first term in office

and continuing through President Biden’s presidency,

procurement spending consistently increased year over

year from $475 billion in 2016 to $759 billion in 2023. With

President Trump beginning a second term in office with a

stated intention to significantly downsize the federal

workforce, procurement spending could continue to rise as

the government necessarily relies on contractors to

perform an increasing proportion of government functions.

See Hiring Freeze: Memorandum for the Heads of

Executive Departments and Agencies, 90 Fed. Reg. 8247,

8247 (Jan. 20, 2025).

Contractors perform a broad array of services in

support of agencies and programs that extend across the

entire federal government. Of the $478 billion spent on

service contracts in 2023, $248 billion—more than half—

funded service contracts across the full range of civilian

agencies. The most prominent service categories for 2023

included professional support services, health care

services, building operation services, and information

technology and telecommunications services. $230 billion

funded a broad range of service contracts for the

2 These figures are based on data available through USAspending.gov.

Advanced

Search,

USAspending.gov,

https://www.usaspending.gov/search (last visited Feb. 11, 2025) (select

“Fiscal years” tab in “Time Period” dropdown; select desired fiscal year;

select “Contracts” and “Contract IDVs” from “Award Type” dropdown;

click “Submit”; scroll down to “Results Over Time” graphic; select “By

Year”; hover cursor over graph to view fiscal year total; repeat for each

fiscal year).

6

Department of Defense, with major service categories

including engineering and technical support services,

health care services, and logistics support. See A Snapshot:

Government-Wide Contracting, Gov’t Accountability Off.

(2024), supra.

In particular, contractors perform a large number of

critical support functions that are inherently dangerous

and involve a high risk of harm to third parties or damage

to property. This includes, for example, providing support

to military missions in combat zones, cleaning up

environmental and industrial incidents, developing and

distributing vaccines, and transporting astronauts to the

International Space Station. See, e.g., Stephen L. Schooner

& Daniel S. Greenspahn, Too Dependent on Contractors?

Minimum Standards for Responsible Governance, 6 J.

Cont. Mgmt. 9, 12 (Summer 2008) (“[T]he government

today relies upon contractors for increasingly critical and

sensitive defense-related tasks, and turns more and more

to contractors for healthcare, education, welfare, and

prison management[,] . . . disaster relief, border security,

port security, and policing, [and] . . . military and foreign

operations.”).

Contractors of all sizes perform work for the federal

government, and this includes—by design—a substantial

number of small businesses. See, e.g., 48 C.F.R. § 19.201(a)

(describing the government’s policy of providing

“maximum practicable opportunities in its acquisitions to

small business, veteran-owned small business, servicedisabled veteran-owned small business, HUBZone small

business, small disadvantaged business, and womenowned small business concerns”). The government

awarded nearly three-million contracts to small businesses

7

in fiscal year 2023 for a total of $177 billion—roughly one

quarter of total procurement spending for the year.3

Notwithstanding the growth in spending on federal

contracts, the total number of contractors performing these

critical services is decreasing. Between 2011 and 2020, the

number of small businesses receiving Department of

Defense contract awards declined 43 percent, falling at a

rate of 6 percent per year. The number of larger businesses

receiving contract awards fell at an even higher rate of 7.3

percent per year over the same period. U.S. Gov’t

Accountability Off., GAO-22-104621, Small Business

Contracting: Actions Needed to Implement and Monitor

DOD’s Small Business Strategy 8-9 (2021) (“Overall, DOD

awarded contracts to almost 25,000 fewer businesses in

2020 than it did in 2011.”). With a shrinking supply of

contractors performing an increasing volume of contracts,

the federal procurement system is vulnerable to

contractors’ changing perceptions of the risks involved in

contracting with the government.

II.

In Recent Decades, Contractors Have Been

Increasingly Targeted in Lawsuits Arising Out

of a Broad Spectrum of Federal Programs.

As contractors have played a greater role in

supporting the government’s broad spectrum of mandates,

contractors have correspondingly become involved in an

3 Advanced Search, USAspending.gov, supra (select “Fiscal years” tab

in “Time Period” dropdown; select “FY 2023”; select “Contracts” and

“Contract IDVs” from “Award Type” dropdown; expand “Recipient

Type” dropdown; select “Small Business” from “General Business”

dropdown; click “Submit”; scroll down to “Results Over Time” graphic;

select “By Year”; hover cursor over graph to view fiscal year total).

8

increasing number of lawsuits related to their performance

of government contracts. This increase is due in large part

to the legal landscape that has developed around lawsuits

against the government. Plaintiffs often elect to sue

contractors, rather than the government dictating the

contractors’ actions, because the government is generally

immune from private civil actions under the doctrine of

sovereign immunity. See, e.g., Campbell-Ewald Co. v.

Gomez, 577 U.S. 153, 166 (2016); Cunningham v. Gen.

Dynamics Info. Tech., Inc., 888 F.3d 640, 643 (4th Cir.

2018). Aided by numerous statutory defenses and common

law rules—such as the Feres Doctrine, the Stencel Aero

rule, and the “discretionary function” exception to the

Federal Tort Claims Act—the government is exceptionally

effective at defending itself from suit. See Feres v. United

States, 340 U.S. 135, 146 (1950) (holding immunity bars

claims by servicemembers against the government for

injuries incident to military service); Stencel Aero Eng’g

Corp. v. United States, 431 U.S. 666, 673 (1977) (holding

the government is not liable under third-party indemnity

actions when the injured party is a servicemember); 28

U.S.C. § 2680(a) (providing immunity for government

officials performing a discretionary function, even if the

discretion is abused); United States v. Gaubert, 499 U.S.

315, 334 (1991) (applying discretionary function exception);

cf. Filarsky v. Delia, 566 U.S. 377, 391 (2012) (“Because

government employees will often be protected from suit by

some form of immunity, those working alongside them

could be left holding the bag . . . .”).

Over the past several decades, lawsuits against

contractors have arisen under contracts for a broad

spectrum of services, including the operation of detention

facilities in support of U.S. immigration law as in the

9

present case, the design of nuclear reactors for the Navy,

see Gay v. A.O. Smith Corp., No. 23-2078, 2024 WL

2558735, at *1 (3d Cir. May 24, 2024), clean-up operations

at the World Trade Center disaster site after the

September 11, 2001 terrorist attacks, see In re World Trade

Ctr. Disaster Site Litig., 521 F.3d 169, 196 (2d Cir. 2008),

servicing Department of Education student loans, see

Berman v. Penn. Higher Educ. Assistance Agency, No. 231414, 2024 WL 1615016, at *1 (4th Cir. Apr. 15, 2024),

administering the Medicare program, Sanders v. Dep’t of

Health and Hum Servs., No. 10-172, 2010 WL 5055823, at

*1 (E.D. La. July 16, 2010), informing health insurance

applicants about eligibility for qualified health plans under

the Affordable Care Act, Cunningham, 888 F.3d at 644,

hazardous substance and industrial incident cleanup, see

Taylor Energy Co. v. Luttrell, 3 F.4th 172, 174 (5th Cir.

2021); Adkisson v. Jacobs Eng’g Grp., Inc., 790 F.3d 641,

643-44 (6th Cir. 2015), waste disposal and water treatment

at military bases, see In re KBR, Inc., Burn Pit Litig., 744

F.3d 326 (4th Cir. 2014), providing medical services in

correctional institutions, see Simmons v. Naphcare Inc.,

No. CV 19-01329-CJC, 2019 WL 13177046, at *1 (C.D. Cal.

Nov. 7, 2019), repairing military vehicles in combat zones,

see Abernathy v. Carlyle Grp., Inc., No. 22-3603, 2024 WL

5331993, at *2 (D.D.C. Sept. 27, 2024), developing

interrogation techniques for use against captured enemy

combatants, see Salim v. Mitchell, 183 F. Supp. 3d 1121

(E.D. Wash. 2016), and providing mission support services

on the battlefield, see Equal Emp. Opportunity Comm’n v.

Fluor Fed. Glob. Projects, Inc., No. 22-cv-1960-HMH, 2022

WL 17406568, at *1 (D.S.C. Oct. 31, 2022); McMahon v.

Presidential Airways, Inc., 502 F.3d 1333, 1336 (11th Cir.

2007).

10

Contractors have also increasingly faced the threat

of lawsuits brought or funded by interest groups as a

means to challenge controversial government policies

without engaging Congress or the administrative

rulemaking process. See, e.g., Al Shimari v. CACI Premier

Tech., Inc., 775 F. App’x 758 (4th Cir. 2019); Al Shimari, et

al. v. CACI, Ctr. for Const. Rts. (last updated Jan. 14,

2025), https://ccrjustice.org/AlShimari (explaining that

Center for Constitutional Rights brought suit on behalf of

plaintiffs to challenge the Iraq War); Corrie v. Caterpillar,

Inc., 503 F.3d 974 (9th Cir. 2007); Corrie et al. v.

Caterpillar, Ctr. for Const. Rts. (last updated Nov. 19,

2018),

https://ccrjustice.org/home/what-we-do/ourcases/corrie-et-al-v-caterpillar (explaining that multiple

interest groups brought suit against Caterpillar on behalf

of plaintiffs to challenge U.S. policy regarding Israel’s

demolition actions in Palestinian Territories).

III. By Denying Contractors the Right to Immediate

Appellate Review When Yearsley Immunity May

Apply, the Tenth Circuit’s Decision Harms the

Contracting Community and Undermines the

Government’s Ability to Efficiently and

Effectively Carry Out Critical Functions.

By providing immunity from suit, derivative

sovereign immunity under Yearsley shields contractors—

and in turn the government—from the deleterious impacts

of protracted litigation related to the performance of

important government functions. See Mitchell v. Forsyth,

472 U.S. 511, 525-26 (1985) (recognizing, in the context of

qualified immunity for government officials, that

immunity protects government agents not only from

liability for money damages, but also from the disruptive

impact of subjecting government officials to trial); see also

11

Cunningham, 888 F.3d at 643 (“[Derivative sovereign]

immunity derives from ‘the government’s unquestioned

need to delegate certain functions,’ and the

acknowledgement that ‘[i]mposing liability on private

agents of the government would directly impede the

significant governmental interest in completion of its

work.’” (quoting Butters v. Vance Int’l, Inc., 225 F.3d 187,

193-94 (4th Cir. 2009))). But derivative sovereign

immunity cannot serve this fundamental purpose without

the right to an immediate appeal of an adverse ruling as to

the availability of immunity. See Hunter v. Bryant, 502

U.S. 224, 227 (1991) (“[W]e repeatedly have stressed the

importance of resolving immunity questions at the earliest

possible stage in litigation.”); cf. McManaway v. KBR, Inc.,

554 Fed. App’x 347, 353-54 (5th Cir. 2014) (Jones, J.,

dissenting) (“At the very least, courts must be required to

rule on this exception at the earliest possible stage of

litigation. . . . [F]orcing [contractors] to participate, as in

this case, in lengthy discovery, depositions, and

interpretation of the contractual clauses seriously

undermines the law.”).

In the context of derivative sovereign immunity, the

lack of immediate appeal undermines the government’s

ability to carry out important functions in two key ways:

(1) by heightening the already-substantial risks of

litigation, such that potential offerors avoid competing for

contracts; and (2) by increasing costs and burdens imposed

on the government, thereby straining agency resources.

12

A.

The Tenth Circuit’s Decision Heightens the

Substantial Business Risks Associated with

Performing Federal Contracts, Which Will

Reduce the Number of Contractors Willing

and Able to Support Key Government

Programs.

Litigation poses three key business risks for

contractors. First, contractors face the possibility of

massive damages if found liable for actions related to

contract performance, or if forced to settle claims. See, e.g.,

Master Settlement Agreement, In re 3M Combat Arms

Earplug Prods. Liab. Litig., No. 19-md-2885 (N.D. Fla. filed

Aug. 29, 2023) (resulting in $6 billion multidistrict

litigation settlement). Second, contractors may face

significant reputational harm, both with government

customers and in commercial markets more broadly.

Finally, and most critically here, contractors face the risk

of

incurring

enormous—and

in

some

cases

insurmountable—costs during the litigation process itself,

even before any determination on the merits is reached.

Defendants’ Status Report on Insurance Coverage

Proceedings at 2, In re 3M Combat Arms Earplug Prods.

Liab. Litig., No. 19-md-2885 (N.D. Fla. filed May 20, 2024)

(stating that, as of the date of filing the status report,

defendant contractors’ defense costs totaled over $370

million). See also, for example, the 17-year litigation

timeline in Al Shimari v. CACI Premier Tech., Inc., 775 F.

App’x 758, 759-60 (4th Cir. 2019) (denying collateral order

review of denial of derivative sovereign immunity).

Early resolution of derivative sovereign immunity

mitigates all three of these risks, but especially so the risk

of insurmountable litigation costs. Enduring the full

expense of discovery and trial before appealing denials of

13

derivative sovereign immunity can deplete company

resources and force contractors to dissolve their business

or file for bankruptcy even before incurring the cost of

liability. See, e.g., In re Johns-Manville Corp., 26 B.R. 405,

407-08 (Bankr. S.D.N.Y. 1983) (filing for bankruptcy due to

financial difficulties resulting from manufacturer’s

position as defendant in more than 2,000 asbestos lawsuits

costing approximately $40,000 per case, excluding

appeals); In re Aearo Techs. LLC, 642 B.R. 891 (Bankr. S.D.

Ind. 2022) (filing for bankruptcy when faced with

approximately 2,700 lawsuits related to contract for

Combat Arms Earplugs). Although large, established

government contractors may have sufficient revenue

streams to withstand district court litigation through

discovery and trial—before an appeal can be heard on the

issue of derivative sovereign immunity—many contractors,

particularly small businesses, do not.

Thus, where contractors face a heightened risk that

performance of a government contract will result in costly,

protracted litigation, businesses are less likely to offer

their services and expertise to the government. For

example, with the expectation that the government would

seek to award contracts to operate detention facilities in

anticipation of mass deportation action following President

Trump’s inauguration in January 2025, contractors have

expressed reluctance to compete for these contracts based

on, among other things, the risk of tort litigation and the

uncertainty regarding interlocutory appeal of derivative

sovereign immunity determinations. Similarly, contractors

have also expressed reluctance to compete for contracts in

hostile overseas environments for reasons that include

liability related to sudden policy changes by the U.S.

14

government that

arrangements.

B.

could

alter

contractual

security

The Tenth Circuit’s Decision Increases

Costs to the Government and Further

Strains Limited Agency Resources.

The Tenth Circuit’s ruling will increase costs and

burdens imposed on the federal government in numerous

direct and indirect ways.

To begin with, as explained supra, the ruling will

reduce the number of participants in the federal

marketplace. A smaller pool of contractors means less

competition, which typically results in higher average

procurement costs for the government. See Competition in

Contracting Act, 41 U.S.C. § 253 (prescribing requirements

for full and open competition and generally seeking to

maximize the number of qualified offerors); Am. Fed’n of

Gov’t Emps., Local 2119 v. Cohen, 171 F.3d 460, 472 (7th

Cir. 1999) (recognizing that, by requiring full and open

competition in the procurement process, “41 U.S.C. § 253

was meant to save money, curb cost growth, promote

innovation and the development of high quality technology

and to maintain ‘the integrity of the expenditure of public

funds.’” (quoting S. Rep. No. 98-50, at 2-4 (1984))); cf.

McManaway v. KBR, Inc., 554 Fed. App’x at 354 (Jones, J.,

dissenting) (“The United States ultimately pays the

judgment, if not by indemnifying [the contractor], then by

having

to

pay

ever-higher

costs

for

private

contractors . . . .”).

Contractors bidding on many projects will be forced

to seek higher prices to offset potential litigation costs. As

the Court noted in Boyle v. United Techs. Corp., “[t]he

15

imposition of liability on Government contractors will

indirectly affect the terms of Government contracts: either

the contractor will decline to manufacture the design

specified by the government, or it will raise its price. Either

way, the interests of the United States will be directly

affected.” 487 U.S. 500, 507 (1988). With the increased risk

of protracted litigation in which threshold issues may not

be resolved for a matter of years, contractors are only

further incentivized to seek higher prices in their proposals

to counterbalance their potential exposure.

The heightened risk of protracted litigation has

especially significant consequences for the government in

the context of cost-reimbursement contracts, where the

costs of insurance and legal fees are generally passed on to

the government. See 48 C.F.R. § 52.228-7 (requiring the

government to reimburse contractors for the cost of liability

insurance in cost-reimbursement contracts); 48 C.F.R.

§ 31.205-19 (providing that self-insurance and purchased

insurance are generally allowable costs that can be charged

to the government); 48 C.F.R. § 31.205-47 (describing

allowable and unallowable legal costs). Insurance costs rise

because insurers must account for the heightened chance

of protracted litigation in addition to potential liability. See

Defendants’ Status Report on Insurance Coverage

Proceedings at 1-3, In re 3M Combat Arms Earplug Prods.

Liab. Litig., No. 19-md-2885 (N.D. Fla. filed May 20, 2024)

(demonstrating that insurance companies will protect their

interests when faced with large insurance payouts in

contractor tort lawsuits). Legal costs rise because, as

discussed, the lack of immediate appeal forces contractor

defendants to endure the full extent of proceedings,

including discovery and trial on the merits, even where

denial of immunity was inappropriate.

16

Lengthy litigation against contractors also strains

agency resources and distracts officials from their duties.

When a suit arises out of performance of a government

contract, litigation on the merits, including discovery,

almost always requires extensive involvement by agency

officials, even when the government is not itself a party to

the lawsuit. See, e.g., In re KBR, Inc., Burn Pit Litig., 268

F. Supp. 3d 778, 787-88 (D. Md. 2017) (requiring

participation by dozens of government attorneys to appear

at hearings and depositions and review and produce

hundreds of thousands of contracting records), aff’d in part,

vacated in part, In re KBR, Inc., Burn Pit Litig., 893 F.3d

241 (4th Cir. 2018); see also Mitchell v. Forsyth, 472 U.S. at

526 (“[E]ven such pretrial matters as discovery are to be

avoided if possible, as ‘[i]nquiries of this kind can be

peculiarly disruptive of effective government.’” (quoting

Harlow v. Fitzgerald, 457 U.S. 800, 816-17 (1982))). Here,

for example, as the Petition ably describes, further

litigation will place substantial demands on ICE officials

involved in overseeing the Aurora Immigration Processing

Center and monitoring GEO’s implementation of its

contract if, as the Tenth Circuit held, the defendant cannot

appeal the district court’s denial of derivative sovereign

immunity before a full trial on the merits. See Pet. at 31.

Agencies that are forced to divert resources and personnel

to support private litigation cannot devote full attention

and capacity to executing critical programs and mandates.

CONCLUSION

As long as some circuits do not recognize an

immediate appeal right for denials of derivative sovereign

immunity under Yearsley, the federal government

contracting community must evaluate and account for

increased uncertainties and significant, business-altering

17

threats. The Tenth Circuit’s ruling only further elevates

and expands these risks.

The rule adopted by the Tenth Circuit harms

contractors and the government. Contractors faced with an

increased risk of protracted litigation will be discouraged

from performing government projects. Fewer businesses

competing for contracts restricts the government’s choices

and reduces price competition, thereby increasing costs

and potentially lowering the quality of services provided to

the government. Contractors that continue to bid on highrisk projects will be forced to demand higher prices. The

result will be higher procurement costs and greater

burdens—all of which will be ultimately borne by the

government. For small business and cost-sensitive

contractors, the risks are particularly acute, as those

entities could face bankruptcy or dissolution—solely from

being haled into court, and regardless of the ultimate

merits of the claims.

In light of the government’s increasing reliance on

contractors to perform a growing quantity and variety of

critical functions, the current uncertainty regarding

interlocutory appeals under these circumstances

substantially undermines the government’s ability to

efficiently and effectively serve the public.

For the foregoing reasons, the Court should grant

the Petition.

18

Respectfully submitted,

Daniel L. Russell Jr.

Counsel of Record

Raymond B. Biagini

Evan K.W. Matsuda

COVINGTON & BURLING LLP

One CityCenter

850 Tenth Street, NW

Washington, DC 20001

drussell@cov.com

(202) 662-6000

February 2025

Counsel for Amicus Curiae