Along with other trade organizations, the NAPHCC filed the brief in the U.S. Department of Army v. Blue Fox Inc. case. At issue is whether a subcontractor can sue a federal agency for payment not made by the prime contractor. Arguments were heard Dec. 1.
"The Blue Fox case is important because it could strengthen bonding rights for subcontractors," the organization said. "The case revolves around the Miller Act and the ability of the subcontractor to receive payment for services rendered."
Payment bonds allow subcontractors to place a lien on an owner’s property in case a subcontractor is not paid for their services. Federal property, however, is owned by the public — and cannot have a lien placed on it. The Miller Act states that the federal government must require the prime contractor to secure a payment bond to protect people supplying labor and material to the project.
The trade organizations support Blue Fox’s position. A Supreme Court ruling in favor of the subcontractor would make the federal government accountable for its mistakes and ensure that subcontractors will be paid for their work on federal projects — even if the government fails in its responsibility to ensure a Miller Act bond is in place.
"As a subcontractor who has been hurt financially by the current lien rights situation under the Miller Act, I wholeheartedly support this effort to make sure subcontractors like myself are protected in the future," said PHCC member Jim Witten, of Witten Bros. Inc. in Charlestown, Ind. "When prime contractors do not make payments to subs and the Federal agency involved fails to get the required bonding, that Federal agency should pay the bill."
Blue Fox, a subcontracting firm working on an army depot in Oregon, was not paid for its work after the prime contractor went bankrupt. The Army’s contracting officer failed to require the prime contractor to secure a Miller Act bond.
Blue Fox sued the Department of Army for the money owed to them for the work completed, but the Army argued they did not have to pay. The Army said the blame fell to the prime contractor, and that they could not be sued under the doctrine of sovereign immunity, which holds that the federal government cannot be sued for money damages unless Congress has passed a law permitting the suit.
Lower courts have sided with both parties, most recently the 9th Federal Circuit Court in favor of Blue Fox.
A decision from the Supreme Court will be issued in the spring of 1999.
