Government Avoids Liability on Contractor Pass-Through Claim

摘要

Mny engineers are familiar with the well-established rule set forth in Severin v. United States. Under the Severin doctrine, a prime contractor may sue the government on behalf of its subcontractor without falling afoul of the privity rule as long as the contractor remains otherwise liable to its subcontractor for the amounts sought in the claim. In these circumstances, the government may be required to pay a contractor that has already reimbursed its subcontractor or that remains potentially liable for the costs in dispute. However, if the government challenges the contractor's standing to bring suit on its subcontractor's behalf, it bears the burden of proof. In other words, in order to successfully present a Sevenin-type defense with regard to liability, the government must present evidence of an "ironbound release" demonstrating that the contractor is completely shielded from any liability to its subcontractor.