By: Nicholas Skubisz-Gonzalez

From air transport to nuclear energy, military contractors in the United States have famously benefitted from the expansive government funding necessary to develop new technology and implement it at scale. However, when issues come up with these projects, who pays the human costs associated with failure by contractors?

The answer, since 1988, has largely been that liability should never rest with the contractors that created the equipment at issue, so long as they satisfy all three elements of the Government Contractor Defense set out in Boyle v. United Technologies Corp. This case involved the death of a Marine Corps pilot due to an escape hatch defect, which resulted in a products liability case brought by his family against the company that created said escape hatch. The District Court initially ruled in favor of Boyle under state tort law, which was reversed on appeal to the Fourth Circuit, leading to the Supreme Court ruling that the manufacturer was immune from liability for this incident since it had simply built the helicopter (including the escape hatch) according to government specifications. The test created in Boyle requires that a contractor need only show that (1) the United States agreed to reasonably precise specifications, (2) the equipment satisfied those specifications, and (3) the supplier warned the United States about any dangers in using the equipment that they knew of and which the United States did not. This defense gives manufacturers the benefit of resolving cases before they are forced to go through costly litigation or risk discovery.

Under the defense set out in Boyle, which has largely been expanded in its applicability in the decades since, and only rarely limited, an increasingly large portion of government contractors have gained immunity from products liability claims by third parties. This most importantly includes blocking suits by the military servicemembers they are meant to benefit.

How does the Government Contractor Defense apply in modern defense contracts?

One of the major military contracts that poses a risk of possibly requiring this defense is the Army’s Integrated Visual Augmentation System (IVAS), a helmet incorporating various elements of virtual and mixed reality to enhance soldier perception on the battlefield. This project was initially awarded to Microsoft in 2018 with the intent of creating prototypes for testing before full production began. That said, issues have arisen over the years due to a failure to ensure user acceptance among military personnel, i.e. how many soldiers actually approve of their future equipment. This issue puts the $21.88 billion contract at risk, according to a 2022 Department of Defense audit by the Inspector General. The report states that the product description lacks any measurement for user acceptance, despite the fact that the Army’s sole measurement for system acceptability is user acceptance.

If relying on the elements in Boyle, this project could pose a significant risk to manufacturers. With this technology, the manufacturer has been provided with limited specifications and an inability to satisfy them due to a lack of adequate user satisfaction metrics. User satisfaction metrics are testing requirements for system effectiveness when used by the intended users, in this case soldier satisfaction with IVAS systems. Barring portions of the contract which may not be publicly available, the defense might not be applicable here, which could explain the recent history of the contract. Despite its value, the Army handed over control of the IVAS contract to Anduril Industries via a contract novation signed off on April 10, 2025. A contract novation is the legal process of replacing one party in a contract with another, shifting both the rights and responsibilities specified in the contract onto the new party with the consent of all involved.

A unique point to make on this contract changeover is how the scope of responsibilities have changed for each contractor given the modern landscape. The US military has in recent years reported a troublesome “substantial consolidation” of military contractors, resulting in their goal of diversifying reliable sources of supply to involve more businesses. When this contract was initially awarded to Microsoft, the goal was to create effective helmets with Mixed Reality capabilities that expanded the soldier’s awareness on the battlefield. While the hardware hasn’t resulted in any serious public concerns for the Army, this initial project did result in several software problems that warranted recompeting the contract, which Microsoft ultimately lost to Anduril. This has changed since the contract novation, since Microsoft now only provides the hardware they already developed, and Anduril is only responsible for working on the software and integration component of the contract, getting their EagleEye software to operate on the Microsoft hardware. Anduril has conducted several tests to ensure compatibility with the existing Microsoft created IVAS 1.2 design, but if this software-hardware connection should fail in any way in the field, a valid question remains on who would be responsible.

Who’s holding the liability hot potato?

Microsoft created the nausea-inducing headset under the original contract, Anduril focused on enhancing the software for user comfort and capabilities and was handed responsibility for the full contract, and in both instances the technology seems to be on the cutting edge of Mixed Reality capabilities. Was it even possible to articulate any reasonably precise specifications for either company?

Common practice might suggest that any tort cases involving this equipment might base liability off of the party responsible for the portion of the hardware or software at issue, yet the Government Contractor Defense presents potentially significant limits for litigants. One of the main limits at issue is the ability to limit the scope of discovery due to confidentiality concerns and the need for testimony by government personnel. This creates a trend of cases where plaintiffs lack meaningful information on the equipment that caused their injuries, preventing them from identifying the root cause, or the real defendant responsible. While the types of cases covered by the defense created in Boyle have grown over the decades since, the current doctrine creates a legal limbo for contracts on developing technologies that have, by their nature, extremely imprecise specifications and multiple contractors taking on full responsibility for different phases of development for the same equipment.Should the defense be expanded to accommodate current practices, as it historically has been post-Boyle? Should it be restricted to assume that liability exists unless the military specifically approved the conduct at issue, as Justice Kagan suggested in a case currently before the Supreme Court? The ideal solution going forward largely depends on an individual’s own balancing on the importance of innovation versus accountability.

#WJLTA #Military-Contractor #Products-Liability