Contracting with Caution: Supreme Court Rulings Reshape Risk

Welcome to Womble Perspectives. Today we’re unpacking two recent U.S. Supreme Court matters that could significantly impact government contractors.

One case could redefine when contractors can invoke sovereign immunity. The other expands the government’s power to prosecute fraud—even when no financial harm is shown. 

Read the full article: Recent Supreme Court Activity with Major Implications for Government Contractors

About the authors:

• Matthew P. Delfino
• Luke Cass
• Joshua A. Mullen

Transcript

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Welcome to Womble Perspectives. Today we’re unpacking two recent U.S. Supreme Court matters that could significantly impact government contractors.

One case could redefine when contractors can invoke sovereign immunity. The other expands the government’s power to prosecute fraud—even when no financial harm is shown. Let’s dive in.

In early June 2025, the Supreme Court agreed to hear a case brought by The GEO Group, Inc., a government contractor operating a detention facility under contract with U.S. Immigration and Customs Enforcement.

The plaintiffs—detainees—allege that GEO violated the federal Trafficking Victims Protection Act and was unjustly enriched under Colorado law through forced labor.

GEO responded with a motion for summary judgment, invoking the Yearsley doctrine. This doctrine provides derivative sovereign immunity to contractors when they act under valid government authorization and follow government direction.

But the district court rejected GEO’s defense, saying ICE didn’t specifically direct the alleged conduct. The Tenth Circuit then dismissed GEO’s appeal, ruling that the immunity claim wasn’t “completely separate” from the case’s merits.

Now, the Supreme Court will weigh in during its October 2025 term. A ruling in GEO’s favor could strengthen contractors’ ability to raise sovereign immunity early in litigation—potentially avoiding costly legal battles.

In a separate but equally important decision, the Supreme Court recently upheld a wire fraud conviction in Kousisis v. United States. The case involved a contractor who made false representations to win a state bridge painting contract.

Here’s the twist: the state agency—PennDOT—was satisfied with the work and suffered no economic loss. Still, the Court ruled that the contractor’s misrepresentation violated the federal wire fraud statute.

Why? Because the statute doesn’t require proof of financial harm. It only requires a scheme to obtain money or property through false pretenses.

In this case, the contractor falsely claimed that a Disadvantaged Business Enterprise, or DBE, would perform a meaningful role in the project. In reality, the DBE was just a pass-through entity.

The Court’s message was clear: fraud is fraud, even if the victim doesn’t lose a dime.

These two cases send a powerful message to government contractors.

First, the Yearsley doctrine remains a valuable shield—but only if your actions are clearly authorized and directed by the government. That means tight compliance, clear documentation, and strict adherence to contract terms.

Second, Kousisis raises the stakes for how you represent your qualifications and intentions during the bidding process. Even if your work is flawless, misrepresentations—intentional or not—can lead to criminal liability.

So, what should companies do?

Actively monitor litigation trends and Supreme Court rulings that affect your risk profile.

Invest in robust compliance programs that include clear policies, internal reporting channels, and third-party vetting.

Train your teams—especially those involved in procurement—on the importance of accurate certifications and representations.

And finally, engage experienced government contracts counsel early and often. Legal guidance during the bidding and execution phases can help you avoid costly missteps.

Remember, compliance isn’t just good business—it’s protection. The Department of Justice has consistently credited companies with strong compliance programs when determining penalties and enforcement outcomes.

The legal landscape for government contractors is shifting. Sovereign immunity defenses may become harder to assert. And fraud enforcement is expanding—even in the absence of financial harm.

Staying ahead means staying informed, staying compliant, and staying strategic.

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