## Facts

- The Department of the Army contracted with Verdan Technology, Inc. to install a telephone switching system at an Army depot in Oregon; Verdan subcontracted part of the work to Blue Fox, Inc.
- Although federal construction contracts typically require Miller Act payment and performance bonds, the Army treated the agreement as a services contract and removed the bond requirement.
- Verdan became insolvent and did not pay Blue Fox for completed work.
- Blue Fox sued the Army seeking to enforce an equitable lien on (1) unpaid contract funds held by the Army and (2) other funds available to complete the project, requesting that the money be paid directly to Blue Fox.

## Issues

1. Whether 5 U.S.C. § 702 waives federal sovereign immunity for a subcontractor’s suit to enforce an equitable lien on government-held funds to recover amounts unpaid by an insolvent prime contractor.
2. Whether the requested equitable lien constitutes “relief other than money damages” within the meaning of § 702.

## Decision

- The Supreme Court reversed the Ninth Circuit and remanded.
- Section 702 does not waive sovereign immunity for Blue Fox’s equitable lien claim against government funds.
- The relief sought was treated as “money damages” because it would attach government funds to compensate Blue Fox for Verdan’s nonpayment.
- Section 702 did not abrogate the settled rule that creditors may not enforce liens or attachments against government property or Treasury funds absent an explicit statutory waiver.

## Legal Principles

- The United States and its agencies are immune from suit unless Congress unequivocally waives sovereign immunity in statutory text.
- Waivers of sovereign immunity are strictly construed in favor of the sovereign.
- Under § 702, the “relief other than money damages” limitation turns on whether the remedy is specific relief (giving the claimant what it is entitled to) or substitute/compensatory relief (money as compensation for a loss).
- A creditor-style equitable lien that would seize government-held funds to satisfy a third party’s debt is a form of substitute relief and falls outside § 702’s waiver.
- Surety subrogation precedents concerning priority to contract funds do not create or expand a sovereign-immunity waiver for a subcontractor’s direct lien-enforcement action against the United States.

## Conclusion

The Court held that APA § 702 does not permit a subcontractor to bypass an insolvent prime contractor by imposing an equitable lien on federal funds, because such a remedy functions as money damages and sovereign immunity bars lien enforcement against government property without a clear congressional waiver.


Department of the Army v. Blue Fox, Inc., 525 U.S. 255 (1999)