The majority opinion identifies three independent grounds for rejecting the Fourth Circuit’s preemption rule, each with distinct significance for federal contractors.
The U.S. Supreme Court's April 22, 2026, decision in Hencely v. Fluor Corp. rejected the recent expansion of the government-contractor defense for private contractors working on certain federal projects, including in high-risk combat environments. In a 6-3 opinion authored by Justice Clarence Thomas, the Court held that neither the Fourth Circuit's broad “battlefield preemption” doctrine nor the federal contractor defense recognized in Boyle v. United Technologies Corp. shields a contractor from state-law tort claims when the contractor’s challenged conduct was neither ordered nor authorized by the federal government. 146 S. Ct. 1086, 1091 (2026). The decision vacated decades of circuit precedent that had provided near-categorical immunity to military contractors operating in combat zones. Id. at 1099. For construction and infrastructure contractors performing federal work, including everything from base operations to overseas facilities construction, the ruling requires an immediate reassessment of contract structure, insurance coverage and litigation posture.
Background: The Bagram Attack and Battlefield Preemption
In 2016, an Afghan national named Ahmad Nayeb, employed by a Fluor Corporation subcontractor at Bagram Airfield in Afghanistan, detonated a suicide vest on Veterans Day, killing five and wounding 17. Id. at 1092. Nayeb had been hired under the military's “Afghan First” initiative, which required contractors to maximize Afghan employment to stimulate the local economy. Id. A subsequent Army investigation found Fluor “primarily responsible” for the attack (id. at 1092-93), concluding that Fluor had failed to maintain required constant supervision of Nayeb, allowed him access to tools he did not need for his job (which he used to construct the bomb) and relied on an unauthorized sign-out system administered by another Afghan employee rather than escorting Nayeb to the base exit in violation of explicit badge and access policies. Id. at 1092-93.
Winston Hencely, a then-20-year-old Army specialist, confronted Nayeb and suffered a fractured skull and permanent brain injuries. Id. at 1091-92. Hencely sued Fluor under South Carolina law for negligent supervision, negligent entrustment of tools and negligent retention of an employee. Id. at 1093. The district court and Fourth Circuit both dismissed the suit under the Supreme Court’s holding in Boyle, which gave rise to the government contractor defense, and under the related “battlefield preemption” doctrine, which held that during wartime, all state-law claims against military contractors integrated into combatant activities under military command are categorically preempted, regardless of whether the contractor violated its own contractual instructions from the military. Id. at 1093. The Supreme Court granted certiorari to resolve whether this categorical rule had any foundation in the Constitution or federal law. Id. Notably, the United States filed an amicus brief in support of Fluor and its defenses.
The Court’s Holdings
The majority opinion identifies three independent grounds for rejecting the Fourth Circuit’s preemption rule, each with distinct significance for federal contractors.
No Express Preemption
Neither the Constitution nor any federal statute expressly preempts a state-law suit against a contractor in this posture. The Federal Tort Claims Act’s combatant-activities exception, 28 U.S.C. § 2680(j), preserves the federal government’s own sovereign immunity but does not extend to suits against private contractors, a point the Court had established in United States v. Orleans. Id; see U.S. v. Orleans, 425 U.S. 807, 813-14 (1976).
Boyle Does Not Support Blanket Preemption
Boyle v. United Technologies Corp., 487 U.S. 500 (1988), preempts state-law claims only where the government “directed the contractor to do the very thing that is the subject of the claim” (id. at 1095 (quoting Correctional Servs. Corp. v. Malesko, 534 U.S. 61, 74 n.6 (2001))), i.e., where compliance with state law would conflict with compliance with the government’s contract. Because the Army found Fluor had violated its contractual duties rather than fulfilled them, there was no conflict between state-law negligence and federal instructions. Id. at 1095-96. The Court rejected the government’s broader proposed rule (preemption whenever a claim “arises from” combatant activities within the scope of the contract) as inconsistent with Boyle’s reasoning. Id. at 1094.
No Constitutional Structural Immunity
The Constitution’s war powers grant Congress and the president exclusive authority to conduct military operations, but that assignment has never been understood to bar all war-related tort suits against private parties. Id. at 1098. Federal contractors “do not perform governmental functions” and therefore do not share the government’s constitutional immunity. Id. at 1098–99 (quoting Penn Dairies, Inc. v. Milk Control Comm’n of Pa., 318 U.S. 261, 269 (1943)). The Yearsley doctrine, which does shield contractors from liability for faithfully executing government-directed work, does not apply when the contractor acted outside the authority the government granted it. Id. at 1099.
Justice Samuel Alito’s dissent flagged significant practical concerns: Hencely will likely lead to state tort claims resulting in the deposition of military commanders, the seeking of sensitive security documents and a shift to blame the military as the “empty chair,” implicating state-secrets privilege and interfering with military discipline. Id. at 1106-07.
What This Means for Federal Construction and Infrastructure Contractors
The decision has immediate and concrete implications across the spectrum of federal project work.
The Absence of Government Direction Now Triggers State-Law Exposure, Rather Than Mere Presence on a Federal Project
Hencely makes clear that a contractor is protected from state-law tort liability only when it faithfully executes what the government directed in a contract, and is exposed when it departs from those instructions. See 146 S. Ct., at 1095, 1099. For contractors operating under performance specifications, detailed safety plans, security protocols or standard operating procedures incorporated into federal contracts, compliance documentation is no longer merely a contract-administration function—it is the primary liability defense. Any gap between what a contract requires and what a contractor actually performs could become a basis for suit.
Domestic Federal Projects Face the Same Analysis
Although the facts in Hencely involve a military base in Afghanistan, the decision’s reasoning would apply with equal force to any federal contract, including U.S. Army Corps of Engineers construction, federal facilities work, airport construction and General Services Administration projects. If a contractor performing work on a federal building violates its own OSHA plan, site-safety manual or quality-control protocol incorporated by reference into the contract, and a third party is injured, Hencely suggests that no federal preemption defense may be available under Boyle. See Hencely, 146 S. Ct. at 1095-96.
High-Risk-Environment Contractors Must Document Government Directives More Rigorously
For contractors on federal projects in combat environments, the practical lesson of Hencely is that, for the contractor to retain immunity, every significant operational decision should be traceable to a government directive. See Hencely, 146 S. Ct. at 1095. Contractors that operate with discretion (because the government’s contract was silent or delegated operational judgment to them) are likely to be treated as independent actors subject to state tort law with regards to those discretionary actions. See id. at 1095-96.
Insurance and Indemnity Implications Require Review
Carriers and risk managers for federal contractors should revisit commercial general liability and umbrella policy terms, considering the expanded state-law exposure this decision allows. Defense Base Act coverage, which channels employee injury claims to an administrative process, was not at issue in Hencely and remains available for claims by contractor employees. 146 S. Ct. at 1096. But third-party claims (including by injured service members, civilian contractors or bystanders on federal sites) are now clearly within the reach of state tort law when the contractor’s conduct falls outside government-directed parameters. Id. at 1099. In the medium-to-long term, insurers of federal contractors may raise premiums, further limit coverage or both. Federal contractors may likewise benefit from reviewing their existing insurance contracts to determine if and how claims now allowed under Hencely would be covered.
Key Takeaways
Hencely has curtailed the reach of broad government contractor preemption in state tort cases by curtailing the extension of Boyle and vacating liberal protections in combat related circumstances. Federal contractors should take several steps in the immediate term: review existing federal contracts to identify what conduct is specifically directed by the government and what falls within contractor discretion; ensure that compliance with safety, security and operational protocols is contemporaneously documented in case of future discovery; verify that commercial general liability and umbrella policies are structured to cover state-law third-party claims in federal-project contexts; ensure that any federal indemnification, particularly for hazardous work, is requested before performance begins; and assess whether indemnification clauses in subcontracts appropriately allocate liability for conduct that falls outside government-mandated specifications.
The decision leaves open whether Congress can, will or should enact express statutory protection for contractors whose operational decisions are inextricably intertwined with government security or operational policy. See Hencely, 146 S. Ct. at 1096, 1098. Until it does, the liability framework that once provided broad categorical immunity has narrowed to a conduct-specific inquiry focused on a single question: Was the challenged act one the government directed, or one the contractor chose? See id. at 1091, 1099.
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