Opinion ID: 216353
Heading Depth: 1
Heading Rank: 4

Heading: Are Plaintiffs Entitled to Recovery Because of Executive's Failure to Request Adequate Appropriation?

Text: Plaintiffs' final argument is that the government is liable for full payment because the executive failed to request the needed funding from Congress. They rely on S.A. Healy Co. v. United States, 576 F.2d 299 (Ct.Cl.1978). The holding in Healy, however, is quite fact-specific; and the general rule stated in the opinion would not apply here. In that case, Healy and the government executed a fixed-price construction contract in November 1970, before Congress appropriated funds. See id. at 300-02. The contract contained the following subject-to-availability clause: Under the contract to be entered into under these specifications, the liability of the United States is contingent on the necessary appropriations being made therefor by the Congress and an appropriate reservation of funds thereunder. Further, the Government shall not be liable for damages under this contract on account of delays in payments due to lack of funds. Id. (internal quotation marks omitted). The contract was also governed by the Reclamation Project Act of 1939, which provided that `the liability of the United States [on its project contracts] shall be contingent upon appropriations being made therefor.' Id. at 303 (quoting 43 U.S.C. § 388). On December 22, 1970, Healy (as required by the contract) submitted a proposed schedule of forecasted earnings that set forth, among other things, $4,887,000 for fiscal year 1972. See id. at 301. The contracting officer approved this schedule in February 1971 and Healy promptly began construction. See id. Meanwhile, in late January 1971 the President sent his proposed budget to Congress; but he requested only $1,800,000 for Healy's contract for fiscal year 1972. See id. at 302. Not until July 1971 did the contracting officer notify Healy how much had been requested. See id. Healy protested that the requested amount was `totally inadequate' and, on inquiring about the possibility of a supplemental appropriation, was told that prospects were bleak. Id. Nevertheless, Healy decided to proceed to the extent possible and continued with construction until September 22, 1971, when funds were exhausted. See id. Three months later, Congress approved a supplemental appropriation request that provided enough money to cover Healy's earnings for fiscal year 1972. See id. In January 1972 the government notified Healy that more money was available, and construction resumed. See id. Despite the contractual and statutory subject-to-availability provisions, the court awarded damages to Healy. See id. It reasoned that the contract did not unambiguously state that the contractor had to bear the full risk of a funds shortage when the shortage was the agency's fault; and it found that the government agency was at fault for not requesting a sufficient appropriation to pay the contractor. Id. at 304; see id. at 305. Consequently, the contractor was entitled to damages caused by the work stoppage between when appropriated funds were exhausted and when a supplemental appropriation bill was enacted. See id. at 302, 307-08. The court described its holding as a narrow one. It said that it was not suggesting that the executive branch was contractually obligated to request from [Congress] appropriations adequate to fund continued performance. Id. at 307. Rather, it held only that (a) a contract will not be construed to throw all the cost and loss necessarily incident to such a decision on the contractor, and none of it on the party whose decision caused the loss, unless clauses of the contract require that result without ambiguity, and (b). . . a government agency that claims a right to do this is under an implied obligation to assist its contractor, by timely and candid information to take the measures that the latter may deem best to diminish and mitigate its loss. Id. The situation presented on this appeal is quite distinguishable from the egregious conduct in Healy. Healy was not informed that it might be underpaid until well after the contract was executed and performance had begun. Indeed, the contracting officer approved the contractor's budget even though the President had already requested less than 40% of that sum from Congress, and the officer did not notify the contractor of that request for another five months. Here, in contrast, Plaintiffs do not dispute the government's contention that the tribes have participated in annual budget consultations with BIA. Aplee. Br. at 48 n.16; see 25 U.S.C. § 450j-1(i) (requiring the Secretary to solicit tribes' participation in formulating the BIA's budget requests). And, as I have already explained, the statutory context and the historical course of dealing made it clear to tribal organizations that annual shortfalls were likely and that contract-support costs would be underpaid. III. CONCLUSION For the foregoing reasons, I respectfully dissent.