Opinion ID: 2357566
Heading Depth: 2
Heading Rank: 1

Heading: Does the ADA Apply Only to Contracts for Goods or Services?

Text: Nothing in the plain language of the ADA suggests that it applies only to payments for goods and services. Those words do not appear in the text. Rather, sections 1341(a)(1)(A) and (C) restrict a government officer's power to make or authorize an expenditure or obligation, and § 1341(a)(1)(B) refers to a contract or obligation. The statute does not define expenditure, obligation, or contract, however. Citing some Congressional debates (the most recent of which occurred more than a century ago) and a few opinions from the Comptroller General, INA argues that these terms should be read to encompass only contracts for goods and services. We reject this argument for several reasons. INA's narrow construction of these terms is not a natural one. [5] Moreover, its interpretation makes little sense as a matter of public policy. Financial commitments like the one at issue here may involve huge sums of money. Exempting them from the statute's coverage would undermine the very principles on which the ADA is based. We have examined the legislative debates cited by INA, and they do not support, let alone compel, its reading of the ADA. [6] More importantly, many cases, including one decided by the Supreme Court, have applied the ADA to the type of indemnification agreement that appellant seeks to enforce here. See, e.g., Hercules, 516 U.S. at 427, 116 S.Ct. 981 (agency may not agree to open-ended indemnity for third-party liability); California-Pacific Utilities Co. v. United States, 194 Ct.Cl. 703 (1971) (public utility sought to recover the funds expended by its insurer to settle a claim); National R.R. Passenger Corp. v. United States, 3 Cl.Ct. 516, 521 (1983) (ADA not violated because indemnification limited by contract to amount appropriated for that purpose). INA principally relies on a general definition provided by the Comptroller General in In re Committee on Appropriations, B-116795, 1954 U.S. Comp. Gen. LEXIS 837 (June 18, 1954). Focusing on the difficulty of determining when an obligation is incurred, and to which appropriation it is properly charged, the Comptroller General stated that obligation generally has been considered to be a definite commitment which creates a legal liability of the Government for the payment of appropriated funds for goods and services ordered or received. Id. at . This attempt to provide a working definition is not the same as declaring that the ADA applies only to contracts for goods and services. Moreover, as the District points out, in the same opinion the Comptroller General acknowledges that it is impractical, if at all possible, to phrase into words a clean-cut and all inclusive definition for the term `obligation' which would serve for all purposes and under all circumstances. Id. at . See also In re Corporation for National & Community Service: Amount of Obligations, B-300480.2, 2003 WL 21361642, at  (Comp.Gen. June 6, 2003) (noting that the Comptroller General has extended the definition [of an obligation] to include a legal duty on the part of the United States which could mature into a legally enforceable claim by virtue of actions on the part of the other party beyond the control of the United States). Nothing in these opinions purports to exclude open-ended indemnification agreements from the coverage of the ADA. By contrast, when directly confronting the issue, the Comptroller General has concluded that the ADA does forbid such agreements. See, e.g., In re Assumption by Government of Contractor Liability to Third Persons  Reconsideration, 62 Comp. Gen. at 364-65. Thus, we are not persuaded that the terms expenditure, contract, and obligation have the narrow meaning that INA suggests, and we hold that contracts for indemnification like the one at issue here fall within the ambit of the ADA.