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

Heading: Congressional Appropriations and Government Contractual Liability

Text: The Appropriations Clause of the United States Constitution states, No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law. U.S. Const. art. 1, § 9, cl. 7. To prevent the Executive from forcing its hand by incurring contractual debts on behalf of the United States, Congress has enacted the Anti-Deficiency Act which, with certain limited exceptions, prohibits federal agencies from contracting for more than what Congress appropriates. See 31 U.S.C. § 1341(a)(1)(A), (B). The Act states in part: An officer or employee of the United States Government . . . may not (A) make or authorize an expenditure or obligation exceeding an amount available in an appropriation or fund for the expenditure or obligation; [or] (B) involve [the] government in a contract or obligation for the payment of money before an appropriation is made unless authorized by law. . . . Id. § 1341(a)(1). Consequently, government contracts generally are not binding until Congress appropriates the necessary funds. See Cherokee Nation, 543 U.S. at 643, 125 S.Ct. 1172. On occasion, however, a law may grant a government officer or employee what is known as contract authoritythat is, the authority to enter into a contract that is binding regardless of whether Congress appropriates sufficient money to cover the contract. See Train v. City of New York, 420 U.S. 35, 39 n. 2, 95 S.Ct. 839, 43 L.Ed.2d 1 (1975); see generally I General Accounting Office, Principles of Federal Appropriations Law p. 2-6 (3d ed. 2004) (GAO Redbook). In that event, if the appropriation turns out to be inadequate, the contractor can sue the government for underpayment. See GAO Redbook at p. 2-7. A grant of contract authority, however, must be clear. As stated in 31 U.S.C. § 1301(d): A law may be construed to make an appropriation out of the Treasury or to authorize making a contract for the payment of money in excess of an appropriation only if the law specifically states that an appropriation is made or that such a contract may be made. Plaintiffs make two principal arguments in support of their claim to full payment of ISDA contract-support costs: They assert (1) that the Secretary had contract authority to bind the government to pay contract-support costs regardless of the sufficiency of appropriations, and (2) that even if the Secretary lacked contract authority, the congressional appropriation for contract-support costs was sufficient for each separate contract, so that the government is bound even if there were insufficient funds to pay the total of such costs for all ISDA contracts. I first address contract authority.