SCOTUS Clarifies "Subject to the Availabilty of Appropriations"

[here_2_help]

The attorneys at McKenna Long & Aldridge just issued a newsflash discussing the SCOTUS decision in Salazar v. Ramah.

Opinion here: http://www.supremeco...1pdf/11-551.pdf

The MLA attorneys wrote (in part)--

Arguably the most significant aspect of the Ramah decision is the court’s interpretation of the phrase 'subject to the availability of appropriations' in these contracts. Government contracts lawyers have long held the view that this language simply established a condition precedent that a government contract cannot be awarded until sufficient funds had been appropriated and obligated. That interpretation is made very clear by the terms of FAR Part 31, Subpart 7. Once this condition precedent had been satisfied and the contract awarded, the phrase had no further legal import. By contrast, the government argued for a different interpretation of this language in Ramah. In the government’s view, this language meant that the Department’s liability could be reduced in each contract—after contract award—as the funds in the appropriation were obligated for other permissible purposes (e.g. in this case, additional service contracts with other tribes.) See id at 9. The court explicitly rejected the government’s argument and confirmed the previous interpretation of this phrase. See id at 10.

I have to confess that I don't understand the reference to FAR 31.7, but I thought this was worth sharing regardless. Hope others think so, as well.

H2H

[Retreadfed]

Th 31.7 reference should be 32.7.

[Guest Vern Edwards]

I don't think the decision has any implications for the operation of FAR 32.703-2 or the Availability of Funds clause, FAR 52.232-18. For one thing, the contract clause in the case was not the Availability of Funds clause and read very differently. The court made no mention of the Availability of Funds clause or of FAR. For another thing, the government let the contractor perform and then refused to pay the entire amount due. The Availability of Funds clause does not work like that.

Interesting decision, but a special case and nothing really new. I haven't read the McKenna, Long & Aldridge analysis.

[ji20874]

What I found most interesting in the case was the Court's reminder that the Anti-Deficiency Act only reaches to Government officials -- but a contractor still has a right to payment...

The remaining counterarguments are unpersuasive. First, the Government suggests that today’s holding couldcause the Secretary to violate the Anti-Deficiency Act, which prevents federal officers from "mak[ing] or authoriz[ing] an expenditure or obligation exceeding an amount available in an appropriation." 31 U. S. C. §1341(a)(1)(A). But a predecessor version of that Act was in place when Ferris and Dougherty were decided, see GAO Redbook, pp.6–9 to 6–10, and the Government did not prevail there.As Dougherty explained, the Anti-Deficiency Act’s requirements "apply to the official, but they do not affect the rights in this court of the citizen honestly contracting with the Government." 18 Ct. Cl., at 503; see also Ferris, 27 Ct. Cl., at 546 ("An appropriation per se merely imposes limitations upon the Government’s own agents; . . . but its insufficiency does not pay the Government’s debts, nor cancel its obligations").