Arctic Slope Native Association, LTD v. Sebelius

Case Updates

The U.S. Supreme Court granted the cert. petition, vacated the ruling, and remanded the case in light of Salazar v. Ramah Navajo Chapter.

NCLC urged the U.S. Supreme Court to review the Federal Circuit's erroneous decision which effectively held that the federal government may disregard its contractual promise to pay for goods delivered and services rendered whenever the government inserts a clause stating the contract is “subject to the availability of appropriations” and the government exhausts the funding appropriation. The case arises out of the federal government's refusal to pay a health services contractor's indirect support costs, after the government overextended itself and entered into too many contracts. The Federal Circuit ruled that the obligation to pay contractors is “subject to the availability of appropriations” and that there were no available appropriations because Congress had provided that the appropriations available for the funding of contract support costs were “not to exceed” specified amounts. NCLC argued that the Federal Circuit upended the settled understanding of the commonplace “subject to availability of appropriations” clause which the U.S. Supreme Court recently explained“normally makes clear that a contracting party can negotiate a contract prior to the beginning of a fiscal year but that the contract will not become binding unless and until Congress appropriates funds for that year.” If the Federal Circuit's ruling is allowed to stand, the government’s reliability as a contracting partner will be called into question.