CHEROKEE NATION OF OKLAHOMA et al. – Appellant
Versus
LEAVITT, SECRETARY OF HEALTH AND HUMAN SERVICES, et al. , (2005) – Respondent
The Indian Self-Determination and Education Assistance Act (Act) authorizes the Government and Indian tribes to enter into contracts in which tribes promise to supply federally funded services that a Government agency normally would provide, 25 U. S. C. §450(f); and requires the Government to pay, inter alia, a tribes "contract support costs," which are "reasonable costs" that a federal agency would not have incurred, but which the tribe would incur in managing the program, §450j-1(a)(2). Here, each Tribe agreed to supply health services normally provided by the Department of Health and Human Services Indian Health Service, and the contracts included an annual funding agreement with a Government promise to pay contract support costs. In each instance, the Government refused to pay the full amount promised because Congress had not appropriated sufficient funds. In the first case, the Tribes submitted administrative payment claims under the Contract Disputes Act of 1978, which the Department of the Interior (the appropriations manager) denied. They then brought a breach-of-contract action. The District Court found against them, and the Tenth Circuit affirmed. In the second case, the Cherokee Nation submitted claims to the Department of the Interior, which the Board of Contract Appeals ordered paid. The Federal Circuit affirmed.
Held: The Government is legally bound to pay the "contract support costs" at issue. Pp. 4-15.
(a) The Government argues that it is legally bound by its promises to pay the relevant costs only if Congress appropriated sufficient funds, which the Government contends Congress did not do in this instance. It does not deny that it promised, but failed, to pay the costs; that, were these ordinary procurement contracts, its promises to pay would be legally binding; that each year Congress appropriated more than the amounts at issue; that those appropriations Acts had no relevant statutory restrictions; that where Congress makes such appropriations, a clear inference arises that it does not intend to impose legally binding restrictions; and that as long as Congress has appropriated sufficient legally unrestricted funds to pay contracts, as it did here, the Government normally cannot back out of a promise to pay on grounds of insufficient appropriations. Thus, in order to show that its promises were not legally binding, the Government must show something special about the promises at issue. It fails to do so here. Pp. 4-5.
(b) The Act does not support the Governments initial argument that, because the Act creates a special contract with a unique nature differentiating it from standard Government procurement contracts, a tribe should bear the risk that a lump-sum appropriation will be insufficient to pay its contract. In general, the Acts language runs counter to this view, strongly suggesting instead that Congress, in respect to a promises binding nature, meant to treat alike promises made under the Act and ordinary contractual promises. The Act uses "contract" 426 times to describe the nature of the Governments promise, and "contract" normally refers to "a promise ... for the breach of which the law gives a remedy, or the performance of which the law ... recognizes as a duty," Restatement (Second) of Contracts §1. Payment of contract support costs is described in a provision containing a sample "Contract," 25 U. S. C. §450l(c), and contractors are entitled to "money damages" under the Contract Disputes Act if the Government refuses to pay, §450m-1(a). Nor do the Acts general purposes support any special treatment. The Government points to the statement that tribes need not spend funds "in excess of the amount of funds awarded," §450l(c), but that kind of statement often appears in procu
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