Lead Opinion
delivered the opinion of the Court.
I
A
Congress enacted ISDA in 1975 in order to achieve “maximum Indian participation in the direction of educational as well as other Federal services to Indian communities so as to render such services more responsive to the needs and desires of those communities.” 25 U. S. C. § 450a(a). To that end, the Act directá the Secretary
As originally enacted, ISDA required the Government to provide contracting tribes with an amount of funds equivalent to those that the Secretary “would have otherwise provided for his direct operation of the programs.” § 106(h), 88 Stat. 2211. It soon became apparent that this secretarial amount failed to account for the full costs to tribes of providing
Congress included a model contract in ISDA and directed that each tribal self-determination contract “shall . . . contain, or incorporate [it] by reference.” § 450l(a)(1). The model contract specifies that “‘[s]ubject to the availability of appropriations, the Secretary shall make available to the Contractor the total amount specified in the annual funding agreement’ ” between the Secretary and the tribe. § 450Z(c) (model agreement § 1(b)(4)). That amount “‘shall not be less than the applicable amount determined pursuant to [§450j-1(a)],’ ” which includes contract support costs. Ibid.; § 450j-l(a)(2). The contract indicates that “ ‘[e]ach provision of [ISDA] and each provision of this Contract shall be liberally construed for the benefit of the Contractor . . . § 450Z(c) (model agreement § 1(a)(2)). Finally, the Act makes clear that if the Government fails to pay the amount contracted for, then tribal contractors are entitled to pursue “money damages” in accordance with the Contract Disputes Act. § 450m-l(a).
B
During Fiscal Years (FYs) 1994 to 2001, respondent Tribes contracted with the Secretary of the Interior to provide services such as law enforcement, environmental protection, and agricultural assistance. The Tribes fully performed. During each FY, Congress appropriated a total amount to the Bureau of Indian Affairs (BIA) “for the operation of Indian programs.” See, e. g., Department of the Interior and Belated Agencies Appropriations Act, 2000,113 Stat. 1501A-148. Of that sum, Congress provided that “not to exceed [a particular amount] shall be available for payments to tribes and tribal organizations for contract support costs” under ISDA. E. g., ibid. Thus, in FY 2000, for example, Congress appropriated $1,670,444,000 to the BIA, of which “not to exceed $120,229,000” was allocated for contract support costs. Ibid.
During each relevant FY, Congress appropriated sufficient funds to pay in full any individual tribal contractor’s contract support costs. Congress did not, however, appropriate sufficient funds to cover the contract support costs due all tribal contractors collectively. Between FYs 1994 and 2001, appropriations covered only between 77% and 92% of tribes’ aggregate contract support costs. The extent of the shortfall was not revealed until each FY was well underway, at which point a tribe’s performance of its contractual obligations was largely complete. See
I—!
A
In evaluating the Government’s obligation to pay tribes for contract support costs, we do not write on a clean slate. Only seven years ago, in Cherokee Nation, we also considered the Government’s promise to pay contract support costs in ISDA self-determination contracts that made the Government’s obligation “subject to the availability of appropriations.”
As we explained, that did not excuse the Government’s responsibility to pay the Tribes. We stressed that the Government’s obligation to pay contract support costs should be treated as an ordinary contract promise, noting that ISDA “uses the word ‘contract’ 426 times to describe the nature of the Government’s promise.” Id., at 639. As even the Government conceded, “in the case of ordinary contracts ... ‘if the amount of an unrestricted appropriation is sufficient to fund the contract, the contractor is entitled to payment even if the agency has allocated the funds to another purpose or assumes other obligations that exhaust the funds.’ ” Id., at 641. It followed, therefore, that absent “something special about the promises here at issue,” the Government was obligated to pay the Tribes’ contract support costs in full. Id., at 638.
We held that the mere fact that ISDA self-determination contracts are made “subject to the availability of appropriations” did not warrant a special rule. Id., at 643 (internal quotation marks omitted). That commonplace provision, we explained, is ordinarily satisfied
Our conclusion in Cherokee Nation followed directly from well-established principles of Government contracting law. When a Government contractor is one of several persons to be paid out of a larger appropriation sufficient in itself to pay the contractor, it has long been the rule that the Government is responsible to the contractor for the full amount due under the contract, even if the agency exhausts the appropriation in service of other permissible ends. See Ferris v. United States,
This principle safeguards both the expectations of Government contractors and the long-term fiscal interests of the United States. For contractors, the Ferris rule reflects that when “a contract is but one activity under a larger appropriation, it is not reasonable to expect the contractor to know how much of that appropriation remains available for it at any given time.” GAO Redbook, p. 6-18. Contractors are responsible for knowing the size of the pie, not how the agency elects to slice it. Thus, so long as Congress appropriates adequate funds to cover a prospective contract, contractors need not keep track of agencies’ shifting priorities and competing obligations; rather, they may trust that the Government will honor its contractual promises. Dougherty,
The rule likewise furthers “the Government’s own long-run interest as a reliable contracting partner in the myriad workaday transaction of its agencies.” United States v. Winstar Corp.,
B
The principles underlying Cherokee Nation and Ferris dictate the result in this case. Once “Congress has appropriated sufficient legally unrestricted funds to pay the contracts at issue, the Government normally cannot back out of a promise to pay on grounds of ‘insufficient appropriations,’ even if the contract uses language such as ‘subject to the availability of appropriations,’ and even if an agency’s total lump-sum appropriation is insufficient to pay all the contracts the agency has made.” Cherokee Nation,
That condition is satisfied here. In each FY between 1994 and 2001, Congress appropriated to the BIA a lump sum from which “not to exceed” between $91 and $125 million was allocated for contract support costs, an amount that exceeded the sum due any tribal contractor. Within those constraints, the ability to direct those funds was “ ‘committed to agency discretion by law.’” Lincoln v. Vigil,
The Government’s contractual promise to pay each tribal contractor the “full amount of funds to which the contractor
As in Cherokee Nation, we decline the Government’s invitation to ascribe “special, rather than ordinary,” meaning to the fact that ISDA makes contracts “subject to the availability of appropriations.”
Ill
A
The Government primarily seeks to distinguish this case from Cherokee Nation and Ferris on the ground that Congress here appropriated “not to exceed” a given amount for contract support costs, thereby imposing an express cap on the total funds available. See Brief for Petitioners 26, 49. The Government argues, on this basis, that Ferris and Cherokee Nation involved “contracts made against the backdrop of unrestricted, lump-sum appropriations,” while this case does not. See Brief for Petitioners 49, 26.
That premise, however, is inaccurate. In Ferris, Congress appropriated “[f]or improving Delaware River below Bridesburg, Pennsylvania, forty-five thousand dollars.” 20 Stat. 364. As explained in the Government’s own appropriations law handbook, the “not to exceed” language at issue in this case has an identical meaning to the quoted language in Ferris. See GAO Redbook, p. 6-5 (“Words like ‘not to exceed’ are not the only way to establish a maximum limitation. If the appropriation includes a specific amount for a particular object (such as ‘For Cuban cigars, $100’), then the appropriation is a maximum which may not be exceeded”). The appropriation in Cherokee Nation took a similar form. See, e. g., 108 Stat. 2527-2528 (“For expenses necessary to carry
This result does not leave the “not to exceed” language in Congress’ appropriation without legal effect. To the contrary, it prevents the Secretary from reprogramming other funds to pay contract support costs—thereby protecting funds that Congress envisioned for other BIA programs, including tribes that choose not to enter ISDA contracts. But when an agency makes competing contractual commitments with legally available funds and then fails to pay, it is the Government that must bear the fiscal consequences, not the contractor.
B
The dissent attempts to distinguish this case from Cherokee Nation and Ferris on different grounds, relying on §450j-l(b)’s proviso that “the Secretary is not required to reduce funding for programs, projects, or activities serving a tribe to make funds available to another tribe.” In the dissent’s view, that clause establishes that each dollar allocated by the Secretary reduces the amount of appropriations legally available to pay other contractors. In effect, the dissent understands § 450j-l(b) to make the legal availability of appropriations turn on the Secretary’s expenditures rather than the sum allocated by Congress.
That interpretation, which is inconsistent with ordinary principles of Government contracting law, is improbable. We have explained that Congress ordinarily controls the availability of appropriations; the agency controls whether to make funds from that appropriation available to pay a contractor. See Cherokee Nation,
The better reading of §450j-l(b) accords with ordinary Government contracting principles. As we explained, supra, at 190-192, the clause underscores the Secretary’s discretion to allocate funds among tribes, but does not alter the Government’s legal obligation when the agency fails to pay. That reading gives full effect to the clause’s text, which addresses the “amount of funds provided,” and specifies that the Secretary is not required to reduce funding for one tribe to make “funds available” to another. 450j-l(b). Indeed, even the Government acknowledges the clause governs the Secretary’s discretion to distribute funds. See Brief for Petitioners 52 (pursuant to § 450j-l(b), the Secretary was not obligated to pay tribes’ “contract support costs on a first-come, first-served basis, but had the authority to distribute the available money among all tribal contractors in an equitable fashion”).
At minimum, the fact that we, the court below, the Government, and the Tribes do not share the dissent’s reading of § 450j-1(b) is strong evidence that its interpretation is not, as it claims, “unambiguous[ly]” correct. Post, at 207 (opinion of Roberts, C. J.). Because ISDA is construed in favor of tribes, that conclusion is fatal to the dissent.
C
The remaining counterarguments are unpersuasive. First, the Government suggests that today’s holding could cause the Secretary to violate the Anti-Deficiency Act, which prevents federal officers from “mak[ing] or authorizing] 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 Dou-gherty 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.”
Second, the Government argues that Congress could not have intended for respondents to recover from the Judgment Fund, 31 U. S. C. § 1304, because that would allow the Tribes to circumvent Congress’ intent to cap total expenditures for contract support costs.
Third, the Government invokes cases in which courts have rejected contractors’ attempts to recover for amounts beyond the maximum appropriated by Congress for a particular purpose. See, e. g., Sutton v. United States,
The Ferris and Sutton lines of cases are distinguishable, however. GAO Redbook, p. 6-18. “[I]t is settled that contractors paid from a general appropriation are not barred from recovering for breach of contract even though the appropriation is exhausted,” but that “under a specific line-item appropriation, the answer is different.” Ibid.
Finally, the Government argues that legislative history suggests that Congress approved of the distribution of available funds on a uniform, pro rata basis. But “a fundamental principle of appropriations law is that where Congress merely appropriates lump-sum amounts without statutorily restricting what can be done with those funds, a clear inference arises that it does not intend to impose legally binding restrictions.” Lincoln,
> hH
As the Government points out, the state of affairs resulting in this case is the product of two congressional decisions which the BIA has found difficult to reconcile. On the one hand, Congress obligated the Secretary to accept every qualifying ISDA contract, which includes a promise of “full” funding for all contract support costs. On the other, Congress appropriated insufficient funds to pay in full each tribal contractor. The Government’s frustration is understandable, but the dilemma’s resolution is the responsibility of Congress.
Congress is not short of options. For instance, it could reduce the Government’s financial obligation by amending ISDA to remove the statutory mandate compelling the BIA to enter into self-determination contracts, or by giving the BIA flexibility to pay less than the full amount of contract support costs. It could also pass a moratorium on the formation of new self-determination contracts, as it has done before. See § 328, 112 Stat. 2681-291 to 2681-292. Or Congress could elect to make line-item appropriations, allocating funds to cover tribes’ contract support costs on a contractor-by-contractor basis. On the other hand, Congress could appropriate sufficient funds to the BIA to meet the tribes’ total contract support cost needs. Indeed, there is some evidence that Congress may do just that. See H. R. Rep. No. 112-151, p. 42 (2011) (“The Committee believes that the Bureau should pay all contract support costs for which it has contractually agreed and directs the Bureau to include the full cost of the contract support obligations in its fiscal year 2013 budget submission”).
The desirability of these options is not for us to say. We make clear only that Congress has ample means at hand to resolve the situation underlying the Tribes’ suit. Any one of the options above could also promote transparency about the Government’s fiscal obligations with respect to ISDA’s directive that contract support costs be paid in full. For the period in question, however, it is the Government—not the Tribes—that must bear the consequences of Congress’ decision to mandate that the Government enter into binding contracts for which its appropriation was sufficient to pay any individual tribal contractor, but “insufficient to pay all the contracts the agency has made.” Cherokee Nation,
The judgment of the Court of Appeals is affirmed.
It is so ordered.
Notes
As defined by ISDA, contract support costs “shall consist of an amount for the reasonable costs for activities which must be carried on by a tribal organization as a contractor to ensure compliance with the terms of the contract and prudent management, but which . . . (A) normally are not carried on by the respective Secretary in his direct operation of the program; or (B) are provided by the Secretary in support of the contracted program from resources other than those under contract.” §450j-l(a)(2). Such costs include overhead administrative costs, as well as expenses such as federally mandated audits and liability insurance. See Cherokee Nation of Okla.,
Compare
In Ferris, for instance, Congress appropriated $45,000 for the improvement of the Delaware River below Bridesburg, Pennsylvania. Act of Mar. 3, 1879, ch. 181, 20 Stat. 364. The Government contracted with Ferris for $37,000 to dredge the river. Halfway through Ferris’ performance of his contract, the United States Army Corps of Engineers ran out of money to pay Ferris, having used $17,000 of the appropriation to pay for other improvements. Nonetheless, the Court of Claims found that Ferris could recover for the balance of his contract. As the court explained, the appropriation “merely impose[d] limitations upon the Government’s own agents; ... its insufficiency [did] not pay the Government’s debts, nor cancel its obligations, nor defeat the rights of other parties.” 27 Ct. Cl., at 546; see also Dougherty,
Indeed, the IHS once allocated its appropriations for new ISDA contracts on a first-come, first-serve basis. See Dept, of Health and Human Services, Indian Self-Determination Memorandum No. 92-2, p. 4 (Feb. 27, 1992).
The Government’s reliance on this statutory language is particularly curious because it suggests it is superfluous. See Brief for Petitioners 30-31 (it is “unnecessary” to specify that contracts are “subject to the availability of appropriations” (internal quotation marks omitted)); see also Reply Brief for Petitioners 7 (“[A]ll government contracts are contingent upon the appropriations provided by Congress”).
The dissent’s view notwithstanding, it is beyond question that Congress appropriated sufficient unrestricted funds to pay any contractor in full. The dissent’s real argument is that §450j-1(b) reverses the applicability of the Ferris rule to ISDA, so that the Secretary’s allocation of funds to one contractor reduces the legal availability of fends to others. See post, at 204 (opinion of Roberts, C. J.) (“[T]hat the Secretary could have allocated the fends to [a] tribe is irrelevant. What matters is what the Secretary actually does, and once he allocates the fends to one tribe, they are not ‘available’ to another”). We are not persuaded that § 450j—1(b) was intended to enact that radical departure from ordinary Government contracting principles. Indeed, Congress has spoken clearly and directly when limiting the Government’s total contractual liability to an amount appropriated in similar schemes; that it did not do so here further counsels against the dissent’s reading. See, e. g., 25 U. S. C. § 2008( j)(2) (“If the total amount of funds necessary to provide grants to tribes ... for a fiscal year exceeds the amount of fends appropriated . . . , the Secretary shall reduce the amount of each grant [pro rata]”).
We have some doubt whether a Government employee would violate the Anti-Deficiency Act by obeying an express statutory command to enter a contract, as was the case here. But we need not decide the question, for this case concerns only the contractual rights of tribal contractors, not the consequences of entering into such contracts for agency employees.
The Judgment Fund is a “permanent, indefinite appropriation” enacted by Congress to pay final judgments against the United States when, inter alia, “[pjayment may not legally be made from any other source of funds.” 31 CFR § 256.1(a)(4) (2011).
For that reason, the Government’s reliance on Office of Personnel Management v. Richmond,
Of course, “[t]he terms ‘lump-sum’ and ‘line-item’ are relative concepts.” GAO Redbook, p. 6-165. For example, an appropriation for building two ships “could be viewed as a line-item appropriation in relation to the broader ‘Shipbuilding and Conversion’ category, but it was also a lump-sum appropriation in relation to the two specific vessels included.” Ibid. So long as a contractor does not seek payment beyond the amount Congress made legally available for a given purpose, “[t]his factual distinction does not affect the legal principle.” Ibid. See also In re Newport News Shipbuilding & Dry Dock Co.,
Dissenting Opinion
with whom Justice Ginsburg, Justice Breyer, and Justice Alito join, dissenting.
Today the Court concludes that the Federal Government must pay the full amount of contract support costs incurred by the respondent Tribes, regardless of whether there are any appropriated funds left for that purpose. This despite the facts that payment'of such costs is “subject to the availability of appropriations,” a condition expressly set forth in both the statute and the contracts providing for such payment,
The Indian Self-Determination and Education Assistance Act provides: “Notwithstanding any other provision in [the Act], the provision of funds under this [Act] is subject to the availability of appropriations . . . .” Ibid. This condition is repeated in the Tribes’ contracts with the Government. App. 206; see also § 450l(c) (model agreement § 1(b)(4)). The question in this case is whether appropriations were “available” during fiscal years 1994 through 2001 to pay all the contract support costs incurred by the Tribes. Only if appropriations were “available” may the Tribes hold the Government liable for the unpaid amounts.
Congress restricted the amount of funds “available” to pay the Tribes’ contract support costs in two ways. First, in each annual appropriations statute for the Department of the Interior from fiscal years 1994 to 2001, Congress provided that spending on contract support costs for all tribes was “not to exceed” a certain amount. The fiscal year 1995 appropriations statute is representative. It provided: “For operation of Indian programs . . . , $1,526,778,000, ... of which not to exceed $95,823,000 shall be for payments to tribes and tribal organizations for contract support costs . . . .” 108 Stat. 2510-2511. As the Court acknowledges, ante, at 194-195, the phrase “not to exceed” has a settled meaning in federal appropriations law. By use of the phrase, Congress imposed a cap on the total funds available for contract support costs in each fiscal year. See 2 General Accounting Office, Principles of Federal Appropriations Law, p. 6-8 (2d ed. 1992) (“[T]he most effective way to establish a maximum ... earmark is by the words ‘not to exceed’ or ‘not more than’ ”).
Second, in §450j-l(b) itself—in the very same sentence that conditions funding on the “availability of appropriations”—Congress provided that “the Secretary [of the Interior] is not required to reduce funding for programs, projects, or activities serving a tribe to make funds available to another tribe or tribal organization under [the Act].” An agency may be required to shift funds from one object to another, within statutory limits, when doing so is necessary to meet a contractual obligation. See 1 id., at 2-26 (2d ed. 1991). But the “reduction” clause in §450j-1(b) expressly provides that the Secretary is “not required” to engage in such reprogramming to make one tribe’s funds “available to another tribe.” It follows that appropriations allocated for “programs, projects, or activities serving a tribe” are not “available” to another tribe, unless the Secretary reallocates them. Contrary to the Court’s suggestion, ante, at 197, the Government shares this view that the “reduction” clause “specifically relieves the Secretary of any obligation to make funds available to one contractor by reducing payments to others,” Brief for Petitioners 51 (citing Arctic Slope Native Assn., Ltd. v. Sebelius,
Given these express restrictions established by Congress—which no one doubts are valid—I cannot agree with the Court’s conclusion that appropriations were “available”
In reaching a contrary conclusion, the Court fails to appreciate the full significance of the “reduction” clause in § 450j-1(b). As construed by the Court, that clause merely confirms that the Secretary “may allocate funds to one tribe at the expense of another.” Ante, at 193. But as explained above, the clause does more than that: It also establishes that when the Secretary does allocate funds to one tribe at the expense of another, the latter tribe has no right to those funds—the funds are not “available” to it. The fact that the Secretary could have allocated the funds to the other tribe is irrelevant. What matters is what the Secretary actually does, and once he allocates the funds to one tribe, they are not “available” to another.
The Court rejects this reading of the “reduction” clause, on the ground that it would constitute a “radical departure from ordinary Government contracting principles.” Ante, at 196, n. 6. But the fact that the clause operates as a constraint on the “availability of appropriations” is evident not only from its text, which speaks in terms of “funds available,” but also from its placement in the statute, immediately following the “subject to the availability” clause. Under the Court’s view, by contrast, the “reduction” clause merely “underscores the Secretary’s discretion to allocate funds among tribes.” Ante, at 196. There is, however, no reason to suppose that Congress enacted the provision simply to confirm this “ordinary” rule. Ibid. We generally try to avoid reading statutes to be so “insignificant.” TRW Inc. v. Andrews,
The Court maintains that its holding is compelled by our decision in Cherokee Nation of Okla. v. Leavitt,
We ruled against the Government, but not because of any disagreement with its reading of the “reduction” clause. The basis for our decision was instead that “the relevant congressional appropriations contained other unrestricted funds, small in
As even the Tribes concede, Cherokee Nation does not control this case. Tr. of Oral Arg. 39 (counsel for the Tribes) (“I don’t think this case is controlled by Cherokee”). The reason is not that the appropriations statutes in this case contained “not to exceed” caps while those in Cherokee Nation did not. The Court is correct that appropriating an amount “for” a particular purpose has the same effect as providing that appropriations for that purpose are “not to exceed” that amount. Ante, at 195. What makes this ease different is where Congress drew the line. In Cherokee Nation, the statutes capped funding for “expenses necessary to carry out” the Act, a category that included funding for both “inherent federal functions” and contract support costs. Accordingly, funding for one could be used for the other, without violating the cap. Here, by contrast, the statutes capped funding for contract support costs specifically. Thus, once the Secretary exhausted those funds, he could not reprogram other funds—such as funds for “inherent federal functions”—to pay the costs. With the caps in place, moreover, the “reduction” clause, as explained above, rendered unavailable the only possible source of funds left: funds already allocated for other contract support costs. Unlike in Cherokee Nation, therefore, there were no unrestricted funds to pay the costs at issue in this case. The Court’s quotation from Cherokee Nation concerning “when an ‘ “unrestricted appropriation is sufficient to fund the contract,” ’ ” ante, at 196 (quoting Cherokee Nation, supra, at 641; emphasis added), is accordingly beside the point.
The Court also relies on Ferris v. United States,
This is hardly a typical government contracts case. Many government contracts contain a “subject to the availability of appropriations” clause, and many appropriations statutes contain “not to exceed” language. But this case involves not only those provisions but a third, relieving the Secretary of any obligation to make funds “available” to one contractor by reducing payments to others. Such provisions will not always appear together, but when they do, we must give them effect. Doing so here, I would hold that the Tribes are not entitled to payment of their contract support costs in full, and I would reverse the contrary judgment of the Court of Appeals for the Tenth Circuit.