Cherokee Nation of Okla. v. Thompson & Thompson v. Cherokee Nation of Okla. (consolidated)
The Cherokee Nation entered into contracts with the United States Secretary of Health and Human Services (the Secretary) pursuant to the Indian Self-Determination and Education Assistance Act (ISDA). The ISDA authorizes the Secretary to contract with Indian tribes to perform services that would otherwise be administered by the Secretary, with the goal of increasing the autonomy of Indian tribes. The ISDA instructs the Secretary to pay contract support costs (CSCs) to tribes to cover certain costs in administering the contracts; however, payment of contract support costs is “subject to the availability of appropriations and the Secretary is not required to reduce funding for programs, projects or activities serving a tribe to make funds available” for CSCs. 25 U.S.C. § 450j-1(b). The contracts between the Secretary and the Cherokee included language reiterating the above provisions of the ISDA.
The Cherokee sued the Secretary in federal district court, alleging that it was not paid $3.4 million for CSCs for the fiscal year 1997. Even though the funds specifically appropriated by Congress for CSCs had been used up, the Cherokee argued the Secretary could and should have paid the contract service costs out of unrestricted funds allocated for administration of the ISDA. The district court ruled for the government and the Tenth Circuit Court of Appeals affirmed, holding that funding for the Cherokee's CSCs was subject to Congress' specific appropriations and that the Secretary was not obligated under the statute or other contract law principles to use unrestricted funds to pay CSCs.
In a separate lawsuit, the Cherokee made a claim through the Department of Interior's Board of Contract Appeals, alleging that the Secretary breached its contract with the Cherokee for the fiscal years 1994, 1995 and 1996 by failing to pay the full indirect costs of administering the contracts. The Board ruled for the Cherokee and the U.S. Court of Appeals for the Federal Circuit affirmed, finding “no statutory caps on funding in the appropriations acts for the relevant fiscal years.” The consolidated cases were granted certiorari.
Questions Presented:
Cherokee Nation of Oklahoma v. Thompson:
1. Whether the federal government can repudiate, without liability, express contractual commitments
for which it has received valuable consideration, either by spending down discretionary agency appropriations otherwise available to pay its contracts, or simply by changing the law and the
contracts retroactively.
2. Whether government contract payment rights that are contingent on "the availability of appropriations" vest when an agency receives a lump-sum appropriation that is legally available to pay the
contracts – as is the law of the Federal Circuit under Blackhawk Heating – or is the government's liability calculated only at the end of the year after the agency has spent
its appropriations on other activities, as the Tenth Circuit ruled below.
Thopson v. Cherokee Nation of Oklahoma:
The Indian Self-Determination and Education Assistance Act (ISDA), 25 U.S.C. § 450-450n, authorizes the Secretary of Health and Human Services
(the Secretary) to enter into contracts with Indian Tribes for the administration of programs the Secretary otherwise would administer himself. The ISDA also provides that the Secretary shall pay
"contract support costs" to cover certain direct and indirect expenses incurred by the Tribes in administering those contracts. The ISDA, however, makes payment "subject to the availability of
appropriations," and declares that the Secretary "is not required to reduce funding for programs, projects or activities serving a tribe to make funds available" for contract support and other
self-determination contract costs. 25 U.S.C. § 450j-l(b). The questions presented are:
1. Whether the ISDA requires the Secretary to pay contract support costs associated with carrying out self-determination contracts with the Indian Health Service, where appropriations were
otherwise insufficient to fully fund those costs and would require reprogramming funds needed for noncontractable, inherently federal functions such as having an Indian Health Service.
2. Whether Section 314 of the Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999, Pub. L. No.105-277, 112 Stat. 2681-288, bars respondent from recovering its contract support
costs.
Decisions under Review:
Cherokee Nation of Oklahoma v. Thompson (10th Circuit)
Thompson v. Cherokee Nation of Oklahoma (Federal Circuit)
