New FAR Clause Protects Against Anti-Deficiency Act Violations

The interim rule issued with today’s FAC 2005-67 adds a new FAR clause at 52.232-39 to make clear the government is not bound by the terms of online service agreements containing an open-ended indemnification clause. The rule addresses concerns raised in an opinion from the Department of Justice’s Office of Legal Counsel involving the use of unrestricted indemnification clauses in acquisitions for social media applications. The opinion noted that the Anti-Deficiency Act (31 USC 1341) is violated when a government employee with authority to bind the government agrees, without statutory authorization or another exception, to such open-ended clauses. The rule requires contracting officers to insert FAR 52.232-39, Unenforceability of Unauthorized Obligations, in all solicitations and contracts. The rule also makes corresponding changes to FAR 52.212-4, Contract Terms and Conditions—Commercial Items. Comments on the interim rule are due by August 20.

About George Gullo

George Gullo is an attorney editor in the Government Contracts group at Wolters Kluwer Legal & Regulatory U.S. George serves as the principal editor of Cost Accounting Standards Guide and supports all of the group’s print and electronic publications, as well as legal research tools, including the Government Contracts Reporter, Board of Contract Appeals Decisions, and the FAR and DFARS Matrix Smart Charts. With more than 25 years experience in the legal publishing industry, including more than 15 years in the government contracts area, George also has a background in legal and business transactions. He is a graduate of DePaul University College of Law and a licensed Illinois attorney.
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