12.216
Unenforceability of unauthorized obligations
FAR 12.216 ensures that any unauthorized obligations in supplier license agreements, such as indemnification clauses, are unenforceable against the Government to prevent Anti-Deficiency Act violations.
Overview
FAR 12.216 addresses the issue of unenforceable obligations that may arise from supplier license agreements, such as End User License Agreements (EULAs) and Terms of Service (TOS), particularly in the acquisition of commercial products and services. These agreements often contain clauses—especially indemnification provisions—that are inconsistent with Federal law and could potentially violate the Anti-Deficiency Act if accepted by the Government. To prevent such violations, paragraph (u) of the clause at FAR 52.212-4 is included in contracts to ensure that any unauthorized obligations are unenforceable against the Government. This protects agencies from inadvertently accepting liability or financial commitments not authorized by law.
Key Rules
- Supplier License Agreements
- Many commercial supplies and services, especially IT products, are subject to supplier license agreements that may include problematic clauses.
- Indemnification Clauses
- Indemnification or similar clauses in these agreements are often unenforceable if they conflict with Federal law.
- Anti-Deficiency Act Compliance
- Agreements that create unauthorized obligations could violate the Anti-Deficiency Act, which prohibits the Government from incurring obligations beyond appropriated funds.
- Contract Clause 52.212-4(u)
- This clause is included to explicitly prevent the enforcement of any unauthorized obligations against the Government.
Responsibilities
- Contracting Officers: Must ensure that contracts include the appropriate clause (52.212-4(u)) and do not accept unauthorized obligations in supplier agreements.
- Contractors: Must recognize that certain license agreement terms (e.g., indemnification) are unenforceable against the Government.
- Agencies: Must oversee compliance to avoid Anti-Deficiency Act violations and ensure proper contract administration.
Practical Implications
- This section exists to protect the Government from inadvertently accepting liability or obligations not permitted by law.
- It impacts daily contracting by requiring careful review of supplier agreements and strict adherence to contract clauses.
- Common pitfalls include failing to recognize unenforceable clauses or not including the required contract language, which could result in legal or financial risk.