Overview
This section addresses the legal conflicts between commercial supplier license agreements (such as EULAs and Terms of Service) and federal law, specifically regarding clauses that create open-ended financial liabilities for the government.
Key Rules
- Scope: Applies to any supply or service acquisition involving supplier license agreements, most notably in Information Technology, computer software, and web services.
- Prohibited Clauses: Focuses on indemnification clauses and similar legal instruments that are inconsistent with Federal law.
- Anti-Deficiency Act Link: Explicitly warns that agreeing to unauthorized indemnification obligations could result in a violation of the Anti-Deficiency Act (31 U.S.C. 1341).
- Legal Status: Declares that such unauthorized obligations are unenforceable against the Government even if they are embedded in standard commercial terms.
Practical Implications
- Contracting Officers must carefully review and often renegotiate commercial "click-wrap" or "browse-wrap" agreements to strike out indemnification language that would bind the government to indefinite future costs.
- Federal agencies cannot legally accept standard commercial terms "as-is" if those terms require the government to hold a private vendor harmless, as this would constitute an obligation of funds in excess of appropriations.