Indemnification Agreements and the Anti-Deficiency Act

In order to comply with the Anti-Deficiency Act, 31 U.S.C. § 1341, indemnification agreements with government contractors, if otherwise authorized, must include a limitation on the amount of liability and must state both that the liability is further limited to the amount of appropriated funds available at the time payment must be made, and that the contracting agency implies no promise that Congress will appropriate additional funds to meet any deficiency in the event of loss.

A government agency may not indemnify its contractors for claims brought against them by reason of their own negligence. Nor may the United States agree in advance to assume liability for the negligence of its employees for which it may not otherwise be responsible under the Federal Tort Claims Act.