FAR 12.216—Unenforceability of unauthorized obligations.
Plain-English Summary
FAR 12.216 explains when supplier license agreements, such as end user license agreements (EULAs), terms of service (TOS), and similar online or software-related agreements, are not enforceable against the Government because they would create unauthorized obligations. The section is aimed especially at information technology acquisitions, but it applies more broadly to any supply or service acquired subject to a vendor’s license terms. Its central concern is indemnification clauses and other provisions that conflict with Federal law, particularly where acceptance of those terms could violate the Anti-Deficiency Act (31 U.S.C. 1341) by committing the Government to open-ended or unauthorized liability. In practice, this section tells contracting personnel and contractors that vendor boilerplate does not automatically bind the Government, and that the Government cannot agree to terms that exceed statutory authority. It also points to paragraph (u) of the commercial items clause at FAR 52.212-4 as the mechanism that prevents such violations in commercial acquisitions. The practical significance is that agencies must review license terms carefully before acceptance, and contractors must understand that certain standard commercial terms may be unenforceable when dealing with the Federal Government.
Key Rules
License terms may apply
Supplies and services can be acquired subject to supplier license agreements, including EULAs, TOS, and similar instruments. This is common in IT acquisitions, but the rule is not limited to software and can apply to any commercial supply or service.
Unauthorized obligations are unenforceable
If a license agreement contains terms that the Government lacks authority to accept, those terms are not enforceable against the United States. The section is focused on preventing the Government from being bound by obligations that exceed legal authority.
Indemnification clauses are a key risk
Many vendor agreements include indemnification provisions that conflict with Federal law. Such clauses are specifically identified as problematic because they can create open-ended liability the Government cannot lawfully assume.
Anti-Deficiency Act concerns control acceptance
Agreeing to unauthorized obligations can violate the Anti-Deficiency Act by committing the Government to pay or assume liability without proper statutory authorization or available appropriations. The rule exists to prevent contracting personnel from inadvertently creating such violations.
FAR 52.212-4(u) blocks improper terms
Paragraph (u) of the commercial items clause at FAR 52.212-4 is intended to prevent the Government from accepting license terms that would create unauthorized obligations. In commercial acquisitions, this clause helps preserve the Government’s ability to reject or disregard conflicting terms.
Responsibilities
Contracting Officer
Review supplier license agreements and ensure the Government does not accept terms that are unauthorized or inconsistent with Federal law. Use the commercial items clause and other acquisition terms to prevent Anti-Deficiency Act violations and negotiate or reject problematic provisions, especially indemnification clauses.
Contractor / Supplier
Provide license terms that are compatible with Federal procurement law and understand that standard commercial boilerplate may not be enforceable against the Government. Avoid insisting on indemnification or other provisions that the Government cannot lawfully accept.
Agency / Legal Counsel
Support review of license agreements and advise on whether specific terms are legally permissible. Help identify clauses that would create unauthorized obligations and ensure acquisition strategies and contract language protect the Government.
Program / Technical Personnel
Flag when software, web services, or other supplies/services are subject to external license terms before purchase or use. Coordinate early with contracting staff so unacceptable terms are identified before the Government is exposed to them.
Practical Implications
Vendor click-through terms and standard online agreements are not automatically acceptable just because they are common in the commercial market.
Indemnification language is a frequent problem area and should be reviewed carefully before any acceptance or use.
Contracting officers should not assume that a license attached to software or a web service is harmless boilerplate; it may contain legally prohibited commitments.
Early review matters: once a user clicks through or a service is activated, the agency may already have created a dispute over whether the Government accepted the terms.
The safest practice is to identify license terms during acquisition planning and resolve conflicts before award, delivery, or access is granted.
Official Regulatory Text
Many supplies or services are acquired subject to supplier license agreements. These are particularly common in information technology acquisitions, but they may apply to any supply or service. For example, computer software and services delivered through the internet (web services) are often subject to license agreements, referred to as End User License Agreements (EULA), Terms of Service (TOS), or other similar legal instruments or agreements. Many of these agreements contain indemnification clauses that are inconsistent with Federal law and unenforceable, but which could create a violation of the Anti-Deficiency Act ( 31 U.S.C. 1341 ) if agreed to by the Government. Paragraph (u) of the clause at 52.212-4 prevents any such violations.