A recent U.S. Government Accountability Office (GAO) decision serves as an important reminder that federal agencies violate the Antideficiency Act, 31 U.S.C. § 1341 et seq., whenever they accept unpaid “voluntary services” from contractors without first obtaining written agreement that: (1) the services are offered without expectation of pay; and (2) expressly waives any future pay claims against the government. Dep’t. of the Treasury—Acceptance of Voluntary Servs., B-324214, Jan. 27, 2014.
The Antideficieny Act provides that an agency “may not accept voluntary services” that exceed those authorized by law. See 31 U.S.C. § 1342. According to GAO, “[t]he purpose of the prohibition is to preclude situations that might generate claims for compensation that might exceed an agency’s available funds.” B-324214, at 2 (internal citation omitted). The Federal Acquisition Regulation (FAR) also makes clear that the mere act of “encouraging a contractor to [perform or] continue work in the absence of funds” is a violation. See FAR 32.704(c) (emphasis added). Federal employees who violate the Act are subject to civil or criminal penalties. See 31 U.S.C. §§ 1349, 1350.
Because the voluntary services prohibition is intended to preclude future monetary claims against the government, GAO and the Attorney General have held that an agency does not violate the Antideficiency Act if it accepts voluntary services “with a written record” that clearly says “the services are offered with no expectation of payment.” See B-324214, at 3. According to GAO, such services are “gratuitous,” not “voluntary,” and therefore do not violate the Act. Id. To be effective, such an agreement “must clearly state that the services are offered without expectation of payment, and it must waive any future claims against the government for pay for the services rendered.” Id. at 4.
In Dep’t of Treasury, GAO determined that the Treasury violated the Antideficiency Act when it accepted services from four individuals who “perform[ed] substantive official business” for the agency on an unpaid basis. Id. at 2. Treasury admitted it had not obtained an advanced “written waiver of compensation” from any of the workers. Id. at 3. Instead, the agency claimed it had secured “binding oral waivers” to that effect. Id. at 3. According to GAO, this approach “clearly violate[d] the plain meaning of the voluntary services prohibition,” id. at 2, and “[o]nly a written document, executed prior to the beginning of performance by those providing services to the government, provides the necessary protection from [future monetary] claims,” id. at 3-4.
In an era of ever-tightening budgets and increased competition for federal work, government contractors may be tempted to offer their services to federal agencies “at no cost.” Similarly, government officials may encourage contractors to perform work without compensation. Before doing so, however, contractors should be mindful of the requirements under the Antideficiency Act and should consult with counsel prior to executing any advanced agreement to waive future claims against the government.