The current administration has made claims of vast executive discretion with respect to contracts and grants. In a recent argument in Harvard’s contest of funding cutoffs, the government lawyer argued that the government had discretion to direct public money as it saw fit. In seeking to foreclose disfavored law firms from working on matters of government contracts, the administration argued that it was acting “within the bounds of established executive authority,” as a contractor “managing who it does business with and how, based on what it believes to be in the public interest.”
Government contracts and grants may seem at first glance to be matters allowing broad executive discretion. One strand of doctrine, the distinction between public and private rights, might suggest as much. But the public rights characterization does not suggest unreviewable executive power. Rather, significant delegations to the executive even with respect to public rights require procedural and substantive constraints as conditions of the delegation.
This article will look at the traditional treatment of contracts and grants, and then address recent National Institutes of Health (NIH) grant terminations. The district court in American Public Health Associations v. National Institutes of Health correctly subjected the NIH grant terminations to the realm of reason, including by use of the APA’s arbitrary and capricious standard. A majority of the Supreme Court, however, granted a partial stay, reasoning that the district court likely lacked jurisdiction with respect to the grant termination claims. The majority indicated that such claims should be treated as Tucker Act claims to be heard in the Court of Federal Claims. This result undermines significant precedent and Congress’s intent to make grant-in-aid disputes reviewable in the district courts under the Administrative Procedure Act. Wherever the litigation proceeds, however, the courts should employ APA standards, including review of whether the government has acted contrary to constitutional and statutory authority, and moreover, whether its actions are arbitrary and capricious.
Citation
Ann Woolhandler, Contracts, Grants, and the Limits of Executive Discretion, 78 Administrative Law Review, 387–429 (2026).