Through the Tucker Act, 28 U.S.C. 1491, the United States government has waived its sovereign immunity on law suits arising out of contracts to which it, or its agency, was a party. The Act states that if the plaintiff seeks less than $10,000 in damages, the federal district courts have concurrent jurisdiction. However, if the damages sought exceeds that amount, the Federal Court of Claims has the exclusive jurisdiction.

Not all governmental contracts are subject to the Tucker Act. For example, the Supreme Court, in its case Burr v. FHA, 309 U.S. 242 (1940) has stated that the Congress may organize "sue and be sued" agencies; such agencies may be sued in any court of otherwise competent jurisdiction as if it were a private litigant, as long as the agency is to pay out the judgment from its own discretionary budget, not from the U.S. Treasury.