Is the government bound by acts of unauthorized officials?

In order to be a lawful act that binds the government, a government official must be authorized to make that act. A contract must be formed by a government official who has actual authority to bind the United States in a contract, namely a properly designated contracting officer. A contract specialist, a contracting officer’s representative (COR), or a contracting officer’s technical representative (COTR), while sounding like someone who has authority, actually possess none whatsoever to sign a contract.

Similarly, an unauthorized representative like a contract specialist, COR or COTR cannot lawfully issue a change order (modification) to a contract. Only a properly designated contracting officer can direct a contractor to make changes that affect price, quantity, specifications or delivery schedule.

Richard Lieberman, a consultant and retired attorney.
Richard Lieberman, a consultant and retired attorney.

There are, however, very limited instances where the government can be bound to pay for a change, even if there was no specific direction coming from a contracting officer. This was demonstrated in a recent Civilian Board case, Servitodo LLC vs. Department of Health and Human Services (CBCA 4777). In that case, the project officer and the contract specialist (who had no contracting authority), directed that the contractor hire an additional person beyond what the contract required. Servitodo hired the person, but sought an equitable adjustment to pay for the extra-contractual costs. The government’s position was that only the contracting officer had the authority to direct the additional hire.

However, Servitodo sent an email to the person designated in the contract, and that person worked for the contracting officer. The contractor’s email requested direction from the contracting officer before making the additional hire. The contracting officer did not immediately respond, but eventually told the project officer not to “interfere” with the hiring by Servitodo — just to tell them to “comply with the contract.” The board noted that the contracting officer clearly knew or should have known about the direction to hire the additional person, but “stood by and allowed the work to continue.”

The board held that even where a contracting officer does not give the direction to change a contract, the contracting officer may actually ratify that change. If a contractor can show that the contracting officer was either on actual or constructive notice that the extra work was being directed, and took no action to stop it, but allowed it to continue, then the contracting officer has ratified the government’s direction to do the additional work, and the contractor must be paid for it.

Be careful. Ensure that any contract changes are directed by a proper contracting officer. If someone else seeks to change your contract, immediately notify the contracting officer and wait for his or her direction before making the change.

Richard Lieberman is a consultant and retired attorney. This article does not provide legal advice as to any particular transaction.

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