It has always been an issue with the Federal Government of what a CO must do if a contractor performs work based on the direction of a government employee who does not have authorization to direct such work. In almost all cases where the contractor has done work (even though it’s unauthorized), they get paid. Usually this is done via a ratification of the unauthorized commitment. Should a contractor’s performance of work outside the scope of the contract go uncompensated if a contractor does not receive appropriate authorization in accordance with the contractual terms?
Yes, according to a recent Court of Federal Claims decision in Baistar Mechanical, Inc., v. United States, No. 15-1473C (2016). This case strengthened the idea that a contractor should only perform work required under the terms of the federal contract or directed by an authorized government agent in accordance with the contractual terms. And contractors need to understand that a Contracting Officer’s Representative usually does not have the authority to authorize such work, even if they act like they do!
This case involved a ground maintenance and snow removal services contract. While working on that contract, Baistar alleged that two Contracting Officer’s Representatives requested their assistance with the planning and design of the current boiler plant and future plants at the location. Now it’s pretty clear to me that this is outside the scope of a ground maintenance and snow removal contract. So bad on both the contractor and the CORs.
Baistar provided the assistance but was not selected as the contractor for the plant projects and was never paid for its planning and design assistance.
Additionally, Baistar stated that throughout the performance of the ground maintenance and snow removal contract, they performed various other services at the request of CORs, but were never paid for those services.
Ultimately the government terminated Baistar for default and the contractor filed claims seeking payment for the extra work. After the government denied the claims, they filed an appeal with the U.S. Court of Federal Claims.
The government moved to dismiss the contractor’s appeal since, under the terms of the contract, the CORs lacked authority to order additional work.
Specifically, the contract provided:
Any additional services or a change to work specified which may be performed by the contractor, either at its own volition or at the request of an individual other than a duly appointed [contracting officer], except as may be explicitly authorized in the contract, will be done at the financial risk of the contractor. Only a duly appointed contracting officer is authorized to bind the government to a change in the specifications, terms, or conditions of this contract.
The contract added that the contracting officer’s representatives did “not have authority to issue technical direction that…changes any of the terms, conditions, or specification(s)/work statement of the contract.”
The Court of Federal Claims wrote that “a government agent can bind the government if the agent possesses express or implied actual authority.” No implied authority will exist “when the action taken by the government agent contravenes the explicit terms of the governing contract.” Further, when a contractor works with or enters into an agreement with a government agent, the contractor is responsible for determining whether that agent can effectively bind the government.”
In this case, “the express provisions of the ground maintenance contract grant exclusive authority to the contracting officer, not the representatives, to make any changes regarding scope of worth.” The Court continued:
The . . . contracting officer may have delegated management authority to its representatives, but that delegation was limited by the contract. The contract’s explicit terms gave the contracting officer exclusive authority to order out-of-scope work, and barred the representatives from implied authority to do the same. The fact that the representatives allegedly acted as if they had authority, or even believed they had authority, is insufficient.
The Court granted the government’s motion to dismiss most of Baistar’s causes of action.
In the past, when benefit was derived from a contractor who relied on the “apparent” authority of the COR to do the work, the government would do their best to ensure the contractor was compensated. Now the tide has turned and contractors need to be aware of exactly who can and cannot authorize work on the contract. It is always best to check with the CO before taking on work outside the scope of the contract or even extra work not identified in the contract.