What goes around, comes around.

The government sometimes refuses to pay a contractor for a modification when the government official requesting the modification lacks appropriate authority.  But contractual authority isn’t a one-way street benefiting only the government.  A recent decision by the Armed Services Board of Contract Appeals demonstrates that a contractor may not be bound by a final waiver and release of claims if the individual signing on the contractor’s behalf lacked authority.

The ASBCA’s decision in Horton Construction Co., SBA No. 61085 (2017) involved a contract between the Army and Horton Construction Co., Inc.  Under the contract, Horton Construction was to perform work associated with erosion control at Fort Polk, Louisiana.  The contract was awarded at a firm, fixed-price of approximately $1.94 million.

After the work was completed, Horton Construction submitted a document entitled “Certification of Final Payment, Contractors Release of Claims.”  The document was signed on Horton Construction’s behalf by Chauncy Horton.

More than three years later, Horton Construction submitted a certified claim for an additional $274,599.  The certified claim was signed by Dominique Horton Washington, the company’s Vice President.

The Contracting Officer denied the claim, and Horton Construction filed an appeal with the ASBCA.  In response, the Army argued that the appeal should be dismissed because the claim arose after a final release was executed.

Horton Construction opposed the Army’s motion for summary judgment.  Horton Construction contended that “Mr. Chauncy Horton did not have the requisite authority or the intent to release a claim.”

The ASBCA noted that, when a party moves for summary judgment, it must demonstrate “that there are no disputed material facts, and the moving party is entitled to judgment as a matter of law.”  In this case, the information in the record did “not demonstrate the extent to which Mr. Chauncy Horton was authorized to enter agreements between Horton and the Army.”  The ASBCA concluded that “the Army failed to submit sufficient evidence to meet its initial burden, specifically whether Mr. Chauncy Horton was authorized to sign the final payment and final release for appellant.”

The ASBCA denied the government’s motion for summary judgment.

When issues of contractual authority arise, they usually seem to benefit the government.  But, as the Horton Construction case shows, the government cannot have it both ways.  Like the government, a contractor may not be bound by the signature of someone who lacks appropriate authority.