In our line of work, we regularly litigate protests, claims, appeals, etc., against the Government. But often, procuring and contracting issues can be resolved without the need for litigation–via a little-known method we like to call “talking things out with your CO.” There are also some important things to keep in mind regarding contract performance communications. This article is the last of three articles aimed at providing helpful tips for communicating with your contracting officer. Part 1, which focused on pre-solicitation and solicitation communications, can be found here. And Part 2, which focused on proposal submission communications, can be found here. This article will focus on contract performance communications.
Only the Contracting Officer, Acting within their Scope of Warranted Authority, has the Power to Bind the Government Regarding Contract Modifications!
So, let’s say you read Parts 1 and 2 of this blog series, and you did, in fact, communicate openly with your contracting officer to make sure you understood the solicitation, got your complete proposal in (on time), and won this award (you’re welcome).
Now, you are performing the contracted work. But–as frequently happens–there are some changes that need to be made to your performance (i.e. government needs changed, materials became unavailable, storm damaged the work site, etc.). So, who are you going to call? No surprises here, still, your contracting officer–but only your designated contracting officer.
Indeed, only your designated contracting officer, acting within the scope of authority assigned to them under the FAR, the prime government contract, and the agency head, can bind the government regarding your contract. FAR subpart 1.6 covers contracting authority, and generally, establishes that the government is only bound by the actions of those with the authority to bind it. Specifically, FAR 1.601 states, “Contracts may be entered into and signed on behalf of the Government only by contracting officers.” And FAR 1.602-1 states:
Contracting officers have authority to enter into, administer, or terminate contracts and make related determinations and findings. Contracting officers may bind the Government only to the extent of the authority delegated to them.
Finally, FAR part 43 covers contract modifications. And it says:
(a) Only contracting officers acting within the scope of their authority are empowered to execute contract modifications on behalf of the Government. Other Government personnel shall not –
(1) Execute contract modifications;
(2) Act in such a manner as to cause the contractor to believe that they have authority to bind the Government; or
(3) Direct or encourage the contractor to perform work that should be the subject of a contract modification.
So, what all these FAR provisions are getting at is that only the contracting officer can bind the government with respect to your federal contract–seems simple enough! But in reality, this concept is not always as straightforward as it sounds on paper.
You, being a successful and responsible government contractor, want to please your government client. So, when someone flashes a fancy government badge at you (complete with a government title) and tells you to do something, the gut instinct is often to do it. This seems to be especially true when the request is something closely related to the work you are already doing–or something that adds or removes some aspect of it. For example, most contractors would rightfully hesitate if a government officer asked them to “go ahead and landscape” the building they are pouring concrete around. But if a government officer said, “hey, while you are pouring concrete on this lot, go ahead and fill in the crack in the lot beside it,” it would be easier to understand a contractor blindly obliging. But this is where things get a bit sticky–as doing so could cost you! And you may not be entitled to any additional costs you incur.
Information Systems & Networks Corp. v. United States, 81 Fed. Cl. 740 (2008), a 2008 case at the Court of Federal Claims, provides a cautionary tale. In Information Systems, the agency asked the contractor to submit a change order proposal. The Contracting Officer’s Technical Representative (COTR) then told the contractor, in writing, that the agency had “technically approved” the proposal–but it was never signed by the contracting officer. The contractor proceeded with the work anyway, incurring almost $900,000.00 in costs in performing the work under the change order proposal. And unfortunately, the court denied the claim for the additional costs finding that the designated contracting officer never ordered or instructed the contractor to perform the work. The court said:
[F]or a constructive change to occur, the informal order or the other conduct that causes the contractor to exceed the scope of the contract must originate from someone who is authorized to bind the Government. It would be startling, indeed, if the law were otherwise on this point, as this limitation seemingly reflects the basic notion that the United States cannot be subjected to liability based upon the conduct of those not authorized to act in a particular regard.
In Information Systems, the contractor learned a very expensive lesson. And it is not one anybody needs to repeat! Keep in mind too, it is not just the unauthorized modifications for additional work that could cost you. If a government official without the authority tells you “not to worry about” something included in your contract–and you don’t–you could be on the hook for a potential breach of contract as well.
When in doubt, always ask your contracting officer for an official written modification before you agree to incur additional costs or responsibilities under your contract–or agree to change the terms of your contract at all. But what if someone else just gives you instructions that modify your work–similar to what happened in Information Systems? Well, in that case, you need to make sure your contracting officer ratifies the unauthorized commitment before agreeing to anything.
Your Contracting Officer can Ratify an Unauthorized Commitment–but Watch Out for the Ratification Trap!
Let’s start with some definitions from the FAR. Ratification “means the act of approving an unauthorized commitment by an official who has the authority to do so.” And an unauthorized commitment “means an agreement that is not binding solely because the Government representative who made it lacked the authority to enter into that agreement on behalf of the Government.” The FAR explains that, under certain circumstances, commitments by unauthorized representatives may be ratified by a contracting officer (or another officer) with authority.
So, let’s look back at Information Systems. In that case, if the contractor had taken the proposal–that the COTR said was “technically approved” by the contracting officer–and gotten it actually approved by the contracting officer before proceeding, they would likely be almost $900,000.00 richer! Even though the COTR was not authorized to approve the proposal when he/she did so, the contracting officer could easily have ratified that unauthorized commitment–binding the government to the additional costs.
But this brings up a very important point as well, beware of the ratification trap! In the scenario we just described, let’s say the contractor had to submit a second change order proposal. And this time, the COTR said, “again, this is technically approved, just like I said it was last time–then, it was.” It may be tempting for the contractor to give in, remembering that the contracting officer ratified this guy’s unauthorized commitment last time. But that, again, could be costly.
We call that the “Ratification Trap,” wherein receiving behind-the-scenes ratifications can mislead contractors into believing that unauthorized actions were authorized. Just because there was one ratification does not mean that the agency will grant future ratifications. Always obtain the commitment from the officer with actual present authority before proceeding with any modifications.
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So, the takeaway here is that talking with your contracting officer can be crucial when you are performing under your contracts as well. Don’t be fooled by just any ol’ government badge. And don’t let one agency ratification of an unauthorized commitment make you lazy–always get the authority you need to proceed–and when at all possible, do so in a signed, written official contract modification to protect your interest.
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