Do They Have Authority to Contract?


Let’s suppose that you’re providing some service to a government agency when one employee of that agency mentions “if you do A task, I’ll recommend you receive X amount of money.” What would you do? Would you do the work you’re asked to do? You might say yes, or you might say no. If you said no you may be correct. If you said yes you may also be right. I do not intend to confuse you in a lawyerly sort of way. It is only that the correctness of the answer lies with the authority the employee has to bind the government into a contract.

Why is this authority important? Since the government cannot act on its own it must act through its employees. Where it comes to contracts the authority to contract on behalf of the federal government is delegated to contracting officers. 48 C.F.R. § 1452. 201-70 (2011). This is actual authority. A contracting officer has actual authority to bind the government to contract. Without that authority – which can be expressed or implied – the government cannot be bound. Hence, the answer to the question presented above lies heavily on discovering whether that person has the actual authority to bind the government. It is worth then to inquire whether the person asking you to do the A job has authority to contract. You would be the judge of each circumstance you face however keep in mind the authority of any person asking you to do something.

Let’s bring this a step further, to look at the consequence such lack of authority can have on a contractor. Generally, before you can claim a breach of contract you must first establish that there is an enforceable contract. The formation requirements of a government contract differ from those of a commercial or service contract. To establish the existence of an enforceable government you must show 1. Mutuality of intent to contract; 2. Offer, acceptance, consideration; 3 conduct by the government representative having actual authority to bind the government. There we have in the third element the requirement of a person with actual authority to act i.e. bind the government.

Now you may rightfully retort and say, “wait a minute are you telling me that if I’m talking to government employee and they agree on something I may not have a contract?” If this is your question, then yes. You may find yourself in that position absent implied authority or ratification. Remember this is not the commercial world this is the government contracting world, where the governing statutes dictates the rules of the game. For instance, in the commercial setting we talk about apparent authority where private parties can be bound by the acts of their agents; not so in government contract settings. The apparent authority doesn’t apply to the actions of government officials. This is a significant and important distinction. And, it is a mistake to claim apparent authority if raising a breach of contract issue.

Will you be out of luck entirely if you did work as described in the above situation? Yes, if the government doesn’t ratify the actions of the representative or if no implied authority is found. It is worth saying a few words about the implied authority as it may prove your saving grace should you bring a breach of contract claim against the government when you believe to have interacted with a person with authority to bind the government. Authority is implied, when said authority is considered to be an integral part of the duties assigned to a government representative. As the court said in Cruz-Pagan v. United States, 35 Fed. Cl. 59 (1996), this “doctrine of implied authority serves to fill in the gap when agency reasonably must have intended certain representative to possess contracting authority but failed expressly to grant that authority.” Thus, the doctrine of implied authority can be your save the day doctrine to establish the existence of an enforceable contract where the person you've been interacting with has no actual authority to contract. Note, you cannot use the doctrine to create actual authority where there's none.

In conclusion, while some things may be obvious don’t assume the obvious. When contracting with the federal government you are not dealing with a private party whose agents can bind that private party to contract. It is important for you to do your due diligence and make sure that the persons you are interacting with and entering into agreements have the authority to do so as delegated to them by the government agency they represent. The alternative can be a costly litigation that could and may not result in a favorable decision for you.

Keep in mind the information here is provided solely for education. The specifics of your situation will dictate the potential outcomes. Should you have questions contact us support@lexalbex.com .


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