Federal Contract Law | Contracting officers need a public profile

Joseph J. Petrillo

One of the first things a lawyer learns about federal contracts is that the commercial concept of 'apparent authority' doesn't apply. Someone may have a fancy title or a high-level position, but that doesn't mean that what he or she says or does can actually bind the government. Only real authority counts.

To bind the government to a procurement contract requires a properly warranted contracting officer. Even then, the officer's authority can't go beyond any restrictions in the warrant. For instance, a contracting officer might have authority to enter into contracts only up to a certain dollar amount.

Apparently, government purchase cards are one of the rare exceptions to the rule. They look and act like credit cards but have another name because the government pays off the balance every month. Every cardholder is, in effect, a contracting officer, up to the card's limit.

Courts apply the rules on authority strictly, even when the result is brutal. The 1998 case of Harbert/Lummus vs. United States illustrates how easy it is to get caught in the authority trap. That case concerned an Energy Department program to help construct ethanol plants. In one such deal, the construction contractor complained of tardy payment and wanted to know if DOE would really fund the project to completion. It got these assurances at a meeting with the deputy director of the DOE program office. The DOE contracting officer attended the meeting but remained silent when the deputy director committed to fund the project fully.

When Harbert/Lummus sued to enforce this commitment, the government's defense was that the deputy director lacked contracting authority. This was true. However, the trial court found that the contracting officer's silence amounted to acquiescence. Since the CO did have authority to bind the government in contract, the commitment was valid.

But that wasn't the end of the story. The government appealed, and the federal circuit reversed. The appellate court dug up a limitation in the wording of the contracting officer's warrant. In one garbled sentence, the warrant seemed to require that the contracting officer approve his own action in writing before performing it. The commitment made at the meeting was oral and never put in writing. Therefore, the federal circuit held, no one with authority had ever made or ratified DOE's commitment. In Sam Goldwyn's famous dictum, the oral contract wasn't worth the paper it was written on.

This question of authority need not be so mysterious. After all, the Federal Acquisition Regulation requires that contracting officers be appointed in writing, using a Standard Form 1402, Certificate of Appointment. Each agency needs to keep a file of all its active certificates.

So in theory, it isn't hard to know who has what authority: Look at the Form 1402. But the FAR doesn't require agencies to make the forms available. In practice, it isn't easy for contractors to get them. Some contracting officers produce them on request. Others balk.

At a recent meeting of a committee of the American Bar Association, Public Contract Section, I suggested that agencies list all authorized contracting officers on their Web sites. The listing would include any limitation on the contracting officer's authority.

Most of those at the meeting thought this was a good idea. Some recalled the difficulty of finding out whether a government official ordering emergency supplies for the Katrina recovery effort had authority to do so. Contractors were understandably reluctant to ship items they wouldn't get paid for. This problem seems to have a simple solution. Maybe it will actually get solved.

Joseph J. Petrillo is a lawyer with the Washington law firm Petrillo & Powell. E-mail him at jp@petrillopowell.com.

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