A PLAY IN THREE ACTS: ACTUAL AUTHORITY By Richard Lieberman, Consultant and Retired Attorney The Cast __________________________________________________ The Colonel LTC Saunders, Retired, an employee of the private West Point Association of Graduates (“AOG”), also its Director of Alumni Giving, Chief of Alumni Support Operations and a volunteer coach of the West Point Cadet Pistol Team. The CO The Army Contracting Officer (unnamed) The West Point Contract Ms. Denise Conklin, a contract specialist in the CO’s office The IMC The Indoor Marksmanship Center at the U.S. Military Academy at West Point P&K (Contracting) A construction contractor STV An Engineering Firm ____________________________________________________ ACT 1: Time: Winter 2000 Place: The Contracting Office and Others The Colonel Terrible fire at the IMC. AOG will “gift” a new target system to the Army if West Point will fix the building. Others: Wonderful, let’s do it! The CO Selects STV to design the building and furnishes the drawings to potential bidders. The Colonel AOG hereby selects Caswell (a contractor), as the maker of the target system. The CO I issue a solicitation for IMC renovation, and I include the STV drawings in the solicitation, which states that the Heating, Ventilating and Air Conditioning (“HVAC”) system must be subcontracted to Rangetech or Caswell (both contractors). The Colonel I show Rangetech and Caswell the STV drawings during a meeting with them concerning the target system. Both contractors tell me the HVAC design is inadequate. The Colonel I send an email to personnel at Caswell in which I say “The general contractor will be required to use Caswell or Rangetech for the ventilation system portion of the government contract. If you feel that your own system, not the one designed by STV, is superior and/or cheaper, a modification to the contract will be made and you may install your own system.” (Sept. 28, 2000) The CO I award a contract for IMC renovation to P&K as best value. Its subcontractor for the HVAC (G&E) has a price of $570,000. (Dec. 14, 2000) P&K We hereby send to the West Point Contact our concerns about the ventilation system which does not meet government requirements, and suggest a redesign. The West Point Contact Your redesign is rejected. G&E Says to P&K that G&E declines to install the STV-designed ventilation system in the IMC contract because it won’t work, and we don’t want our reputation ruined. P&K I found a substitute subcontractor, and accepted a price of $783,500 ($213,500 above G&E’s price) (NOTE: During the ensuing litigation, no material facts were disclosed that anyone with authority to bind the government either agreed that the HVAC specifications in the Solicitation could be altered, amended, or ratified to any such change.) ACT TWO: At P&K’s Corporate Headquarters P&K I submit my claim for $245,525 to the Army on this project In reliance on the Colonel’s email, G&E’s price was for a less expensive HVAC system, a price P&K used in preparing its bid. When G&E subsequently refused to install the STV design, P&K had to obtain a replacement subcontractor, which it did, at a cost of $245,525 to plaintiff in excess of G&E’s price ACT THREE: At the Court of Federal Claims—the Decision from the Bench: It is undisputed that the Colonel, a retired employee acting in a non-federal capacity, had neither actual nor implied authority to bind the government. Actual authority may be express (in writing) or implied (through a job description) from the authority granted to that agent. Only the Contracting Officer has authority to make commitments or changes that affect price, quality, quantity, delivery or any other terms and conditions of a contract. Therefore, there was no agreement ever made to modify the contract specifications as G&E did in its proposal to P&K. There simply was no basis for P&K to believe that the contract had been lawfully modified, and its claim fails on that basis. P&K Contracting, Inc. v. United States, No. 09-399C (Fed. Cl. Dec. 21, 2012). REMINDER: Do not take direction from, nor change anything in your written contract, unless you have a written order from a contracting officer with authority to make such a change. ________________________________________ All opinions, conclusions or recommendations expressed are those of the author(s) and do not necessarily reflect the views of the Maryland PTAP. The posting of this information does not constitute an express or implied endorsement of any of the cosponsor’s or participants’ opinions, products, or services. This article does not constitute legal advice as to any particular transaction.
Posted on: Mon, 24 Jun 2013 17:30:37 +0000
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