Government Contracts Government Ratified Unauthorized Action
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Thursday, May 21, 2020

Government Ratified Unauthorized Action

By Government Contracts Editorial Staff

The Civilian Board of Contract Appeals summarily ruled the government was obligated to honor the pricing provisions of an unauthorized contract modification because officials with unlimited contracting authority ratified the modification. After Hurricanes Maria and Irma struck Puerto Rico and the United States Virgin Islands, the government did not have any contracts in place to ship equipment, goods, or other materials from the continental U.S. to either Puerto Rico or the USVI to assist in the disaster-relief efforts. The closest prepositioned contract was limited to shipments from Puerto Rico to the USVI and had a price ceiling of $4 million. The government issued, on a sole-source basis, a modification to expand the indefinite delivery/indefinite quantity contract and add contract line item numbers that would allow for the immediate shipment of necessary disaster-relief materials from CONUS to the impacted areas. The modification also increased the contract’s price ceiling to $100 million, but the contracting officer who executed the modification had a warrant of contracting authority limited to $25 million or less.

Implicit Ratification. Authorized contracting officials continued to direct the contractor to keep performing. After several months of performance, the government directed the contractor to provide supporting data to justify the costs it had incurred pursuant to the modification. Authorized officials subsequently ratified the unauthorized contract commitment, using the express ratification procedures of FAR 1.602-3, which effectively changed the modification’s pricing terms for several CLINs, reducing what the government was willing to pay for barge shipment and stevedoring services. However, based on the stipulated undisputed facts, the modification was enforceable as written. Even after recognizing the modification signatory error, COs with unlimited warrants of contracting authority were closely involved in ensuring that the contractor continued performing and did not notify the contractor of the problem with the formation of the contract modification. The officials implicitly ratified the modification through their conduct, and the government had no right, months later, to change the modification’s pricing terms through an express ratification. (Crowley Logistics, Inc. v. Dept. of Homeland Security, CBCA, ¶96,01

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