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Supplier's Contacts Had No Authority to Bind Government

The Armed Services Board of Contract Appeals dismissed for lack of jurisdiction a claim alleging breach of an implied-in-fact contract because the claimant did not present sufficient evidence showing one of its contacts had authority to bind the government or that the alleged agreements were ratified. The claimant supplied frozen meal kits under a prime vendor program in connection with a military initiative to reduce food and labor costs. When the military announced a change to the initiative, the claimant sought payment for kits as well as the costs of "storage, finance charges, dumped product, sales, travel and samples." On appeal from the contracting officer's denial of the claim, the government moved for summary judgment, asserting the claimant was a subcontractor or supplier that had no government contract. The claimant responded it had an implied-in-fact contract for the purchase of food products produced and stored in inventory but never ordered under the prime vendor program.

Insufficient Evidence

To establish an implied-in-fact government contract, a claimant must show, among other things, that the government representative whose conduct is relied on had actual authority to bind the government. The claimant contended this requirement was met because two government contacts who placed orders and promised payment had express or implied authority to bind the government. However, the claimant understood the first contact did not have authority to place orders, and the allegation the second contact had authority to "force orders" was based on "argument and speculation," which was insufficient to establish the existence of disputed material facts as to express actual authority. Further, the claimant provided no specific evidence of implied actual authority. Under the prime vendor program, the contacts' military branch was responsible for food service policy and procedures, and another defense agency was responsible for procurement of food and food-related items. As their branch of the military had no authority to contract for the meal kits, it would have been impossible for either contact to have actual or implied authority to bind the government in contract for the meal kits.
No Ratification

Moreover, no one in that branch had authority to purchase the meal kits, so there were no branch personnel available to ratify any agreement by one of the contacts, and the action of two COs from the defense agency with procurement authority did not rise to the level of a ratification. Finally, there was no institutional ratification. To prove institutional ratification, a claimant must show the government sought and received the benefit of an unauthorized contract, and that officials who were empowered to ratify agreements had knowledge of all the facts related to the unauthorized action. Again, no one in the contacts' military branch had authority to order meal kits, and since the branch never received the kits, it only received the benefit of readiness to fill orders, which was not the subject of any alleged agreement. (D & F Marketing, Inc., ASBCA, 92,542)

(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )


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