Intern's Unauthorized Agreement Did Not Bind Government

A claim for damages arising from the cancellation of a lodging agreement was dismissed by the Court of Federal Claims because the government employee who made the reservation did not possess actual or implied authority to bind the government and her actions were not authorized by contracting officials. An intern at a defense supply center entered into a letter agreement with a hotel to provide rooms for personnel attending a quality control training class. The intern signed the hotel's form agreement, which stated the hotel could recover 80% of the anticipated gross revenue should the reservation be cancelled. After the training class was called off, the intern informed the hotel the reserved rooms were no longer needed. The hotel sued for the cancellation fees delineated in its agreement. The government contested the claim on the basis the intern was not authorized to bind the government. Only government officials who possess a contracting officer's warrant are authorized to bind the government to a contract (FAR 1.602-1), and contracts entered into by government employees who lack authority are unenforceable.

Here, the intern lacked actual authority to obligate the government by contract. Although applicable regulations authorize federal employees to procure lodging for themselves by billing to a government-sponsored charge card, employees are not authorized to bind the government for the cost of the lodging. Moreover, no one in the intern's chain of supervision was in a position to ratify the agreement or delegate contracting authority to her. The supervisors were not warranted contracting officers and therefore lacked authority to ratify the intern's actions. The supervisors' awareness of the agreement was not sufficient to establish ratification. In addition, the doctrine of implied actual authority did not apply to create a binding contract. For an employee to bind the government based on implied authority, the employee's actions must be an "integral" part of his or her duties, which was not the case here. Also, implied authority applies only when some contracting authority is actually delegated. There was no delegation of any contracting authority to the intern. (Stout Road Associates, Inc. v. U.S., FedCl, 52 CCF ¶78,910)

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