B-306353, Architect of the Capitol--Contract Ratification, October 26, 2005

B-306353 Oct 26, 2005 Jump To VIEW DECISION DOWNLOADS RELATED PAGES GAO CONTACTS Highlights The Architect of the Capitol may use appropriated funds to pay a contractor for services rendered pursuant to an unauthorized commitment. The Architect of the Capitol's actions subsequent to learning of the unauthorized commitment constitutes a valid ratification. See generally B-259926, Mar. 31, 1995; B-251728.2, June 9, 1993. View Decision B-306353, Architect of the Capitol--Contract Ratification, October 26, 2005 Decision Matter of: Architect of the Capitol—Contract Ratification File: B-306353 Date: October 26, 2005 DIGEST The Architect of the Capitol may use appropriated funds to pay a contractor for services rendered pursuant to an unauthorized commitment. The Architect of the Capitol's actions subsequent to learning of the unauthorized commitment constitutes a valid ratification. See generally B-259926, Mar. 31, 1995; B-251728.2, June 9, 1993. DECISION The Architect of the Capitol (AOC) has requested an advance decision under 31 U.S.C. sect. 3529 on whether it may use appropriated funds to pay a contractor for construction performed pursuant to directives issued without authority by an AOC employee. Because AOC validly ratified the unauthorized directives, it may use appropriated funds to pay the costs of the construction performed under those directives. See generally B-259926, Mar. 31, 1995; B-251728.2, June 9, 1993. BACKGROUND AOC is responsible for the maintenance and improvement of the U.S. Capitol Grounds. 40 U.S.C. sect. 5102. Pursuant to this responsibility, AOC is expanding the West Refrigeration Plant near the Capitol. The general contractor for this project is Hitt Contracting, Inc. (Hitt). Letter from Alan M. Hantman, Architect of the Capitol, to David Walker, Comptroller General of the United States, Sept. 19, 2005 (Hantman Letter). An AOC employee issued three directive letters to Hitt (directives) on March 30, 2004, January 25, 2005, and February 14, 2005, instructing Hitt to undertake work on the refrigeration plant project. The employee who issued the directives lacked the authority to do so. Id. Hitt, believing the directive letters to be authorized, began the requested work. Telephone interview with Cynthia Bennett, Director of Procurement, AOC, Oct. 4, 2005 (Bennett Interview 1). Upon learning that the directives were unauthorized, AOC suspended the work. Id.Subsequently, the senior project manager for the refrigeration plant project and the AOC Director of Procurement determined that the work begun under the unauthorized directives was necessary for the project and that funds were available for the work. Hantman Letter, Attachment 1. As a result, the Director of Procurement signed Contract Modification 36, which authorized the work begun under the directives to continue. Id.Hitt then resumed the work. Bennett Interview 1. On August 5, 2005, Hitt submitted an invoice for the work to AOC. Hantman Letter, Attachment 2. AOC asks whether it may properly use appropriated funds to pay for the work performed by Hitt pursuant to the directives. ANALYSIS It is axiomatic that the United States cannot be bound beyond the actual authority conferred upon its agents by statute or regulation. B-212968, Apr. 10, 1984. Where, as here, a government agent purports to commit the government to a transaction he has no authority to enter, the government is not legally obligated to honor the transaction. B-209132, Oct. 3, 1983. Thus, the directives alone did not obligate AOC, because the individual who signed them lacked authority to bind the government. Bennett Interview 1. Nevertheless, it has long been recognized that an authorized government official possessing knowledge of the facts may give effect to an unauthorized act of another government official by subsequently ratifying the action. United States v. Beebe, 180 U.S. 343 (1901). Traditionally, when an agency official, authorized to bind the agency in contract, knows of the relevant facts surrounding an unauthorized commitment and affirms that act, the agency then becomes bound as if the individual who made the original contract was authorized to do so. Id. at 354. See also 22 Comp. Gen. 1083 (1943); B-226248, May 13, 1987. This traditional ratification rule has been modified in the federal arena by statute and regulation. The majority of government procurement actions are governed by title 48 of the Code of Federal Regulations, the Federal Acquisition Regulation (FAR). However, as a legislative branch agency, AOC is not subject to these rules. See 48 C.F.R. sections 1.101 and 2.101 (2004); B-289867, Apr. 26, 2002; Bennett Interview 1. Nonetheless, AOC models its contracting and procurement practices after those in the FAR. Bennett Interview 1.