You have to deal with a big mess.  A recent case from the Board of Contract Appeals illustrates some problems that can occur. 

In CPR Restoration, LLC v. Department of Veterans Affairs, CPR performed $280,000.00 worth of restoration and cleaning services and then sought payment from the VA. The VA refused, claiming that the individual that signed the contract was not authorized to sign the contract.

CPR brought a claim before the Board of Contract Appeals demanding payment. The Board agreed with the VA’s position finding that the VA employee who signed the contract did not have contracting authority nor did anyone with contracting authority ratify the agreement. Then the dominoes started falling:

  • With no contract, CPR was not a contractor;
  • Because it wasn’t a contractor, CPR could not submit a claim directly to the VA;
  • Because the claim could not be submitted to the VA, the VA’s contracting officer could not issue a decision on CPR’s claim; 
  • Because the VA did not make a decision, CPR had no decision to appeal to the Board; and
  • Because there was no decision to appeal, the Board did not have jurisdiction to hear the claim.

 What a mess.  And, the whole situation could have been avoided if someone had asked whether the VA employee had the authority to sign the contract. 

This situation makes me wonder–how many contractors are asking whether the person signing the contract has the authority to bind the company.