Court Opinion

ID: 9491073
Source: CourtListenerOpinion
Date Created: 2023-08-05 14:03:06.188799+00
Date Added: 2024-06-11T17:54:29.725549
License: Public Domain

T.G. NELSON, Circuit Judge,
dissenting.
The executive branch of the Government has made it clear that contracts coming within the FAR must be in writing. This is not a whim or caprice by the United States. With thousands of contracts and hundreds of billions of dollars in play every year, the Government simply has to know to whom and for what it is obligated.
48 C.F.R. § 1.602-l(b), quoted by the majority, furnishes the gateway to the proper analysis:
No contract shall be entered into unless the contracting officer ensures that all requirements of law, executive orders, regulations, and all other applicable procedures, including clearances and approvals, have been met.
This portion of the FAR is followed by § 2.101 which defines contract:
Contract means a mutually binding legal relationship obligating the seller to furnish the supplies or services (including construction) and the buyer to pay for them. It includes all types of commitments that obligate the Government to an expenditure of appropriated funds and that, except as otherwise authorized, are in writing.
48 C.F.R. § 2.101 (emphasis added).
The FAR specifically limits the authority of contracting officers when it provides that “Contracting officers ... may bind the Government only to the extent of the authority delegated to them” 48 C.F.R. § 1.602-1. A contracting officer must thus be specifically authorized to enter into oral contracts.
PacOrd has not shown that anyone connected with the alleged indemnity contract was “otherwise authorized” to enter into an oral agreement. In the absence of such authority, the oral contract can have no validity-
This case is controlled, in my view, by Federal Crop Ins. Corp. v. Merrill, 332 U.S. 380, 384, 68 S.Ct. 1, 3, 92 L.Ed. 10 (1947), where the Court said:
Whatever the form in which the Government functions, anyone entering into an arrangement with the Government takes the risk of having accurately ascertained that he who purports to act for the Government stays within the bounds of his authority. The scope of this authority may be explicitly defined by Congress or be limited by delegated legislation, properly exercised through the rule-making power.
PacOrd is an experienced government contractor and it is certainly not unfair to charge it with knowledge of the authority of those with whom it deals. But even if PacOrd could make a showing that it was an unsophisticated new entrant into the business, that would not protect it under Merrill:
Accordingly, the Wheat Crop Insurance Regulations were binding on all who sought to come within the Federal Crop Insurance Act, regardless of actual knowledge of what is in the Regulations or of the hardship resulting from innocent ignorance .... [Tjhat “Men must turn square comers when they deal with the Government,” does not reflect a callous outlook. It merely expresses the duty of all courts to observe the conditions defined by Congress for charging the public treasury.
Id. at 385, 68 S.Ct. at 3.
The majority relies on the Narva Harris case. There are only two problems with the Narva Harris case:
1. It was not decided under the FAR.
2. It is just plain wrong. It does not even cite Merrill, nor explain why the claimed lack of authority to enter into the oral contract at issue in Narva Harris did not preclude recovery. Authority to enter into a written contract cannot be construed as impliedly including authority to enter into an oral contract without thereby nullifying the requirement of a written contract.
For the above reasons, I respectfully dissent.