In the United States Court of Federal Claims

Democracy Worldwide v. United States

No. 20-782C

Filed: September 30, 2020

Opinion

BLAKE, J.

This case arises out of a grant awarded by the United States Agency for International Development (USAID) to Democracy Worldwide (DW), as authorized by the Further Consolidated Appropriations Act of 2020, Pub. L. No. 116–94, 133 Stat. 2892 (2020). DW challenges the Agreements Officer (AO)’s disallowance of DW’s purchase of personal protective equipment (PPE) and other COVID-19 related costs for DW’s program activities during the pandemic. The AO disallowed the costs because the costs arose from items and activities that were not contained in the approved grant agreement, and DW did not first obtain approval from the AO. USAID contends that this Court lacks jurisdiction over disputes arising from grants. For the reasons stated below, we conclude that this Court has authority to review grants disputes and affirm USAID’s disallowance of costs.

I. Background

In November 2019, the Center of Excellence on Democracy, Human Rights and Governance (DRG), within the Bureau of Democracy, Conflict and Humanitarian Assistance (DCHA) of USAID announced $8,000,000 for human rights programming and projects in Central Africa. USAID sought applications for programs to increase protection for human rights defenders through various methods, including, but not limited to, strengthening civil society capacity to conduct civic education and activism, bolstering protections for journalists and human rights advocates, and conducting strategic civil and human rights-based litigation. The Notice of Funding Opportunity (NOFO) asked bidders to identify one or more countries in which to perform their proposed work.

Seven organizations responded to the NOFO, from which USAID selected Democracy Worldwide (DW) to perform a project in Cameroon. DW has a long history of human rights programming across the globe, with an impressive resume in Central and West Africa. Furthermore, its proposed program to support human rights defenders in Cameroon received a near perfect score.

A. DW’s Program Proposal

DW proposed a program under the “Environment building” pillar of programming. “Environment building focuses on strengthening the normative frameworks (laws and policies) and institutional architecture that help states respect their human rights obligations, as well as building the capacity of civil society actors to promote those rights, monitor compliance, and demand accountability.” DW’s proposed program addressed this pillar by training civil society actors (journalists and activists) to mobilize communities and demand action for poor governance and human rights issues. DW proposed quarterly trainings and individual follow-on meetings with selected human rights activists and civil society groups.

B. Program Award

On January 15, 2020, USAID awarded DW $2,000,000 to implement its proposed program. The grant agreement contained the project proposal and DW’s budget as an appendix. The agreement states that DW is bound by the proposal that it submitted. To amend the grant agreement, DW would need to submit a budget or program realignment to the AO for prior approval.

Headquarters and field staff initiated the first steps needed to commence the program. The field staff, who all reside in Cameroon, invited civil society actors in Cameroon to the training. The headquarters staff approached the international experts to contract with them for their roles in this training.

C. First Training

DW planned the first training for civil society groups on April 15–17, 2020. DW designed the training to increase institutional capacity to receive foreign funding by educating civil society groups on U.S. rules and regulations, implement good management practices for non-governmental organizations (NGOs), and teach best accounting practices and internal controls. The training would also cover the substance of human rights protections by bringing in legal experts to present on human rights bodies generally and share their experiences with strategic litigation and social activism. These experts would include civil society activists from Kosovo who worked on the case of Diana Kastrati, Togolese civil society activists from Faure Must Go, and members of the LUCHA movement in the Democratic Republic of the Congo.

DW planned the training to take place in Yaoundé, Cameroon at the Hilton Hotel. All participants and experts would also stay at the hotel. DW would organize a “welcome” dinner for participants and trainers to network and build rapport.

Along with its proposal, DW submitted a comprehensive budget for its proposed project. The budget for each training contains a “supplies” line item for the training. In the narrative, “supplies” for the trainings include “assorted office supplies, such as flip charts, pens, folders, handouts, and name tags.” In addition, the budget includes a line item for “supplies” in the “Other Direct Costs” category. The narrative budget provides that these costs are for “assorted office supplies for staff, including paper, pens, ink, staplers, and anything necessary to daily operations.”

D. COVID-19 in Cameroon and Its Impact on DW’s Program

On March 6, 2020, Cameroon reported its first confirmed case of COVID-19. A French national carried the virus to Yaoundé on February 24, 2020. From there, cases increased exponentially. On March 18, 2020, Prime Minister Joseph Dion Ngute closed Cameroon’s land, air, and sea borders. Given that the borders were closed, it was no longer feasible for the proposed experts for the first training to travel to Yaoundé in person. Accordingly, DW’s Program Manager, Amanda McDowell, contacted Justin Baird, the Agreements Officer Representative (AOR) at USAID, to alert him that the training would need to make certain adjustments.

The email exchange was as follows:

FROM: Amanda McDowell

TO: Justin Baird, USAID AOR

DATE: March 23, 2020

Dear Justin,

Given the COVID-19 restrictions in Cameroon right now, DW needs to make some adjustments to the first training. Borders are closed and we can’t physically bring in our planned experts. Instead, we plan to rent a projector and screen for the experts to give their presentations virtually. In addition, our local staff will now have to give the presentations related to institution building (specifically the sessions on budgeting, US rules and regs, etc.). We also may have some additional costs depending on Cameroon’s rules re: covid (e.g., for masks, sanitation, etc.).

Please let me know if this plan works for USAID. I await your guidance on how to proceed.

Sincerely,

Amanda

FROM: Justin Baird, USAID AOR

TO: Amanda McDowell

DATE: March 23, 2020

Amanda,

Thanks for the heads up. I appreciate your efforts to make the training go forward in light of the changing circumstances. Let me follow up with the AO on this and get back to you. In the interim, keep up the great work.

Best,

Justin

FROM: Justin Baird, USAID AOR

TO: Morgan Huston, USAID AO

DATE: March 23, 2020

Hi Morgan,

Please see below exchange from Amanda at DW. I think the remote training should suffice to meet their program targets, especially considering DW field staff will be there to do follow-on meetings.

Also, looks like they may want to purchase some masks/PPE for their field staff/trainings. Is this approved?

Thanks,

Justin

NOTE: Mr. Baird attached the above email exchange from Ms. McDowell in his email to Ms. Huston.

FROM: Morgan Huston, USAID AO

TO: Justin Baird, USAID AOR

DATE: March 25, 2020

Justin,

Agreed, I think having the experts present remotely should be fine. Please inform DW that any PPE purchase needs to comply with the guidance on the USAID website. The FAQs are also helpful. If they have any other questions/expenses, we can hop on a call to figure out if a budget/program realignment is necessary.

Thanks,

Morgan

FROM: Justin Baird, USAID AOR

TO: Amanda McDowell

DATE: March 25, 2020

Hi Amanda,

Following up on our earlier conversation re: PPE for DW’s Cameroon program. You can purchase PPE just make sure it complies with the guidance on the USAID website, e.g., is reasonable, etc. Morgan also noted that the FAQs have some helpful information for grantees.

Let me know if it looks like we need to do a budget/program realignment in light of the Covid restrictions.

Best,

Justin

Upon receiving Mr. Baird’s email on March 25, 2020, Ms. McDowell alerted the field staff that USAID had approved the amended plan for the first training. On April 10, 2020, just five days prior to the training date, the Cameroonian government announced seven additional COVID-19 related restrictions. Starting Monday, April 13, 2020, everyone would have to wear a mask in public spaces. Further, the Hilton now required that all events at their meeting spaces would have to provide hand washing stations at the entrances and exits of their meeting rooms. It also charged additional cleaning fees for hotel rooms and conference spaces. DW negotiated a flat fee of $5000 for the conference space and the hotel rooms required for the training.

Ms. McDowell, in concert with the field staff, purchased masks, latex gloves, hand sanitizer, and thermometers for the participants and staff to use while at the training. The field staff solicited price quotes from several manufacturers and retailers. The cheapest option per mask was a manufacturer that required a 500-mask minimum. Because the COVID-19 pandemic appeared that it would last beyond the first training, DW decided to order 500 masks. The field staff purchased large water Gerry cans, hand soap, and plastic barrels to construct hand washing stations at the entrances and exits of the training conference space. The field staff also chose to purchase the masks, gloves, hand sanitizer, and thermometer from a local retailer.

In addition, the field staff executed a contract with a medical contractor for two nurses to come to the training to take temperatures and conduct periodic checks on participants. As part of their contracts, DW paid the nurses a consultant fee and provided them with per diem and the cost of lodging at the training venue hotel. The nurses would also test participants and DW field staff for COVID-19.

The training was highly successful, and the participants reported that they learned valuable lessons, which they planned to implement. The field staff also set up individualized follow-on meetings for two weeks later with all the participants to check in on their progress and to discuss next steps.

The quarter ended on June 30, 2020. Per the reporting schedule in the grant agreement, DW submitted its quarterly programmatic reports as well as its quarterly financial reports. In the quarterly report, DW included the PPE and thermometers that it purchased for staff in the supplies contained in the “other direct costs” budget category. It listed the PPE for participants, the cost of the COVID-19 tests, and the hand washing stations in the budget line items specifically for the training. DW placed the costs for the nurses under consultant fees, which originally included only the trainers and legal experts.

In reviewing the quarterly report, Mr. Baird saw that DW charged approximately $1500 for the masks, $350 for the hand washing stations, $3500 for the nurses’ consultant fees and attendant expenses, $95 for thermometers, and the $5000 flat rate for the additional sanitation for the conference space. He confirmed that such expenses were not included in the grant agreement. Accordingly, Mr. Baird forwarded the report to Ms. Huston, the AO, and recommended disallowing the costs. Ms. Huston agreed with Mr. Baird and sent a letter notifying Ms. McDowell that she would add $10,445 to DW’s remaining funds. Effectively, this means that DW spent its own money on the COVID-19 related expenses rather than USAID’s funds.

DW asked Ms. Huston to review this decision, arguing that these expenses were reasonable in light of the circumstances. Ms. McDowell also pointed to the email exchange in which Mr. Baird thanked her for moving the training forward. She understood that he was giving her permission to take reasonable steps, which included procuring necessary supplies to move the training forward. Further, DW argued that the line items for “supplies” both in the Other Direct Costs and Activities categories of the budget are illustrative and not exhaustive. Ms. Huston issued a written decision in which she disallowed the costs for the hand washing stations and masks.

Pursuant to USAID’s regulations, DW appealed Ms. Huston’s decision to USAID’s Assistant Administrator, Bureau for Management (“Assistant Administrator”) two weeks later. DW submitted Mr. Baird’s email as well as a copy of the mask ordinance and the hotel’s internal policy requiring hand washing stations. Upon receipt of the appeal, Ms. Huston and the Assistant Administrator forwarded the appeal to the Bureau for Management, Office of Management Policy, Budget, and Performance, Compliance Division (“M/MPBP/Compliance”), which prepares a recommendation for the Assistant Administrator. Thirty days later, M/MPBP/Compliance informed DW that its appeal had been denied. DW appealed the decision to this Court.

Discussion

I. Jurisdiction

DW, as plaintiff, must establish jurisdiction by a preponderance of the evidence. See Trusted Integration, Inc. v. United States, 659 F.3d 1159, 1163 (Fed. Cir. 2011) (citing Reynolds v. Army & Air Force Exch. Serv., 846 F.2d 746, 748 (Fed. Cir. 1988)).

The Tucker Act provides this Court with jurisdiction over “any claim against the United States founded either upon the Constitution, or any Act of Congress or any regulation of an executive department, or upon any express or implied contract with the United States . . . .” 28 U.S.C. § 1491(a)(1). To establish this Court’s jurisdiction under the Tucker Act, DW must “identify a substantive right for money damages against the United States separate from the Tucker Act.” Todd v. United States, 386 F.3d 1091, 1094 (Fed. Cir. 2004). A statute is money-mandating if either: (1) “it can fairly be interpreted as mandating compensation by the Federal government for . . . damages sustained,” or (2) “it grants the claimant a right to recover damages either expressly or by implication.” Blueport Co. v. United States, 533 F.3d 1374, 1383 (Fed. Cir. 2008) (quoting United States v. Mitchell, 463 U.S. 206, 216–17 (1983)).

In this case, the government questions this Court’s jurisdiction to hear DW’s claim. The government asserts that this Court cannot adjudicate performance disputes that do not concern procurement. It further argues that DW’s complaint does not pertain to procurement but rather to assistance. DW asserts multiple arguments in opposition to the government’s motion to dismiss DW’s claim for lack of jurisdiction.

The government argues that this Court does not have jurisdiction over grants disputes because grants are not procurement contracts. Citing the Federal Grants and Cooperative Agreement Act of 1977, 31 U.S.C. §§ 6301–6308, the government argues that procurement contracts are distinguishable from the grant agreement here. According to that Act, the federal government uses procurement contracts to “acquire . . . property or services for [its] direct benefit or use,” or when the agency decides that a procurement contract is appropriate in light of the circumstances. Id. § 6303. By contrast, the federal government uses grants to “transfer a thing of value [or] . . . to carry out a public purpose.” Id. § 6304. Because of the fundamentally different purposes of procurement contracts and grants, the government argues that the Tucker Act clearly does not provide this Court with jurisdiction.

A. The Government’s Arguments Against Jurisdiction

In arguing against jurisdiction, the government relies heavily on Rick’s Mushroom Serv., Inc. v. United States, 521 F.3d 1338, 1343 (Fed. Cir. 2008), where the Federal Circuit held that “the Tucker Act is merely a jurisdictional statute and does not create a substantive cause of action [requiring] the plaintiff [to] look beyond the Tucker Act to identify a substantive source of law that created the right to recovery of money damages against the United States.” The instrument at issue in Rick’s Mushroom was a cooperative agreement, where the parties had agreed to a cost-sharing arrangement. Rick’s Mushroom Serv., Inc, 521 F.3dat 1343–44. The Federal Circuit explained that the cost sharing agreement did not point to a money-mandating source of law to establish jurisdiction. Id.

The government asserts that this Court relied on Rick’s Mushroom to find that non-traditional contracts, in particular, cooperative agreements, do not presume money damages. In St. Bernard’s Parish Government, for instance, the government argued that “cooperative agreements, unlike procurement contracts, are not presumed to provide money damages.” St. Bernard Parish Gov’t v. United States, 134 Fed. Cl. 730, 734 (2017), aff’d on other grounds, 916 F.3d 987, 989 (Fed. Cir. 2019). This Court found that the instrument at issue was a cooperative agreement, which barred jurisdiction over the claim.

The government further relies on Bowen v. Massachusetts, 487 U.S. 879, 909 (1988), where Massachusetts successfully challenged a Medicaid disallowance in district court. The Supreme Court held that the district court properly had jurisdiction through the Administrative Procedure Act (APA) because the state’s suit was not for “money damages,” as the state was suing for payment owed under the Medicaid grant program rather than a suit for compensatory damages. Id. at 909–10. Further, the Supreme Court reasoned that this Court was not adequately situated to provide relief because the suit concerned an issue that would impact the state and federal government’s prospective relationship in Medicaid, a complex and ongoing grant program. Id. at 904–05. The Supreme Court reasoned that this Court could not provide full relief because it lacked “the general equitable powers of a district court to grant prospective relief.” Id. at 905. Effectively, the test for this Court’s jurisdiction became whether the suit at issue was for money due versus compensatory damages. Id. at 909–10. This Court would only have jurisdiction over the latter category.

B. DW’s Arguments in Favor of Jurisdiction

DW rebuts the government’s reliance on Rick’s Mushroom by distinguishing between cooperative agreements and grants. Cooperative agreements involve “substantial involvement” by the grantor agency, whereas grants operate more like contracts. A grantee, much like a contractor, has autonomy regarding the implementation of the program. Provided a grantee meets the terms, conditions, and milestones of the grant agreement, the grantor agency takes a “hands-off” approach that is fairly analogous to the arms-length relationship between contractor and government agency.

In addition, DW argues that this Court should look to Suburban Mortgage Associates v. United States, 480 F.3d 1116 (Fed. Cir. 2007). There, a commercial mortgage lender brought suit against the U.S. Department of Housing and Urban Development (HUD) under the APA in district court, and the Federal Circuit departed from Bowen. Id. at 1117, 1125. Instead, the Federal Circuit instructed courts to first examine whether this Court would offer an adequate remedy. Id. at 1125. If it would, then jurisdiction is properly in this Court. Id. The Federal Circuit noted, however, that even if a case were to survive the first question, courts must nonetheless ask “whether there is an adequate remedy available under the Tucker Act in the Court of Federal Claims for the sought-after monetary relief.” Id. Essentially, where the plaintiff’s claim seeks monetary reward from the government, and “a money judgment will give the plaintiff essentially the remedy he seeks—then the proper forum for resolution of the dispute is not a district court under the APA but [this Court] under the Tucker Act.” Id. at 1126.

The Federal Circuit also distinguished Bowen from Suburban Mortgage by differentiating disputes between a state and the federal government under a major grant program (e.g., Medicaid) and suits for monetary relief, such as the relief requested in Suburban Mortgage. Id. at 1127.

We find DW’s arguments persuasive. While similar, grants and cooperative agreements create different relationships between the federal agency and the implementing entity (i.e., grantee or recipient of cooperative agreement). Indeed, grants and procurement contracts create analogous dynamics. Both contracts and grants define the parameters of the goods or services to be delivered and, importantly, allow the grantee or contractor significantly more autonomy than that of a cooperative agreement. As discussed below, grantees and contractors also assume the risk in performing the grant or contract. Therefore, the government’s argument that Rick’s Mushroom precludes jurisdiction is unpersuasive.

Further, in the wake of Suburban Mortgage, grant suits for monetary claims are properly brought to this Court. Disputes for grants awarded pursuant to major federal grants programs may belong in district court under the APA, but that is not the case here. This case, which is a suit for monetary relief, falls into the former category. This dispute fits within the Tucker Act’s separate money-mandating claim because the plaintiff demands monetary relief. Further, this grant arose under a statutorily authorized program involving a cost-reimbursement system pursuant to regulations. USAID awarded this grant pursuant to the Further Consolidated Appropriations Act of 2020, which meets this relatively low standard. As such, this Court has jurisdiction to hear this case.

II. Factual Dispute

A. Reasonable Costs

DW argues that the grant agreement budget should be read to allow for the purchase of masks and hand washing stations. It argues that the list of supplies in the narrative budget is illustrative rather than exhaustive. Further, DW argues that the masks and hand washing stations were necessary to comply with the “Do No Harm” provisions in the grant agreement. DW argues that absent these materials, it would have recklessly endangered the health and lives of its participants. In addition, DW relies on guidance published on USAID’s website that indicated that generally, the purchase of PPE is allowable.

The government, by contrast, argues that such a large change in the budget is unreasonable and requires express written permission by the AO. It further argues that according to the grant agreement, the proper course for DW would have been to request a budget realignment and programmatic amendment. Further, the government cites USAID’s COVID-19 Guidance for Implementing Partners. On its website, USAID indicates that it understands that implementers may incur previously unforeseen costs as a result of the pandemic. It notes, however, that to be allowable, such costs must be “allowable, allocable, and reasonable.”

The standard for “reasonable” is “what a prudent person would do under the circumstances that were prevailing at the time the decision was made to incur the cost.” USAID’s website directs implementers to Title 2 of the Code of Federal Regulations Section 200.404 for additional guidance on what falls within the definition of “reasonable.”

While providing that reasonable costs related to COVID-19 safety measures are generally allowable, USAID’s COVID-19 guidance expressly states that “[b]efore incurring any additional costs relating to COVID-19, partners must contact their AOR(s)/COR(s)/CO(s) for approval, when required.” Further, USAID issued periodic Frequently Asked Questions documents on its website that contain information related to COVID-19. For each question relating to allowable costs, the document advises communicating with the program specific AO or CO about the allowability of specific costs.

While it is admirable that DW was able to adapt to the changed circumstances so quickly and provide this training, we agree that the proper course would have been to ask the AO for a budget realignment or to obtain her express written permission for the additional costs. The “Do No Harm” provision is of a general character and does not give the grantee the authority to spend money as it sees fit. It must be balanced against the public policy interest of protecting taxpayer dollars from being spent according to the whims of grantees and with very little oversight. Accordingly, this Court affirms the disallowances by USAID.

B. Assumption of Risk

In analyzing which party bears the risk of a fixed-price contract, Pernix Serka Joint Venture v. Department of State, CBCA 5683, 20-1 BCA ¶ 37,589 is persuasive. In December 2013, the U.S. Department of State (DoS) awarded a fixed-price contract to Pernix Serka Joint Venture (Pernix) “to construct a rainwater capture and storage system in Freetown, Sierra Leone.” Id. The contract included the cost for the necessary labor, materials, equipment, services, and value added taxes to complete the construction. Id. The contract also included an “Excusable Delays” clause, which provided Pernix with flexibility for exigent circumstances such as acts of God or other extreme circumstances outside of its control. Id. During performance of the contract, Ebola spread throughout Sierra Leone, which rendered continued performance potentially dangerous for Pernix’s personnel. Id.

Pernix sought advice from DoS about operating during the Ebola outbreak. DoS provided no guidance other than that Pernix “would need to make its own decisions about the process for completing contract performance under such conditions.” Id. Absent greater guidance, Pernix chose to demobilize and return later. Id. When it returned, Pernix contracted for additional medical services for its employees and later sought an equitable adjustment for those costs. Id. DoS refused to grant the equitable adjustment, arguing that Pernix assumed the risks of unexpected costs when it accepted the contract. Id.

The Civilian Board of Contract Appeals (CBCA) agreed with DoS and found that a firm, fixed-price contract places the risk on the contractor, who “assumes the risk of unexpected costs not attributable to the government.” Id. (quoting Matrix Bus. Sols., Inc. v. Dep’t of Homeland Sec., CBCA 3438, 15-1 BCA ¶ 35,844). Pernix’s contract specifically referenced FAR 52.249-10, which addresses “acts of God, epidemics, and quarantine restrictions.” Id. The CBCA highlighted that in light of the Excusable Delays clause in the contract, Pernix’s attempt to shift the risk onto the government was unavailing. Id.

Pernix also asserted that it was entitled to an equitable adjustment because the Ebola outbreak constituted a cardinal or a constructive change to the contract. Id. The CBCA rejected Pernix’s arguments. Id. First, it held that there was no cardinal change in the contract because Pernix’s scope of work under the contract remained the same. Id. A cardinal change occurs when the government creates a change that is so drastic that it “effectively requires the contractor to perform duties materially different from” those in the original contract. Krygoski Constr. Co. v. United States, 94 F.3d 1537, 1543 (Fed. Cir. 1996). Pernix’s decision to contract for additional medical services for its staff “did not alter the nature of the thing it had contracted for; the contractor remained obligated to perform at the fixed price.” Pernix, 20-1 BCA ¶ 37,589. Accordingly, the CBCA held that the Ebola outbreak did not constitute a cardinal change in conditions that would warrant an equitable adjustment. Id. Similarly, the CBCA did not find persuasive Pernix’s arguments that the Ebola outbreak created a constructive change in its contract. Id. A constructive change occurs when the contractor performs work beyond the scope of the contract pursuant to “an informal order or due to the fault of the [g]overnment.” Id. (quoting Int’l Data Prods. Corp. v. United States, 492 F.3d 1317, 1325 (Fed. Cir. 2007)). To prevail on a constructive change claim, “a contractor must show that (1) it performed work beyond the contract requirements and (2) the Government ordered—expressly or implicitly—the contractor to perform additional work.” Id. (citing Bell/Heery v. United States, 106 Fed. Cl. 300, 313 (2012), aff’d, 739 F.3d 1324 (Fed. Cir. 2014). Pernix argued that the additional costs that it incurred in demobilizing and remobilizing its staff as well as the safety measures it implemented should be considered a constructive change made by the government. Pernix’s argument failed, however, because it neglected to demonstrate a change to the fixed-price contract. It also did not sufficiently establish that the government ordered Pernix to take these additional precautions.

Similarly, grants impose a burden on the grantee to meet the terms and conditions of the grant. Grantees therefore assume the risk and the responsibility of obtaining AO approval for a grant agreement amendment when one is necessary. Here, DW failed to explicitly get AO approval for the additional expenditures, which were not included in the original grant agreement and which strayed beyond the approved budget. Accordingly, the AO’s disallowance of COVID-19 related costs, absent a budget realignment or approval from the AO, was proper.

C. Approval by the AO and AOR

In addition, DW argues that Mr. Baird approved the additional expenditures in his email exchange with Ms. McDowell. DW argues that Ms. McDowell informed Mr. Baird of the situation on the ground and that Mr. Baird knew or should have known that DW would have incurred additional costs. The government argues that regardless of whether Mr. Baird approved the costs, he did not have the necessary authority to do so. Mr. Baird is an Agreements Officer Representative and does not have actual authority to enter into or modify grant agreements. See U.S. Agency for Int’l. Dev., ADS Chapter 303: Grants and Cooperative Agreements to Non-Governmental Organizations § 303.3.15(d) (2020). Ms. Huston, as the Agreements Officer, is the only individual with actual authority to modify grant agreements. Id.

In support of its argument, the government relies on Fed. Crop Ins. Corp. v. Merrill, where the Supreme Court held that the government cannot be bound by the actions of those with apparent authority. 332 U.S. 380, 383–84 (1947). The government relies on the principle that entities who do business with the government must know the scope of the authority for the government officials with whom they interact. Id. at 384; see also Trauma Serv. Grp. v. United States, 104 F.3d 1321, 1325 (Fed. Cir. 1997). The government also argues that federal spending would be wholly untenable if every government employee had the authority to bind the government to a contract. See City of El Centro v. United States, 922 F.2d 816, 820 (Fed. Cir. 1990).

In response, DW argues that the email exchange between Mr. Baird and Ms. Huston, the individual with the authority to modify grant agreements, ratified Mr. Baird’s approval of the additional expenditures. Ratification, however, requires that the plaintiff meet an exceedingly high burden. When a government employee enters into an “unauthorized commitment,” i.e., an agreement unsupported by actual authority, the agreement can become binding upon ratification. Gary v. United States, 67 Fed. Cl. 202, 215–16 (2005); see also FAR 1.602-3(a). Ratification occurs when the individual with actual authority is fully aware of the relevant material facts and “knowingly confirm[s], adopt[s], or acquiesce[s] in the unauthorized action.” Gary, 67 Fed. Cl. at 215.

We find DW’s arguments wholly unpersuasive because Ms. McDowell, at no time, mentioned specific COVID-19 related costs in her email to Mr. Baird. Further, Ms. Huston’s emails to Mr. Baird make clear that any PPE or COVID-19 related purchases must comply with USAID’s guidance. USAID’s guidance clearly states that the grantee should get AO approval for any costs that would significantly deviate from the grant agreement. This email exchange does not meet the high threshold for ratification because Ms. Huston was not fully aware of the material facts (i.e., the significant costs of the PPE) and could therefore not fully confirm, adopt, or acquiesce in their purchase.

For the foregoing reasons, this Court holds that it has jurisdiction over disputes arising from grants disputes and affirms USAID’s disallowance of the costs of the PPE.