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Take Care When You Contract With the King

Local government bodies in Virginia only have limited authority granted by the General Assembly. If a local government body enters into a contract that exceeds its authority, the entire contract is void and unenforceable.  A recent case illustrates how this can lead to very harsh results against contractors that rely in good faith on these contracts that are later deemed void.

The recent case of H.S. Martin v. Lee County School Board perfectly illustrates this issue. There, the Lee County School Board (the “School Board”) contacted H.S. Martin (“Martin”) to repair weather damage to a middle and high school. Martin spoke about the work with School Board members, maintenance supervisors, and the school superintendent The School Board then signed pay authorization forms and actually paid out over $900,000 on a $1.4MM contract. 

After receiving other bids for repair of the gym floor, the School Board told Martin to stop construction. The School Board then refused to pay Martin over $500,000 for work it had performed. Martin sued the School Board. The School Board argued that it had no obligation to pay Martin because the contracts it entered into were void ab initio (from the beginning) because they were ultra vires (beyond its authority). The Court agreed with the School Board and dismissed Martin’s claim without a trial.

Even assuming that Martin had properly performed over $500,000 in work for the School Board, the Court held that the School Board had no obligation to pay Martin. It found that the School Board had not followed the procedures in Virginia’s Public Procurement Act (the “VPPA”) for competitive bidding and emergency procurement. Ultimately, because the School Board did not follow the law, the contractor did not get paid.

This case stands as a warning to all government contractors – not only do contractors need to carefully prepare their own bids, they also need to look behind the government’s request for proposal to ensure the government is acting within its statutory authority. Otherwise, just like Martin, the contractor may not receive payment for its work.   

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