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By Anonymous on Thursday, October 05, 2000 - 11:43 am: All, I left the comment below in an authorized commitment (part 2) thread back on September 19. I never got any responses, and I don't know if it's because I joined the thread too late and everybody was tired of the topic (i.e. I was beating a dead horse that had already been buried under piles of previous messages), or because I'm so wrong or so right that nobody felt the need to respond. I don't want to start unauthorized commits all over, but let me know if you think I'm on to something, or am out of my mind. Thanks and keep on truckin' Anonymous ************************************************ Although I'm unfamiliar with the case law, I believe the FAR's plain language grants contracting offices authority to resolve unauthorized commitments, that arise under or relate to contracts, under the CDA without a FAR Part 1 ratification. The content of FAR 1.602-3(b)(5) and its relationship with the rest of FAR 1.602-3(b) lead to this conclusion. FAR 1.602-3(b)(5) doesn't address whether the ratification described at FAR 1.602(b)(1) through (3) is required; the regulation merely provides that unauthorized commitments involving claims should be processed in accordance with FAR 33.2. FAR 1.602-3(b)(4) also addresses the relationship between the ratification process and another type of resolution (i.e., GAO claim process), but in this case there is express language requiring ratification. The context of 1.602-3(b)(5) within 1.602-3(b) is also relevant. If ratification were required, the most logical place for the language at (b)(5)would within one of the provisions at 1.602-3(b)(1) through (b)(3), all of which describe the ratification process. Instead, (b)(5) is placed on equal footing with these provisions and following another provision, (b)(4), which also addresses the relationship between ratification and another resolution mechanism. The most reasonable interpretation of 1.602-3(b) is (b)(1) - (3) describe the ratification process while (b)(4) and (5) address whether the ratification process should be used when another authority also exists. As stated at (b)(4), ratification trumps GAO process, but CDA trumps ratification per (b)(5). FAR 33.2 further supports this conclusion. 1.602-3(b)(5) states "unauthorized commitments that would involve claims subject to resolution under CDA should be processed in accordance with FAR 33.2." If ratification was intended to be part of the process in such instances, FAR 33.2 would address it. However, there is no mention of ratification in 33.2. FAR 33.210 and 33.211, for instance, place limitations on the contracting officer's authority to act under the CDA and set forth the contracting officer's responsibilities under the CDA, but there is no mention of ratification. I also believe my conclusion is the best from a policy or common sense perspective. Unauthorized commitments that arise under or are related to a contract are likely to be less egregious than those unauthorized commitments that are unrelated to performance under a legitimate contract (e.g., unauthorized commitments unrelated to a contract are more likely to be CICA violations). From an equity standpoint, vendors involved in unauthorized commitments unrelated to a contract are generally less deserving of payment than those who were confused into believing the unauthorized commitment was actually part of their legitimate contract. A conclusion contrary to mine results in a more difficult resolution process (i.e., both Part 1 ratification and Part 33.2 CDA) for those unauthorized commitments related to a contract than for those unauthorized commitments unrelated to a contract, which can be resolved entirely through Part 1 ratification.. By Vern Edwards on Friday, October 06, 2000 - 11:13 am: Anonymous: Okay, I'll bite. I disagree with you, but not for lack of sympathy with your "common sense perspective." Consider the following: There are two circumstances in which an unauthorized commitment can happen: (1) someone without contracting authority makes a commitment in the absence of a contract and (2) someone without contracting authority makes a commitment on the basis of an existing contract. You argue, first, that FAR 1.602-3(b)(5)'s reference to the Disputes Act and FAR Subpart 33.2 and, second, the fact that FAR Subpart 33.2 does not mention ratification, should be taken as an indication that contracting officers may ratify unauthorized commitments that relate to a contract. I argue that FAR 1.602-3(b)(5) merely points out that when an unauthorized commitment is made with respect to an existing contract, the contractor's claim must be processed in accordance with the Disputes clause because that's what the parties agreed to do when they signed the contract. But if the contracting officer determines that the contractor would be entitled to compensation except for the fact that the commitment was unauthorized, then the commitment must be ratified before the CO can modify the contract and pay the contractor. And the contracting officer cannot make the ratification because FAR 1.602-3(b)(3) says so. When a contract is involved there might be several issues for the contracting officer to decide: first, whether there was, in fact, any commitment; second, assuming that the person who made the commitment had the authority to do so, whether the commitment entitles the contractor to additional compensation under a contract clause or because it constituted a breach of contract; and, third, whether the person who made the commitment did, in fact, have the authority to do so. If the contracting officer decides that there was no commitment, or that the commitment does not entitle the contractor to any compensation under a clause or did not constitute a breach, then the inquiry is ended. It doesn't matter whether the commitment was authorized or not. But if the contracting office decides that there was a commitment and that the commitment would entitle the contractor to compensation except for the fact that is was unauthorized, then the question arises as to whether it should be ratified. But the ratification must be made by someone at the level of the chief of the contracting office or above before that contracting officer can cut a mod. I think that you have to read FAR as a whole to come to the correct interpretation. FAR 1.602-1(a) says that contracting officers may bind the Government only to the extent of the authority delegated to them. The subsection on ratification expressly states that unauthorized commitments must be ratified and that the authority to ratify may not be delegated below the level of the chief of the contracting office. FAR 1.602-3(b)(5) and FAR Subpart 33.2 must be read in conjunction with those passages. In conclusion, I think you read too much into FAR 1.602-3(b)(5)'s reference to the Disputes Act and FAR Subpart 33.2. I think that that passage merely reminds people that when a contract is involved the parties have agreed to a procedure for processing claims and that the procedure must be followed. I don't think it gives contracting officers any authority to ratify unauthorized commitments. One thing in your favor, however, is the fact that boards and courts have held on several occasions that contracting officers have made an "implied ratification" of an unauthorized commitment. So some of them think that COs can ratify. Who knows what the correct answer is? By Peggy Richter on Friday, October 06, 2000 - 11:37 am: On this subject, an issue came up on a CPFF IDIQ TO contract (engineering RDT&E services). In this case, there was an active contract. The problem arose when the applicable TO ended its period of performance and before the follow-on TO was issued. The COR and contractor both thought the predecessor TO was "non severable" and on that basis, the contractor incurred costs applicable to the follow-on tests. The predecessor TO was, however, severable, and there was no active TO at the time the contractor incurred the set up costs for the tests. The CO view was that only ratification would solve the issue, but I'm wondering if a CDA or some other approach might have gotten us to resolution as well? There was never an issue of intentional disregard of the contract (not that legally that makes any difference). By Vern Edwards on Friday, October 06, 2000 - 11:53 am: Peggy: You say that "the contractor incurred costs applicable to the follow-on tests" before the new TO was issued. What you don't say is that it did so on the basis of an unauthorized commitment by the COR. I can tell you what many COs would have done--Since they had planned to issue a new TO anyway, they would have issued the new TO with an effective date that covered the time period in which the contractor incurred the costs. They would have done it without blinking an eye. That is, unless they were p.o.'d at the COR for some reason. (Not that I'm saying that would be the right thing to do you understand.) By Anonymous** on Thursday, October 12, 2000 - 10:04 am: VERN NOT THAT YOU REQUIRE VALIDATION BUT YOUR ANSWER ON 10-06 1113 IS ABSOLUTELY CORRECT. I BELIEVE IF ONE THINKS OF A RATIFICATION AS A "PERMISSION" FOR A KO TO CARRY OUT A PROCUREMENT ACTION THERE SHOULD BE NO CONFUSION ABOUT THIS ISSUE.

Wasting Away Again in Unauthorized Commitmentville

By Anonymous on Thursday, October 05, 2000 - 11:43 am:

All,

I left the comment below in an authorized commitment (part 2) thread back on September 19. I never got any responses, and I don't know if it's because I joined the thread too late and everybody was tired of the topic (i.e. I was beating a dead horse that had already been buried under piles of previous messages), or because I'm so wrong or so right that nobody felt the need to respond. I don't want to start unauthorized commits all over, but let me know if you think I'm on to something, or am out of my mind.

Thanks and keep on truckin'

Anonymous
**************************************************

Although I'm unfamiliar with the case law, I believe the FAR's plain language grants contracting offices authority to resolve unauthorized commitments, that arise under or relate to contracts, under the CDA without a FAR Part 1 ratification.

The content of FAR 1.602-3(b)(5) and its relationship with the rest of FAR 1.602-3(b) lead to this conclusion. FAR 1.602-3(b)(5) doesn't address whether the ratification described at FAR 1.602(b)(1) through (3) is required; the regulation merely provides that unauthorized commitments involving claims should be processed in accordance with FAR 33.2. FAR 1.602-3(b)(4) also addresses the relationship between the ratification process and another type of resolution (i.e., GAO claim process), but in this case there is express language requiring ratification.

The context of 1.602-3(b)(5) within 1.602-3(b) is also relevant. If ratification were required, the most logical place for the language at (b)(5)would within one of the provisions at 1.602-3(b)(1) through (b)(3), all of which describe the ratification process. Instead, (b)(5) is placed on equal footing with these provisions and following another provision, (b)(4), which also addresses the relationship between ratification and another resolution mechanism.

The most reasonable interpretation of 1.602-3(b) is (b)(1) - (3) describe the ratification process while (b)(4) and (5) address whether the ratification process should be used when another authority also exists. As stated at (b)(4), ratification trumps GAO process, but CDA trumps ratification per (b)(5).

FAR 33.2 further supports this conclusion. 1.602-3(b)(5) states "unauthorized commitments that would involve claims subject to resolution under CDA should be processed in accordance with FAR 33.2." If ratification was intended to be part of the process in such instances, FAR 33.2 would address it. However, there is no mention of ratification in 33.2. FAR 33.210 and 33.211, for instance, place limitations on the contracting officer's authority to act under the CDA and set forth the contracting officer's responsibilities under the CDA, but there is no mention of ratification.

I also believe my conclusion is the best from a policy or common sense perspective. Unauthorized commitments that arise under or are related to a contract are likely to be less egregious than those unauthorized commitments that are unrelated to performance under a legitimate contract (e.g., unauthorized commitments unrelated to a contract are more likely to be CICA violations). From an equity standpoint, vendors involved in unauthorized commitments unrelated to a contract are generally less deserving of payment than those who were confused into believing the unauthorized commitment was actually part of their legitimate contract. A conclusion contrary to mine results in a more difficult resolution process (i.e., both Part 1 ratification and Part 33.2 CDA) for those unauthorized commitments related to a contract than for those unauthorized commitments unrelated to a contract, which can be resolved entirely through Part 1 ratification..

By Vern Edwards on Friday, October 06, 2000 - 11:13 am:

Anonymous:

Okay, I'll bite. I disagree with you, but not for lack of sympathy with your "common sense perspective."

Consider the following:

There are two circumstances in which an unauthorized commitment can happen: (1) someone without contracting authority makes a commitment in the absence of a contract and (2) someone without contracting authority makes a commitment on the basis of an existing contract.

You argue, first, that FAR 1.602-3(b)(5)'s reference to the Disputes Act and FAR Subpart 33.2 and, second, the fact that FAR Subpart 33.2 does not mention ratification, should be taken as an indication that contracting officers may ratify unauthorized commitments that relate to a contract.

I argue that FAR 1.602-3(b)(5) merely points out that when an unauthorized commitment is made with respect to an existing contract, the contractor's claim must be processed in accordance with the Disputes clause because that's what the parties agreed to do when they signed the contract. But if the contracting officer determines that the contractor would be entitled to compensation except for the fact that the commitment was unauthorized, then the commitment must be ratified before the CO can modify the contract and pay the contractor. And the contracting officer cannot make the ratification because FAR 1.602-3(b)(3) says so.

When a contract is involved there might be several issues for the contracting officer to decide: first, whether there was, in fact, any commitment; second, assuming that the person who made the commitment had the authority to do so, whether the commitment entitles the contractor to additional compensation under a contract clause or because it constituted a breach of contract; and, third, whether the person who made the commitment did, in fact, have the authority to do so.

If the contracting officer decides that there was no commitment, or that the commitment does not entitle the contractor to any compensation under a clause or did not constitute a breach, then the inquiry is ended. It doesn't matter whether the commitment was authorized or not. But if the contracting office decides that there was a commitment and that the commitment would entitle the contractor to compensation except for the fact that is was unauthorized, then the question arises as to whether it should be ratified. But the ratification must be made by someone at the level of the chief of the contracting office or above before that contracting officer can cut a mod.

I think that you have to read FAR as a whole to come to the correct interpretation. FAR 1.602-1(a) says that contracting officers may bind the Government only to the extent of the authority delegated to them. The subsection on ratification expressly states that unauthorized commitments must be ratified and that the authority to ratify may not be delegated below the level of the chief of the contracting office. FAR 1.602-3(b)(5) and FAR Subpart 33.2 must be read in conjunction with those passages.

In conclusion, I think you read too much into FAR 1.602-3(b)(5)'s reference to the Disputes Act and FAR Subpart 33.2. I think that that passage merely reminds people that when a contract is involved the parties have agreed to a procedure for processing claims and that the procedure must be followed. I don't think it gives contracting officers any authority to ratify unauthorized commitments.

One thing in your favor, however, is the fact that boards and courts have held on several occasions that contracting officers have made an "implied ratification" of an unauthorized commitment. So some of them think that COs can ratify.

Who knows what the correct answer is?

By Peggy Richter on Friday, October 06, 2000 - 11:37 am:

On this subject, an issue came up on a CPFF IDIQ TO contract (engineering RDT&E services). In this case, there was an active contract. The problem arose when the applicable TO ended its period of performance and before the follow-on TO was issued. The COR and contractor both thought the predecessor TO was "non severable" and on that basis, the contractor incurred costs applicable to the follow-on tests. The predecessor TO was, however, severable, and there was no active TO at the time the contractor incurred the set up costs for the tests. The CO view was that only ratification would solve the issue, but I'm wondering if a CDA or some other approach might have gotten us to resolution as well? There was never an issue of intentional disregard of the contract (not that legally that makes any difference).

By Vern Edwards on Friday, October 06, 2000 - 11:53 am:

Peggy:

You say that "the contractor incurred costs applicable to the follow-on tests" before the new TO was issued. What you don't say is that it did so on the basis of an unauthorized commitment by the COR.

I can tell you what many COs would have done--Since they had planned to issue a new TO anyway, they would have issued the new TO with an effective date that covered the time period in which the contractor incurred the costs. They would have done it without blinking an eye. That is, unless they were p.o.'d at the COR for some reason. (Not that I'm saying that would be the right thing to do you understand.)

By Anonymous on Thursday, October 12, 2000 - 10:04 am:

VERN

NOT THAT YOU REQUIRE VALIDATION BUT YOUR ANSWER ON 10-06 1113 IS ABSOLUTELY CORRECT. I BELIEVE IF ONE THINKS OF A RATIFICATION AS A "PERMISSION" FOR A KO TO CARRY OUT A PROCUREMENT ACTION THERE SHOULD BE NO CONFUSION ABOUT THIS ISSUE.