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Unauthorized commitment vs. Informal commitment


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Does anyone know the difference between an "unauthorized commitment," as defined in FAR 1.602-3(a), and an "informal commitment," as discussed in FAR 50.103-2?? FAR defines the first, but not the second. I can't figure out what the difference is. It would be great if you have a source for your answer. Thanks.

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I would focus less on defining terms and more on the differences between a ratification under Part 1 and relief under Part 50. Certainly an informal commitment can share a fair amount in common with an unauthorized commitment, but the requirements for a ratification and the circumstances in which relief under Part 50 might be appropriate are different. Look first to ratification, then Part 50.

According to Mullen, Extraordinary Contractual Relief Under Public Law 85-804, 02-13 Briefing Papers No. 1 (Dec. 2002),

The principal forms of relief available under P.L. 85-804 are (1) the making of advance payments, (2) contract adjustments, including amendments without consideration and correction of mistakes, (3) formalization of informal commitments, and (4) indemnification provisions under the statute's "residual powers."

If the matter could be resolved through ratification, then relief under Pub. L. 85-804 is inappropriate. FAR 50.102-3(B)(2). The Act provides, "Nothing in this [Act] shall be construed to constitute authorization hereunder for-...(f) the formalization of an informal commitment, unless it is found that at the time the commitment was made it was impracticable to use normal procurement procedures." 50 USC 1432(f).

If, for whatever reason, ratification is not available, an informal commitment may be a candidate for relief under Part 50. FAR 1.602-3(d).

Note the two prerequisites for relief under an informal commitment in FAR 50.102-3(d) (written request for payment within six months after furnishing in reliance upon the commitment; it was impracticable to use normal contracting procedures at the time of the commitment).

See generally Arnavas, Authority of Government Representatives, 99-09 Briefing Papers 1 (Aug. 1999), for a discussion of both ratification and extraordinary contract actions.

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I appreciate your response and thank you for it, but, when a person asks a clear question, it doesn't seem polite to respond by telling the person what you would have asked instead. I have a very specific reason for asking what I did. Besides, I didn't ask for a definition of informal commitment. I asked for the difference between an informal commitment and an unauthorized commitment. Could it be that an informal commitment was authorized, but that necessary formalities were not observed? I don't know. That's why I asked. The two things must be different, else why address them separately?

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An unauthorized commitment is, of course, defined such that the only obstacle to a binding contract is the lack of actual authority of the official. An informal commitment under Part 50 contains no such requirement. The point of discussing "informal commitment" in Part 50 is to implement the prohibition contained in 50 USC 1432(f). Almost anything could be considered for relief under Part 50 (e.g., as the formalization of an informal commitment) so long as the requirements of the Part are met. Note FAR 50.103-1:

Although it is impossible to predict or enumerate all the types of cases in which action may be appropriate, examples are included in 50.103-2. Even if all of the factors in any of the examples are present, other considerations may warrant denying a contractor's request for contract adjustment. The examples are not intended to exclude other cases in which the approving authority determines that the circumstances warrant action.
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Maybe an example would help. FAR 50 would not require agreement on price to formalize an informal commitment, but ratification would. These circumstances could rightly be described as an informal commitment, but not an unauthorized commitment.

Contracts based on mutual assent typically require: (1) authority; (2) offer; (3) acceptance; (4) consideration; and (5) reasonably definite terms. Under ratification, everything must be present except the actual authority of the government official to act as agent for the government. Under an extraordinary contractual action, one or more of these elements could be lacking.

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Guest Vern Edwards

Both unauthorized commitments and informal commitments are made by persons who lacked authority to do so. However, there are crucial differences.

In the case of an unauthorized commitment, the only defect is that the person who made it lacked authority. Ratification is possible only if "The resulting contract would otherwise have been proper if made by an appropriate contracting officer," FAR 1.602-3( c)(3), and "Funds are available and were available at the time the unauthorized commitment was made," FAR 1.602-3( c)(6). Thus, an unauthorized commitment cannot be ratified if the commitment would not have been proper if made by a CO, e.g., an unjustifiable sole source procurement, or if funds were or are not available.

An informal commitment may be formalized even if those requirements are not met, as long as the approving authority finds that it would not have been practicable to use "normal" contracting procedures, FAR 50.102-3(d)(2), and formalization is in the interest of the national defense, FAR 50.103-2(B)(1). Thus, if a contracting officer makes a commitment in violation of law, including in the absence of funds, which he or she has no authority to do, the commitment cannot be ratified, but it can be formalized if the approving authority finds that it would have been impracticable for the contracting officer to have followed "normal" procedures and the formalization facilitates the national defense.

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