Colleagues:

My issue is: Whether an agency may issue a letter, and subsequently require an employee to pay an unauthorized commitment it will not ratify.

My initially thought is no. I am unaware of any authority where an agency can require an employee personally pay for an unauthorized commitment for which the agency will not ratify. Of course, the contractor could pursue payment for the employee who entered into the unauthorized commitment, but I do not see how an agency can require (or really even issue a letter to) an employee to pay.

Any insight would be appreciated.

Background facts in case anyone is interested:

The Agency completed a Justification for Other than Full and Competition (JOFOC) for purchase of a specific vendor-offered course. The contractor informs Agency Employee #1 that the course is full and offers another course (not approved on the JOFOC) that costs the same amount. Agency Employee #2, asks contracts, "Can we substitute the second course for the first," and the contracting officer (CO) says, "no." The CO says a JOFOC was not approved for the second course. Agency Employee #2 goes ahead anyway and substitutes the first course (the JOFOC-approved course) for the second course (the course that is not approved). A ratification request was completed by Agency Employee #2 and he agency is in the process of denying the request. The denial is based, in part, on FAR 1.602-3(c)(3), in that "[t]he resulting contract would [not] otherwise have been proper if made by an appropriate contracting office." The thought is, the JOFOC was approved for the first course and not the second course. Also, FAR 1.602-3(c)(6), because, "[f]unds.. were [not] available at the time the unauthorized commitment was made. A check was made with budget and funds were not available at the time the commitment was made. However, funds were obligated on the order/contract which were intended for the first, approved course, so there is an argument that funds were indeed available.

Again, any thoughts are appreciated and thank you in advance for your help.

It appears that the government is being billed for the unapproved course attendance but hasn’t paid it yet, correct? If so, then the vendor should charge the attendee, not the government.

If the vendor charged the government for an unapproved course and the government paid it, the vendor should refund the amount charged and charge the employee. It was an unauthorized charge, correct?

EDIT: If the government mistakenly paid the vendor, the government should demand a refund. If the employee reimburses the government, the proceeds would probably have to be deposited in the Treasury’s General Receipts Fund (SIC). 

Edited October 27, 20204 yr by joel hoffman

On 10/23/2020 at 10:53 AM, Contract time said:

My issue is: Whether an agency may issue a letter, and subsequently require an employee to pay an unauthorized commitment it will not ratify.

I can not find a reference provides an outright yes or no.  But how about "compelled".   An unauthorized commitment that is not ratified falls into issues of potential civil, criminal and admirative violations.   Anyone of these arenas could compel the employee to make the payment and their failure to do so could lead to something much worse like being fired, or???? 

It is not clear to me what the facts are. Who are the parties to the contract? Who said or wrote what to whom? Is it permissible for a supplier to discuss or enter into a contract with an employee that is not a contracting officer? Was the supplier aware of this, if it is applicable. Did the employee represent that the course would be paid for by the government? Who was billed?

On 10/23/2020 at 1:53 PM, Contract time said:

My issue is: Whether an agency may issue a letter, and subsequently require an employee to pay an unauthorized commitment it will not ratify.

No.

The agency may decide to ratify, or not.  See FAR 1.602-3.

If the agency decides not to ratify (says NO to the ratification request), the agency is finished with the payment matter (it said NO, remember?).  If the vendor still wants payment, it can pursue other options, which may include suing the government employee in his or her private capacity in civil court -- but this is a matter for the vendor to decide -- the Government is finished with the payment matter (it said NO, remember?).

I edited my comment above.

Some agencies appear to have their own detailed processes for ratification. For example, DOD administrative instruction states as follows:

If the ratification is not approved by the Director, prepare a statement describing the appropriate disposition action (e.g., referring action for disposition to the Government Accountability Office for resolution under its claim procedures or as authorized by Subpart 50.1 of the FAR),

I did see other agency policies that indicate the personal liability should be paid to the government. Another one stated that it is up to the contractor.

The first place I would look is this agency's policies.  If the letter was reviewed or recommended by legal, that would also be authority. The post did not indicate the name of this agency.  

Here is a reference that may be helpful.   See Pages 3-12 and 13.

https://tjaglcspublic.army.mil/publications?p_p_id=110_INSTANCE_Jnxja3uDhXvh&p_p_lifecycle=0&p_p_state=normal&p_p_mode=view&p_p_col_id=column-1&p_p_col_pos=2&p_p_col_count=4&_110_INSTANCE_Jnxja3uDhXvh_struts_action=%2Fdocument_library_display%2Fview_file_entry&_110_INSTANCE_Jnxja3uDhXvh_fileEntryId=584951 

1 hour ago, Neil Roberts said:

I did see other agency policies that indicate the personal liability should be paid to the government.

If the agency denies (says NO to) the ratification request, then no payment will be made to the vendor and there is nothing to collect from the agency employee.

If the agency grants (says YES to) the ratification request, then the payment should be made from agency funds -- collecting money from an employee to pass to the contractor to satisfy the agency's ratification decision would be an appropriations augmentation, right?  

Collecting from the agency employee is nowhere discussed in the excellent resource Carl shared (at least, I didn't see it).

On 10/23/2020 at 1:53 PM, Contract time said:

My issue is: Whether an agency may issue a letter, and subsequently require an employee to pay an unauthorized commitment it will not ratify.

Was the letter issued in regard to a suitability or clearance action or a standards of conduct issue?  The possibility exists that the agency is treating this as a failure of the employee to pay his/her just debts.

On 10/23/2020 at 10:53 AM, Contract time said:

My issue is: Whether an agency may issue a letter, and subsequently require an employee to pay an unauthorized commitment it will not ratify.

@Contract time, I can think of a situation where the government was billed and as a "business decision" it was decided to pay the supplier for various reasons, yet not ratify the employee action and request re-payment from the employee. We do not know the facts or rationale for the agency letter. You have indicated you searched in FAR for an answer without success. I am not surprised. I don't imagine this agency letter is the kind of thing you would find to be controlled in FAR as specifically permitted or prohibited. Rather it may be a permissible business judgement per FAR 1.102. The letter however, does not seem appropriate to me unless the government paid the supplier.     

p.s. - the letter does not indicate to whom the employee must pay.

Edited October 27, 20204 yr by Neil Roberts
add p.s.

Agree that no contract exists.  I remember a couple decisions from years ago saying contractors bear the burden of ensuring the government employee they are dealing with has full authority.  
 

But as far as the employee rights and obligations, this is a HR matter for a labor relations or employee relations specialist to address.  Any advice from most of us here along these lines is about the same as our medical advice.

On 10/23/2020 at 10:53 AM, Contract time said:

However, funds were obligated on the order/contract which were intended for the first, approved course, so there is an argument that funds were indeed available...

 

On 10/23/2020 at 10:53 AM, Contract time said:

The contractor informs Agency Employee #1 that the course is full and offers another course (not approved on the JOFOC) that costs the same amount. Agency Employee #2, asks contracts, "Can we substitute the second course for the first," and the contracting officer (CO) says, "no."

@Contract, time, I was assuming from what was stated above, that there was a written contract released by the contracting officer for the first course, and after it's issuance as a contract, the course became full, a substitute was offered by the contractor, and an employee attended the substitute course. Can you confirm?

Based upon the limited information in the original post,  it would be foolish for the government to pay the contractor for this unauthorized commitment. Employee #2 had no authority to agree to or to send #1 to the class. If the government accidentally paid it, they need to demand a refund. A refund could be processed during a regular invoice cycle, thus returning the funds to the program.

The contractor should bill the student. The government should discipline employee #2 and perhaps recover TDY costs, if any, from whoever approved TDY orders.  This is based upon the premise that the KO denied the request by employee #2 to substitute course number two for course number one before employee #2 approved the attendance for employee #1. EDIT: NO means NO. 

 

I haven’t had experience in this situation but I’ve had enough similar situations to say it’s not easy to assess employees for the cost.  For starters every agency has their own procedures and policies for HR matters.  Many agencies have extremely strong unions that support employees.  Telling an employee they have to personally pay for a class may not go far.

In this case, the employee benefitted from attending a course.  We don’t know for certain but since it was substituted for an approved course, it probably is related.  The employee then received knowledge.  So we are implying the contractor is at fault and may not get paid or experience considerable delay or the employee must personally pay.  This is why I suggested talking with HR.

Imagine a senior agency official with tons of operational and political issues going on.  Also imagine receiving a Congressional inquiry on behalf of the contractor.  Then put yourself in place of the person trying to explain this (most managers in the chain will back out).  An employee took a replacement course because the class was full!  

One question I have is why didn’t the CO say if the replacement course wasn’t covered by the JOFOC, why not use the purchase card or PO?  It’s likely under the MPT.  It seems like the classic example of an 1102 saying no rather than let me help you do things properly.

1 hour ago, formerfed said:

I haven’t had experience in this situation but I’ve had enough similar situations to say it’s not easy to assess employees for the cost.  For starters every agency has their own procedures and policies for HR matters.  Many agencies have extremely strong unions that support employees.  Telling an employee they have to personally pay for a class may not go far.

In this case, the employee benefitted from attending a course.  We don’t know for certain but since it was substituted for an approved course, it probably is related.  The employee then received knowledge.  So we are implying the contractor is at fault and may not get paid or experience considerable delay or the employee must personally pay.  This is why I suggested talking with HR.

Imagine a senior agency official with tons of operational and political issues going on.  Also imagine receiving a Congressional inquiry on behalf of the contractor.  Then put yourself in place of the person trying to explain this (most managers in the chain will back out).  An employee took a replacement course because the class was full!  

One question I have is why didn’t the CO say if the replacement course wasn’t covered by the JOFOC, why not use the purchase card or PO?  It’s likely under the MPT.  It seems like the classic example of an 1102 saying no rather than let me help you do things properly.

Good point about using another vehicle and about not offering an alternative. However, the supervisor appears to have ignored the KO’s “no” for that contract. 

On 10/23/2020 at 10:53 AM, Contract time said:

A ratification request was completed by Agency Employee #2 and he agency is in the process of denying the request. The denial is based, in part, on FAR 1.602-3(c)(3), in that "[t]he resulting contract would [not] otherwise have been proper if made by an appropriate contracting office." The thought is, the JOFOC was approved for the first course and not the second course. Also, FAR 1.602-3(c)(6), because, "[f]unds.. were [not] available at the time the unauthorized commitment was made. A check was made with budget and funds were not available at the time the commitment was made. However, funds were obligated on the order/contract which were intended for the first, approved course, so there is an argument that funds were indeed available.

Since this is related to or arising from a contract, the Agency could potentially settle the claims involving unauthorized commitments pursuant to FAR Subpart 33.2 instead of FAR 1.602-3(b)(2) and (c). (Ref. FAR 1.602-3( b )(5))

On 10/30/2020 at 2:06 AM, Jamaal Valentine said:

Since this is related to or arising from a contract, the Agency could potentially settle the claims involving unauthorized commitments pursuant to FAR Subpart 33.2 instead of FAR 1.602-3(b)(2) and (c). (Ref. FAR 1.602-3( b )(5))

Except the KO said not to do it; the employees supervisor or someone else did it anyway; it was not within the scope of the sole source contract; the person who enrolled the student employee had no authority to do it; apparently, some decision maker in the agency doesn’t want to ratify it.

The claims process would involve the KO, who, at least told the employee or employee #2 “no” and may have also told the contractor “No”.

If the contractor dealt directly with employee 1 or 2, then the contractor should charge one of them.

I do agree that if there was another way to do it, then it would have been good to advise the employee or employee 2.  However, that might not have been asked of the KO when the employee asked the KO or someone else about the substitute course. Depends upon the context of the conversation. 

It might or might not be “fair” to the employee or to the contractor.

Years ago (1989), my Chief of Construction selected two other people and me to attend Stephen Covey’s course “Seven Habits of Highly Effective People” , which was conducted at a classy “Dude Ranch” outside of Ft. Worth, Texas.

We went. The course was great. It was of great benefit not only to us in personal relationships but to us as supervisors and in our Professional careers. Highly beneficial for dealing with others, both inside and outside our agency and outside of government, including our contractors and proposers. Ok, great.

The problem was that whoever enrolled us in the class treated it like a normal TDY, not noticing that the lodging cost GREATLY exceeded the allowable daily lodging and per diem rate. We were able to get reimbursed for 150% of the max rate but had to eat $275 each for the course. For context, that equals $573 in today’s dollars. Fair? No. We were told to go, didn’t know that we were going to have to absorb a significant cost for it. The Chief didn’t know it either. He promised us that he would make it up, an “On the Spot” award (up to $250) but never did. Did the government obtain the full benefit of the class? Yes. 

56 minutes ago, joel hoffman said:

Except the KO said not to do it; the employees supervisor or someone else did it anyway; it was not within the scope of the sole source contract; the person who enrolled the student employee had no authority to do it; apparently, some decision maker in the agency doesn’t want to ratify it.

The claims process would involve the KO, who, at least told the employee or employee two no and may have also told the contractor No.

If the contractor dealt directly with employee 1 or 2, then the contractor should charge one of them.

I do agree that if there was another way to do it, then it would have been good to advise the employee or employee 2.  However, that might not have been asked of the KO when the employee asked the KO or someone else about the substitute course. Depends upon the context of the conversation. 

Disciplinary action on the employee is a separate issue that government officials can’t seem to separate from unauthorized commitments. There isn’t enough information here for me to decide or make a recommendation on how this should be treated; I simply raised another solution that overcomes the Agency’s argument for not being able to ratify. The Agency appears to think they can’t ratify...I didn’t read that they don’t want to.

20 hours ago, Jamaal Valentine said:

Disciplinary action on the employee is a separate issue that government officials can’t seem to separate from unauthorized commitments. There isn’t enough information here for me to decide or make a recommendation on how this should be treated; I simply raised another solution that overcomes the Agency’s argument for not being able to ratify. The Agency appears to think they can’t ratify...I didn’t read that they don’t want to.

Good point concerning the possible reasons for ;the agency declining to ratify the unauthorized commitment.

I wasn’t discussing repercussions against an employee here either.  I’m simply saying that the vendor likely has no basis for a claim under its contract. They weren’t contracted to provide the course that the student attended. Especially pertinent if the KO so informed the contractor.

However, the cost for one student to attend a course session is less than the simplified acquisition threshold and most likely under the micro purchase limit. Part 6 wouldn’t apply to a separate contract action for a person to attend a class, would it?

if training funds were available and if not within the scope of the contract, it would seem that a separate contract action could have been  available to train the student. The OP didn’t indicate Whether or not the other class was pertinent or necessary. The OP said that funds were not separately available though. 

Interesting that no funds were available other than what was on the contract but “the course was full” and there were still available funds under the contract.  Perhaps “the session was full” but the contract was for multiple sessions...