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Verbal Purchase Orders/Contracts


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On 1/25/2023 at 6:39 PM, Vern Edwards said:

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@MileHighAcqYou "youngsters" crack me up. I'm an old (you're all youngsters to me) and battered contracts warrior, and I've learned many things at my own foolish expense. One of the things I've learned is that the contracting bureaucracy doesn't always have as much say as they think they do.

Who says that you, a procurement analyst, as a reviewer, has the final say? All it takes is one higher staff review, legal review, or (God forbid) IG report to put you off your feed.

See the decision of the Federal Circuit Court of Appeals, one step below the Supreme Court, in HARBERT/LUMMUS AGRIFUELS PROJECTS, Harbert International, Inc., Abb Lummus Crest, Inc. and Lummus Crest, Inc., 142 F. 3d 1429, April 21, 1998:

Emphasis added. Now, there are contrary decisions. But my advice is: Don't be too sure of yourself. 

Look, I think that 999/1,000 times CO's oral agreements will stand, especially if they make sense and the agency wants them to stand. But the notion that such an agreement will always stand, or that you can blithely waive the rules, is not supported by experience.

I would make an oral deal if I thought that it was essential and unavoidable. But I would be ready for trouble if the deal were questioned.

Also see Cibinic, Nash & Yukins, Formation of Government Contracts, 4th ed., Contracts Varying from Statutory and Regulatory Requirements, pp. 69 - 81.

This is true, and sound advice. Though about legal review, all of us COs and PAs are fond of saying they're advisory. lol 

At least until someone higher up reminds us that those advisory personnel are who will be defending our asses when things get serious, so we better take their advice.

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On 1/25/2023 at 10:42 PM, Vern Edwards said:

I know that there is a difference between compliance with specified procedures and what is sometimes done for the sake of expediency. I've taken the expedient course myself, several times.

I also know that while the expedient course is sometimes, perhaps usually, approved, it is sometimes not. Everyone reading this thread should know that, keep it in mind, and make good decisions.

Contractors should be especially wary. Government personnel who would break their own rules might not be reliable promisors. It's one thing to ship based on an oral order from someone with whom you've done business many times and found to be reliable; it may be another thing entirely to do that for someone you do not know, who works for a boss you do not know, who works in an agency office you do not know.

Weeks v. U.S., 144 Fed. Cl. 34 at 48 July 24, 2019:

It's why they sell professional liability insurance for COs - that whole personally and legally liable thing...

I've never seen an unauthorized commitment not ratified, but the possibility of it not being ratified and being personally financially liable, plus the detrimental impacts to one's career, are generally sufficient to keep most people on the straight and narrow and not abuse their authority. If a CO uses their authority sparingly and appropriately (i.e. significant harm to the agency and/or the public but for their immediate action) and follows up oral orders as soon as practicable with a written contract, things will generally turn out alright.

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45 minutes ago, MileHighAcq said:

I've never seen an unauthorized commitment not ratified, but the possibility of it not being ratified and being personally financially liable, plus the detrimental impacts to one's career, are generally sufficient to keep most people on the straight and narrow and not abuse their authority. 

Here you go...

b-262168.pdf

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The basis for assessing the debt against Mr. Martino was the lack of evidence that he conducted or relied upon any kind of market survey in signing the contract extension as required by regulation.

I remember that case! I taught about it for the GWU program in Panama! And John was one of the students! He was a GS-15 as I recall.

Procedure matters.

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On 1/27/2023 at 1:54 PM, Don Mansfield said:

Yikes!! I wonder how many COs are aware of this decision. I certainly wasn't before today.

While in this case the CO’s failure was pretty egregious and resulted in the government paying a substantial price premium because of the CO's failure to follow procedures (seems like this was an option exercise and the CO failed to do a market survey before exercising the option), the general principle seems to be that failure to follow proper procedures could constitute an unauthorized commitment, even if the CO has the authority to otherwise make the commitment  - i.e. enter a binding contract, and the precedent seems to be that if the damage is substantial enough, the agency is within their right to hold the CO personally and financially liable.

Again, I say YIKES!!!

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