Ratification Authority

[Jamaal Valentine]

I was having a discussion at the office, today, and would like to open it up to the forum.

Does a ratifying official have to be a contracting officer (warranted or otherwise have designated contracting authority)? Example, a Chief of the Contracting Office does not have a warrant, but is delegated as a ratifying official.

How does a ratifying official enter into a contractual commitment without complying with CICA? Example, a non-competed unauthorized commitment that exceeds the micro-purchase threshold. (Note: FAR requires that the resulting contract would otherwise have been proper if made by an appropriate contracting officer.)

What are your thoughts? 

[Guest Vern Edwards]

3 hours ago, Jamaal Valentine said:

Does a ratifying official have to be a contracting officer (warranted or otherwise have designated contracting authority)? Example, a Chief of the Contracting Office does not have a warrant, but is delegated as a ratifying official.

The rules in FAR 1.602-3 do not state that a ratifying official must be a "contracting officer." They say that he or she must have authority to enter into a contractual commitment. Presumably, a delegation of ratification authority to the chief of the contracting office would have come from the agency head or an HCA, who do have contracting authority. Such a delegation would effectively give him or her that authority for purposes of ratifying an unauthorized commitment covered by that delegation.

As for complying with CICA, if the unauthorized commitment were large enough to have been subject to CICA, then ratification would not be permitted if no CICA exception could be invoked. However, CICA does not apply when simplified acquisition procedures can be used to conduct an acquisition. See FAR 6.001(a).

Keep in mind that the ratification procedures in FAR 1.602-3 are not mandated by statute. Ratification was not covered in the FAR when first issued--each agency supplemented the FAR with its own procedures. Coverage was added to the FAR in 1988 in pursuit of consistency, 53 FR 3688, Feb. 8, 1988, FAC 84-33, Item I. See Cibinic and Nash, "Improving the FAR System," The Nash & Cibinic Report (February 1987):

Quote

Ratification Of Acts Of Unauthorized Employees--Although this important topic was covered by prior regulations, it was inadvertently omitted from the FAR. This led to lengthy regulations (two or more pages) in the FAR supplements of at least 13 agencies, containing a variety of rules and procedures to be used in such ratifications. As a result of this diversity, a FAR case was instituted in March 1986 to provide FAR coverage. A proposed regulation was issued for comment, comments were received and the matter is still being considered within the FAR councils. Thus, we will be fortunate to have a uniform regulation on this topic by the end of 1987--three and one half years after the inadvertent omission. This is an illustration of the cumbersome and time-consuming nature of the regulatory process which is now being used. 

Actually, the omission from FAR was intentional, not inadvertent. See the Federal Register cited above.

The FAR rules are really an agreement among agency heads, through the FAR councils, about uniform procedures for handling unauthorized commitments. If an agency office does not adhere to them, the main effect is to give the ratifier's higher-ups in the agency a basis for denying that a ratification had been made, rejecting a demand for payment, and arguing in court. Clearly, an agency can deviate from the FAR ratification procedures pursuant to FAR 1.402 as long as no statute or executive order prohibits such a deviation. I know of no such prohibition.

There is a lot more to ratification than one would suspect from a reading of FAR. See e.g., Boyd III, "Implied-in-Fact Contract: Contractual Recovery Against the Government Without An Express Agreement," Public Contract Law Journal (Fall 1991) p. 84, 119:

Quote

The courts and boards have been inconsistent in determining whether an applicable procurement regulation can preclude a finding of ratification where one of the regulation's requirements is not met. While the FAR does not currently require that a ratification be in writing, such a requirement existed under prior regulations, and in the past, the existence of the requirement precluded a finding of ratification. On the other hand, ratification has been found even without the identification of a specific ratifying official as required under the regulations. Commentators have also noted that the government has been held bound to ratification without reference to any regulation.

Indeed, the FAR appears to leave open the possibility of ratification even where all of the FAR's requirements are not met. In particular, the FAR states that unauthorized commitments that would involve claims subject to resolution under the Contract Disputes Act of 1978, are to be processed in accordance with FAR Subpart 33.2, Disputes and Appeals (as opposed to the FAR ratification provision). Because the Contract Disputes Act generally applies to claims based on implied-in-fact contracts, the FAR ratificationprovision is arguably inapplicable to such contracts.

Footnotes omitted.

[Jamaal Valentine]

2 hours ago, Vern Edwards said:

As for complying with CICA, if the unauthorized commitment were large enough to have been subject to CICA, then ratification would not be permitted if no CICA exception could be invoked. However, CICA does not apply when simplified acquisition procedures can be used to conduct an acquisition. See FAR 6.001(a).

This was one of the points I raised during the discussion. If there is an unauthorized commitment outside of SAP … well, for my agency, it is not going to be solved within the office and must be elevated above the chief of the contracting office.

Thanks for the background info as always. Seems ratification training will be deeper than originally anticipated.

[ji20874]

On 4/5/2017 at 8:08 AM, Vern Edwards said:

Indeed, the FAR appears to leave open the possibility of ratification even where all of the FAR's requirements are not met. In particular, the FAR states that unauthorized commitments that would involve claims subject to resolution under the Contract Disputes Act of 1978, are to be processed in accordance with FAR Subpart 33.2, Disputes and Appeals (as opposed to the FAR ratification provision). Because the Contract Disputes Act generally applies to claims based on implied-in-fact contracts, the FAR ratification provision is arguably inapplicable to such contracts.

I was glad to see this quotation that Vern provided. I have long held that FAR 1.602-3(b)(5) stands for the proposition that unauthorized commitments that would involve claims subject to resolution under the Contract Disputes Act of 1978 are to be processed in accordance with FAR Subpart 33.2, Disputes and Appeals (as opposed to the FAR ratification provision). Some others have said previously that such an unauthorized commitment must be processed under both ratifications and disputes procedures.  

I hope our community is moving to agreement that FAR 1.602-3(b)(5) stands for the proposition that unauthorized commitments that would involve claims subject to resolution under the Contract Disputes Act of 1978 are to be processed in accordance with FAR Subpart 33.2, Disputes and Appeals (and not as a ratification under FAR subsection 1.602-3.

[Guest Vern Edwards]

In support and illustration of ji20874's point, suppose that you have a contract under which a contractor is working remotely from the contracting office with an onsite COR who does not have change order authority. Suppose that something happens that needs immediate attention, but there is no way to reach the CO on short notice, so the COR "directs" the contractor to take a course of action that constitutes a within-scope change. The contractor does it and later sends a non-claim (it's not certified) REA to the CO.

The CO knows that the COR had no authority to direct the change and that the government is not bound to pay. However, the CO also knows that had the COR been able to reach her she would have issued the a change order to the same effect and thinks that the COR and the contractor took a reasonable course of action. The cost to the government would have been much greater than the amount sought in the REA had the COR not taken immediate action and had the contractor refused to comply.

Still, there was an unauthorized commitment, and FAR 1.602-3(b)(3) means that the CO cannot ratify, and ratification is a hassle.

FAR 1.602-3(b)(5) states: "Unauthorized commitments that would involve claims subject to resolution under 41 U.S.C. chapter 71, Contract Disputes, should be processed in accordance with Subpart 33.2, Disputes and Appeals." FAR 33.210, "Contracting officer's authority," says:

Quote

Except as provided in this section, contracting officers are authorized, within any specific limitations of their warrants, to decide or resolve all claims arising under or relating to a contract subject to the Disputes statute. In accordance with agency policies and 33.214, contracting officers are authorized to use ADR procedures to resolve claims. The authority to decide or resolve claims does not extend to—

(a) A claim or dispute for penalties or forfeitures prescribed by statute or regulation that another Federal agency is specifically authorized to administer, settle, or determine; or

(b) The settlement, compromise, payment, or adjustment of any claim involving fraud.

Thus, while the CO has no authority under FAR 1.602-3 to ratify an unauthorized commitment, she does have authority under statute to resolve all claims and can settle the REA with the contractor in that way, without ratification. And under these circumstances, she should.

But does the contractor have to submit an actual claim, or can the CO settle on the basis of just the REA alone? I think that the CO can settle without a certified claim, based on FAR 33.204, which says, in pertinent part:

Quote

The Government’s policy is to try to resolve all contractual issues in controversy by mutual agreement at the contracting officer’s level. Reasonable efforts should be made to resolve controversies prior to the submission of a claim.

Settling without submission of a claim would avoid the requirement to pay interest, and the CO would still be exercising her authority under the Contract Disputes Act as implemented by FAR

There is no need to seek ratification. Under the law the CO has the power to decide and settle. If the CO were to decide not to settle the REA on grounds that the COR had no authority to direct the contractor and the contractor knew he didn't, the contractor would have to ask the agency to ratify the COR's action.

I am presuming that the agency's FAR supplement does not prohibit the CO from exercising her authority under the Disputes Act without first seeking ratification.

[Retreadfed]

Vern, a quick bureaucratic question concerning your hypo.  If the contract in question is a DoD contract and the REA does not have the requisite certification for an REA, would the CO be required to obtain the REA certification before negotiating a settlement?

[Guest Vern Edwards]

Yes. That is separate from the Disputes Act cert.

[ji20874]

50 minutes ago, Vern Edwards said:

I am presuming that the agency's FAR supplement does not prohibit the CO from exercising her authority under the Disputes Act without first seeking ratification.

This is an important point -- unfortunately, some agency FAR supplements do effectively undermine and even erase FAR 1.602-3(b)(5).  A contracting officer needs to check his or her agency regulations.

[C Culham]

I fear the discussion is too broad with regard to CDA.   While CDA is one of the routes and might appear to fit nicely into the scenario that has been painted to support it each unauthorized commitment carries with it its own set of facts and circumstances that would suggest proper action.

Missed in the discussion is that the fact that unauthorized commitment and the subsequent ratification process is one that is internal to the Federal government.  If an unauthorized commitment cannot be ratified then it becomes a matter of a GAO claim procedure or extraordinary  relief.   CDA action is only an alternative if the action can be ratified and is  one that  is a matter of a ” written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to the contract.”

 Back to the example offered what is missed is that while the CO would have the back of the COR and settle the REA where in the regulation does is say that the COR does not need to have the back of the CO and agree to follow a ratification process because the COR “lacked the authority to enter into that agreement on behalf of the Government.”?

The real issue is that yes the ratification process is a “hassle” but should not be for an instance like the example offered.   It should be a slam dunk but a slam dunk effort that should be taken all the same.  Talk about changing the dang process that agencies have convoluted so horribly and not provide misleading thoughts that there are some ratifications that just do not need to happen.   After all is it not the policy of regulation that ratification  may not be used in a manner that encourages unauthorized commitments being made by Government personnel?

Missed as well in the example offered and one of the primary matters related to unauthorized commitments is the availability of funding.    Answer me this – What if all the facts regarding the example were true except one  and that being there is no money available to pay for the work what then? 

In the end the discussion as I have noted is just too broad brushed.  The example may provide a view of what happens in reality almost every day but the discussion should narrow to where CO's and COR's do not communicate well, or COR's want to be rogue regardless of regulation, and, and, and!!!!!!!!!

[Guest Vern Edwards]

@ji20874:

I searched the FAR supplements and found, based on a quick review, only one agency that expressly limits a CO's authority to handle an unauthorized commitment that falls under the jurisdiction of the CDA. The Department of Education's supplement, at 48 CFR 3401.602-3(b)(5) says "All other ratification requests must be reviewed and signed or rejected by the HCA." I think what that means, I'm not sure, is that a CO cannot handle the matter under the CDA.

What I wonder is whether that rule is enforceable. I'm not sure that it is. The contractor could still pursue the matter as a claim under constructive change theory, and the law gives the CO authority to decide. in any event, the case law on ratification is very complex. One would never know that from a reading of the FAR, but the articles that I cited above are illuminating in that regard.

Vern

[C Culham]

Open to and love change and will embrace it.   I just wonder what in the wording of FAR part 1 and FAR part 33 has changed to arrive at the conclusions of this thread.  Educate me please as this old dog has studied to the best of my ability the FAR and the interpretations of it that folks have provided throughout the years.....http://www.wifcon.com/arc/forum521a.htm

"If a Government employee makes an unauthorized commitment to a contractor in a matter that is related to a contract (e.g., an unauthorized change that increases the cost of performance), the contractor can submit a claim to the contracting officer pursuant to the Disputes clause seeking payment under the existing contract rather than award of a new contract. If you read FAR 1.602-3 and FAR Subpart 33.2 together, it appears that an authorized official must ratify the unauthorized commitment before the contracting officer can agree to pay the claim under the existing contract.

If no one can or will ratify the unauthorized commitment, then the company must request payment on a quantum meruit basis through the General Accounting Office. See FAR 1.602-3(d). "

Adding this just for the heck of it as well.......https://acc.dau.mil/CommunityBrowser.aspx?id=526643

[Guest Vern Edwards]

Okay, Carl. I'll bite. And I'm going to take some time to educate you as you asked me to. Remember, you asked.

What you quoted is something that I wrote here almost 17 years ago. I can change my mind in the course of 17 years. I can change it in an instant if it serves my purpose. If I live another 17 years I might change it again, three or four times. You should try it. It's liberating.

You know, Carl, you just don't understand the value of arguments. I can and will see and argue every side of an issue, as it suits me. I often argue here just for the sake of arguing, to see where it goes.

I've had a very successful 45 year career. GS-05 to GS-15 in nine years, as fast as the law allowed at that time, and I've had a good career as an acquisition consultant, teacher, and writer. You know why? When the boss wanted to pursue a course that people said he or she couldn't pursue, I'd say: Leave it to me. I'll come up with something. Just give me a day or two. And then I'd go off and think about it and come up with an argument. And then I'd sell it. If it didn't sell I'd adjust it and try again. And, nine times out of ten, I ultimately did sell it. Program managers love people who can do that, and they promote them.

FAR 1.602-3(b)(5) means something. But what? Why do the FAR councils refer COs to FAR Subpart 33.2? It doesn't say that such matters must be handled under 1.602-3 and 33.2. ji20874 took a position. I made an argument in support. I think it's a good argument.

When FAR 1.602-3 was added to FAR in 1988, Prof. Cibinic commented on paragraph (b)(5):

Quote

The other provision that is puzzling is the instruction to use the Disputes Act rather than ratification authority. Ratification is a useful way to settle claims where the contractor has done additional work without the approval of a Contracting Officer (CO) but the Government has obtained a benefit which it desired. If, however, this guidance means that the CO can settle a contractor's claim in such circumstances under the Disputes Act without regard to the limitations in FAR 1.602-3(c), it greatly ameliorates the impact of these narrow limitations. At a minimum, it must mean that the CO, as well as the appeals boards and courts, can find constructive ratification, as discussed in Invalid Or Unauthorized Commitments: Up The Creek Without A Contract, 1 N&CR ¶64. Such an interpretation also circumvents the FAR limitations on delegation of ratification authority. The provision is strange indeed.

See "Authority to Ratify Commitments: New Regulations," The Nash & Cibinic Report (April 1988). Strange it may be, but there it is and I interpret it my way. Actually, paragraph (b)(5) is not all that strange. Before the FAR coverage was added, the 1987 DFARS had included a provision that limited ratification to situations in which settlement did not involve a Contract Disputes Act claim. 

For an example of a CO doing exactly what I described pursuant to the CDA, see National Science Foundation--Potential Antideficiency Act Violation by the National Science Board Office, GAO B-317413, 2009 CPD ¶ 94. (Unfortunately, the CO used the wrong year money to fund the mod, but that did not invalidate the CO's action. The GAO told the agency to use the funds of a later fiscal year.))

I think you're linking the legal act of agreeing to pay for improperly ordered work with the need to punish misbehaving CORs. I see the two things as independent of one another. I don't think that the course of action that I believe is open to COs under the CDA means that CORs who act with impunity should go unpunished. I just think that settling with the contractor and punishing CORs who exceed their authority are two different matters. In this thread I'm interested only in the former.

You went back 17 years and found an old quote of mine that contradicts my current position. Do you think I'm embarrassed because you found something I wrote 17 years ago that contradicts something I'm saying now? Do you really? How long have you been reading me here? A contracting person is only as good as the thoughts that he or she develops and the arguments that he or she can make. Any contracting person who thinks that every regulation always has a single, definite meaning that is cast in stone is intellectually ineffective. And as for conflicting arguments, need I quote Emerson about foolish consistency, hobgoblins, and little minds?

I'm tempted to make an argument in support of your position, just to show you how it's done. But, the thing is, I think it's best not to communicate with you anymore. It's pointless. I just wish you knew--but I know you don't--that there is rarely a single product of a regulatory analysis and interpretation that is written in stone. If you think for one minute that there is a single, definitely correct interpretation of all of this stuff, then you're just being silly.

You know why I've said all this? It wasn't for you. I don't write for fossils. I write for the young people who read here who still have a chance to fix our broken system, which they can't fix it by being narrow minded and inflexible, greeting every new thought with the Everlasting Nay. They've got to be inventive.

You're a good, old school guy, Carl. I know that.

Vern

[Guest Vern Edwards]

By the way, one of the things in the quote of me that Carl posted from August 2000 was this:

On 4/6/2017 at 6:50 PM, C Culham said:

If no one can or will ratify the unauthorized commitment, then the company must request payment on a quantum meruit basis through the General Accounting Office. See FAR 1.602-3(d).

FAR still seems to say that. See 1.602-3(d):

Quote

(d) Nonratifiable commitments. Cases that are not ratifiable under this subsection may be subject to resolution as recommended by the Government Accountability Office under its claim procedure (GAO Policy and Procedures Manual for Guidance of Federal Agencies, Title 4, Chapter 2), or as authorized by FAR Subpart 50.1. Legal advice should be obtained in these cases.

However, the GAO no longer has claim settlement authority and will no longer make recommendations. See National Park Service-Payments to Subcontractors, GAO B-303906, Dec. 7, 2004.

Quote

Effective June 30, 1996, Congress transferred our jurisdiction under section 3702 to the Director of the Office of Management and Budget (OMB). See 31 U.S.C. 3702(a)(4) (2002); B–278805, July 21, 1999. Congress gave the Director of OMB the authority to delegate this function to such agencies as he deemed appropriate. B–278805, July 21, 1999. The Director delegated claims settlement authority to the executive branch agency out of whose activity the claims arose. See Jacob J. Lew, Acting Director, OMB, Determination with Respect to Transfer of Functions Pursuant to Public Law 104–53 , June 28, 1996, Attachment A; Franklin D. Raines, Director, OMB, Determination with Respect to Transfer of Functions Pursuant to Public Law 104–316 , Dec. 17, 1996, Attachment A. Consequently, Interior, not GAO, has the authority to settle the subcontractors' claims...

QUANTUM MERUIT CLAIMS

Interior may find our pre–1996 claims settlement decisions helpful in this regard. In some GAO decisions, the Comptroller General, on a case-by-case basis, authorized reimbursements to persons whose unpaid work benefited the government, even though no enforceable contract existed with the government, under the equitable theory of quantum meruit . See 70 Comp. Gen. 664 (1991); 69 Comp. Gen. 13 (1989); 66 Comp. Gen. 351 (1987); B–252778, Aug. 19, 1993; B–214529, Jan. 19, 1988; B–215651, Mar. 15, 1985; B–210808, May 24, 1984. Although GAO no longer has claims settlement authority, agencies exercising their claims settlement authority may find prior Comptroller General decisions useful.

The GAO Policy and Procedures Manual, Title 4, Ch. 2, the procedure for settling claims, is no longer in effect. Agencies can settle such matters as they see fit, although GAO can still tell agencies which appropriations to use. Thus, a CO may be able to settle a claim on the basis of quantum merit under his or her CDA authority, but should get advice of counsel with regard to that legal technicality. As for settlement under FAR 50.1, Extraordinary Contractual Actions, see FAR 50.101-1(c):

Quote

Certain kinds of relief previously available only under Pub. L. 85-804; e.g., rescission or reformation for mutual mistake, are now available under the authority of 41 U.S.C. chapter 71, Contract Disputes. In accordance with paragraph (a)(2) of this subsection, part 33 must be followed in preference to subpart 50.1 for such relief. In case of doubt as to whether part 33 applies, the contracting officer should seek legal advice.

The bottom line is that COs have a lot of authority under the CDA to do things in order to settle that previously could be done only through ratification or extraordinary contractual relief.

[C Culham]

Vern - Thanks for the responses.  

I went back 17 years because I did not find one suggestion, post, or comment that suggested any thing different for that 17 years with regard to interpretation of the application of ratification with regard to an unauthorized commitment arising to or relating to an existing contract.   The very reason as well that I posted one other reference from the DoD that supported the same point.  I am still perplexed as you have used references of 1988 for the most part and a GAO reference admittedly from 2009 is as I already stated that each unauthorized commitment carries with it its own set of facts and circumstances a point that you are quick to raise. 

9 hours ago, Vern Edwards said:

settling with the contractor and punishing CORs who exceed their authority are two different matters

Not punishment but a established process to prevent abuse of the Federal contracting process and regulations.   Abuse that extends to matters of fiscal accountability.   Abuse that also stretches to contractors who do not adhere to contract terms and conditions and specific instruction from the Government that certain individuals do not have authority to change a contract.    The example provided that started the comments about simply solving certain unauthorized commitments through CDA lacks any accountability evaluations on both sides of the contract.

10 hours ago, Vern Edwards said:

intellectually ineffective

9 hours ago, Vern Edwards said:

I just wish you knew--but I know you don't--that there is rarely a single product of a regulatory analysis and interpretation that is written in stone.

 

9 hours ago, Vern Edwards said:

I don't write for fossils.

 

9 hours ago, Vern Edwards said:

old school guy

To these points Vern I want to yes I wanted you to respond, but I actually hoped for something of substance rather than the same inferences that you have continually sent my way over the years.   I long for the day that I could sit across from a table with you, cast out reasoned and well thought out and researched matters and then engage in conversation of substance rather than facing comments of innuendo and personal attacks.  I honestly do not understand them!  And yes they are personal because your post is directly addressed to me, you know it and I know it.  Quite honestly Vern you do not know me anymore, you do not know other than what I have stated but seem to overlook that.  

 

10 hours ago, Vern Edwards said:

Program managers love people who can do that, and they promote them.

Mine was a 47 year career that I would be willing exemplify to anyone that supports un-fossil like qualities because I was honored to listen to, understand and appreciate from the best.  WAS because in the most recent years an unseemly bias has arisen that suggests that there is only one view and if that view is not embraced then a person is well just not a person of value!

10 hours ago, Vern Edwards said:

You know, Carl, you just don't understand the value of arguments

10 hours ago, Vern Edwards said:

I think it's best not to communicate with you anymore.

I understand and know that the value of arguments does not include caveats such as these.  So is it an argument or  is it a  my way or highway edict that if not followed has to be surrounded with intentional innuendo to devalue?

Your second post and the effort it took is appreciated.  Right or wrong in tying this to your other writings it would seem the suggestion in the end could very well be rid the FAR, in a streamlining effort, of the unauthorized commitment/ratification process but I am left wondering how would the integrity of full contracting process be upheld.  After all my recollection is that prior to 1988 some folks felt the integrity was at stake due to folks not adhering to the actual authority ideal and created a process to support it.    I will continue as I always do to research and consider  what the appropriate and best approach is whether it is a current instance or whether is what can be done in the future.

PS - Vern, as I know it will come up as it has in the past I want to be explicit in relaying that my comments in this post are not of a bleeding heart, sobbing or even lack of an ability of taking a bruising.  I can and have stood in the corner and continue to do so with anyone anytime and debate in fairness and sincerity any matter of reasoning.  You see this is me and always will be...http://cowboyethics.org/cowboy-ethics/.

[ji20874]

I stand where I do because I want to give meaning to the text at FAR 1.602-3(b)(5).  Requiring a ratification for a COR constructive change renders the text at FAR 1.602-3(b)(5) wholly meaningless and superfluous.  So in order to read the text at FAR 1.602-3(b)(5) in a manner that gives it meaning, I take it as it is written -- a COR constructive change is handled under FAR Subpart 33.2 and the contract's Disputes clause, not ratification procedures.

The matter of punishing CORs is wholly separate from the ratification or Disputes process.  CORs may be punished or unpunished, regardless of which procedures apply.  Insisting on ratification procedures for a FAR 1.602-3(b)(5) matter to maximize the opportunity for COR punishment is poor policy, but I have heard this argument from many people -- and I am somewhat sympathetic, but only a little.  However, my approval as a contracting officer of a COR constructive change using FAR Subpart 33.2 does not bar my agency from taking punitive measures against the COR.  

[C Culham]

ji - Punishment is not the issue.  It is a red herring.   Old reference you bet, and possibly the view of GAO has changed too but and interesting read all the same.

http://www.gao.gov/assets/140/131799.pdf

 

[Guest Vern Edwards]

Carl:

17 hours ago, C Culham said:

I went back 17 years because I did not find one suggestion, post, or comment that suggested any thing different for that 17 years with regard to interpretation of the application of ratification with regard to an unauthorized commitment arising to or relating to an existing contract.

I don't recall the matter coming up during the last 17 years. It came up when ji20874 mentioned handling unauthorized commitments through the CDA, as provided in FAR, and I made an argument in support of his proposition. Why not evaluate that argument and respond to it on its own terms instead of pointing out that I had said something else 17 years ago. You still haven't responded to that argument. Why is my interpretation of the regulation unsound?

On 4/6/2017 at 11:00 AM, C Culham said:

While CDA is one of the routes and might appear to fit nicely into the scenario that has been painted to support it[,] each unauthorized commitment carries with it its own set of facts and circumstances that would suggest proper action.

Missed in the discussion is that the fact that unauthorized commitment and the subsequent ratification process is one that is internal to the Federal government.  If an unauthorized commitment cannot be ratified then it becomes a matter of a GAO claim procedure or extraordinary  relief.   CDA action is only an alternative if the action can be ratified and is  one that  is a matter of a ” written demand or written assertion by one of the contracting parties seeking, as a matter of right, the payment of money in a sum certain, the adjustment or interpretation of contract terms, or other relief arising under or relating to the contract.”

That was your first response. Four sentences. The first sentence true enough, but i don't see how it relates to my argument, which was based on a specific scenario. I don't understand the second sentence. What do you mean by "internal to the Federal government"? The statement in the third sentence is simply wrong with respect to a "GAO claim procedure" and and to extraordinary contractual relief. Some kinds of extraordinary relief may be handled under the CDA as expressly provided by FAR. And the fourth sentence is inconsistent with the plain language of FAR 1.602-3(b)(5).

And this:

On 4/6/2017 at 11:00 AM, C Culham said:

Talk about changing the dang process that agencies have convoluted so horribly and not provide misleading thoughts that there are some ratifications that just do not need to happen.  

Huh? What is that? Is that a sentence? Are you saying I was "misleading"? If so, how so?

As for the rest of your first post, it contains stuff like this:

On 4/6/2017 at 11:00 AM, C Culham said:

Back to the example offered[,] what is missed is that while the CO would have the back of the COR and settle the REA where in the regulation does is say that the COR does not need to have the back of the CO and agree to follow a ratification process because the COR “lacked the authority to enter into that agreement on behalf of the Government.”?

What? Whatever that means, what bearing does any of it have on my interpretation of FAR 1.602-3(b)(5)?

Note that I didn't respond to your first post. I didn't want to get into it with you. I didn't respond to you until you poked me with my quote.

Really, how much patience am I supposed to have with that sort of thing?

17 hours ago, C Culham said:

I am still perplexed as you have used references of 1988 for the most part and a GAO reference admittedly from 2009 is as I already stated that each unauthorized commitment carries with it its own set of facts and circumstances a point that you are quick to raise.

I don't understand that sentence. My references were designed to shed light on the origins and meaning of the current rules. I didn't cite them in relation to any particular set of facts. What are you talking about?

17 hours ago, C Culham said:

Right or wrong in tying this to your other writings it would seem the suggestion in the end could very well be rid the FAR, in a streamlining effort, of the unauthorized commitment/ratification process but I am left wondering how would the integrity of full contracting process be upheld. 

My argument about settlement via the CDA was not concerned with the integrity of the contracting process. How would settling under the CDA, as expressly provided for in FAR 1.602-3(b)(5), undermine the integrity of the contracting process? Again, you seem concerned with disciplinary measures against CORs who exceed their authority. I am concerned with the procedure to be used to resolve a demand for payment. Discipline of CORs is another matter entirely. I have said nothing about that one way or another.

In any case, ratification is a matter of the common law of agency. The rules in FAR are about maintaining control over legal liability. They simply describe a more or less uniform process of adopting an unauthorized act. It's simply a legal process. Contracting officers sometimes turn it into a political process in their power struggles with other government personnel. In every organization in which I've worked the higher ups usually preferred that COs handle such matters without resorting to formal ratification procedures or litigation. 

17 hours ago, C Culham said:

After all my recollection is that prior to 1988 some folks felt the integrity was at stake due to folks not adhering to the actual authority ideal and created a process to support it. 

I suppose that some folks were concerned about integrity. I am concerned about integrity. But what has that got to do with settling unauthorized commitments via the CDA, as provided for by regulation? How would settlement by a CO via the CDA, in other words, as provided by law, undermine integrity?

In this thread as in the thread about warrant authority you have been reactionary, not argumentative, which is why I don't want to communicate with you anymore. In both threads you've seen doom reflected in an expansive interpretation that I have made of the rules. You seem to find these matters to be moral issues, and I find that tiresome. They are interpretations, that's all.

If you think I've misinterpreted the plain language of FAR 1.602-3(b)(5), tell everyone where I made my mistake. If your problem with the idea of resolving an unauthorized commitment via the CDA, without accompanying ratification, is that it might let CORs off the hook, then you don't have an argument. FAR 1.602-3 does not call for disciplinary action against persons making unauthorized commitments.

If you have an argument about the interpretation of the plain language of FAR 1.602-3(b)(5), make it. Otherwise, my discussion with you about this is over.

[C Culham]

3 hours ago, Vern Edwards said:

If you have an argument about the interpretation of the plain language of FAR 1.602-3(b)(5), make it.

The Federal government has addressed unauthorized commitments since at least 1980 if not prior to in Federal procurement regulations applicable to all agencies and/or individual agency regulations.   Left out of the FAR specifically the matter was addressed in 1988.   References in this thread support this history.   The existence of the Disputes statute has a similar if not longer history.

Through out this history of 35+ years there has been a consensus of interpretation and supporting policy and regulatory statements that provide that an unauthorized commitment must be ratified prior to an actual procurement action taking place. 

For this thread it is now suggested today based a supposed view of the plain language of a single paragraph of FAR 1.602-3, that being FAR 1.602-3(b)(5),  that converting an unauthorized commitment made by a COR, or any other Federal employee , arising under or relating to an existing contract to a equitable adjustment  can be done absent a ratification by a delegated ratifying official.  

Such interpretation does not make sense.

By FAR definition an unauthorized commitment is an action by a Federal employee that is not binding and the only way to make it a binding commitment is to have said action ratified.  Compare this to the FAR definition of a contract which provides in part a "mutually binding legal relationship".     In this comparison the conclusion is that an unauthorized commitment is not binding, has procured nothing  until a determination of applicability of ratification of the unauthorized commitment occurs at which time the commitment is or has been determined to be a appropriate (ratified) or not by an official who has the authority to do so.  Then and only then does the commitment become either  binding at which time the relief being sought (payment) for the ratified procurement would be handled as a REA, and if not it is to be handled under the Disputes statute.  This view is supported by the plan full read of the language of FAR 1.602-3 which states at (b)(5) that the unauthorized commitments that involve claims (https://www.google.com/url?q=http://www.wifcon.com/analy/REA%20or%20Claim.doc&sa=U&ved=0ahUKEwji4sjEkpPTAhVrsVQKHc77AfYQFggEMAA&client=internal-uds-cse&usg=AFQjCNEMCAN-zFdp9xBBVJVPPa8pW6sX8A) are to be resolved under 41 U.S.C. chapter 71, Contract Disputes.  This option can only be exercised when the ratifying official has ratified or not (FAR 1.602-3(a)(2) and FAR 1.602-3(c)). To separate out FAR 1.602-3(b)(5) in the context of the full regulation of 1.602-3 is not in keeping with the common sense of interpretation that paragraph (5) can be held out and read on its own absent the rest of FAR 1.602-3.

To illustrate the intent of a full read of 1.602-3 and its reference to claims/disputes here is the example -

• A contract exists
• A COR  makes a statement that the contractor follows that results in additional cost to the contractor
• The contractor submits a REA for the effort
• The CO informs the contractor that the REA covers work that was requested by an unauthorized individual and states the REA will be considered in this light
• The CO contacts the COR and requests  information from the COR inclusive of availability of funding and information for use in determining fair and reasonable price
• The CO submits the information provided by the COR to the ratifying official  indicating a view on fair and reasonable price and recommending whether the unauthorized commitment should be ratified or not
• If the ratifying official approves the ratification, the ratifying official either signs the modification that allows for the REA or delegates the CO to do so
• If the ratifying official does not approve, the ratifying official or the CO prepares a response to the contractor so stating
• If the contractor does not agree with the response the contractor submits a claim pursuant to the Disputes statute and FAR part 33 and the CO handles the claim as provided for by the full read of FAR 1.602-3.  It is at this point that pursuant to FAR 33.204 the CO now has authority to determine settlement but not ratification as a CO, unless delegated otherwise does not have authority to ratify.

There would of course be a variation to this flow should the REA meet the standard of being a claim as well.

It is this process that determines if the unauthorized commitment is in fact an action (constructive change?) that should have been ratified early on or in the end.

[ji20874]

Carl,

Everything that you say would be true if the text at FAR 1.602-3(b)(5) did not exist.  But it does exist.  And the regulation has to be read in a manner to give it meaningful meaning.

Your scenario would require both procedures of FAR 1.602-3 and Subpart 33.2 -- but it is easy to see that this doesn't make sense -- what if the ratifying official approves the ratification but the contracting officer rejects the REA or claim (either before or after seeking ratification)?  No, it is best to read the text in a way that makes sense.  FAR 1.602-3(b)(5) does [not] say that a COR constructive change has to be handled under both procedures -- it simply says that such an action is handled under Subpart 33.2, period.

By the way, yesterday the DAU Professor issued a decision that goes along with your thought process.  

[Guest Vern Edwards]

12 hours ago, C Culham said:

The Federal government has addressed unauthorized commitments since at least 1980 if not prior to in Federal procurement regulations applicable to all agencies and/or individual agency regulations.   Left out of the FAR specifically the matter was addressed in 1988.   References in this thread support this history.   The existence of the Disputes statute has a similar if not longer history.

Through out this history of 35+ years there has been a consensus of interpretation and supporting policy and regulatory statements that provide that an unauthorized commitment must be ratified prior to an actual procurement action taking place. 

For this thread it is now suggested today based a supposed view of the plain language of a single paragraph of FAR 1.602-3, that being FAR 1.602-3(b)(5),  that converting an unauthorized commitment made by a COR, or any other Federal employee , arising under or relating to an existing contract to a equitable adjustment  can be done absent a ratification by a delegated ratifying official.  

Such interpretation does not make sense.

So Carl's interpretation of FAR 1.602-3(b)(5) is based on an historical analysis going back 35 years. He looks to the pre-FAR history to shed light on the proper interpretation of paragraph (b)(5). Well, let's look at some of that history, because I wonder if he read it closely.

Here is what the 1986 edition of the DFARS said about ratification:

Quote

201.670 Ratification of unauthorized commitments.

201.670-1 Authority.

Only contracting officers acting within the scope of their authority (see FAR 1.602) may enter into contracts on behalf of the Government. Subject to the limitations in 201.670-4 below, the Head of the Contracting Activity may ratify an unauthorized commitment, provided:

(a) The Government has obtained a benefit resulting from the unauthorized commitment;

(b) The Head of the Contracting Activity could have granted authority to enter into the commitment at the time it was made and still has the power to do so; and

(c) The resulting contract would otherwise have been proper if made by an authorized contracting officer.

***

201.670-4 Limitations on exercise of authority.

The authority in 201.670-1 above may be exercised only where—

(a) Supplies or services have been provided to and accepted by the Government;

(b) The contracting officer determines the price to be fair and reasonable;

(c) The contracting officer recommends payment and legal counsel concurs in the recommendation;

(d) Funds are available and were available at the time the unauthorized commitment was made;

(e) Administrative settlement of the unauthorized commitment would not involve a claim subject to resolution under the Contract Disputes Act of 1978.

Emphasis added. In other words, when settlement of the unauthorized commitment would involve a claim subject to resolution under the Contract Disputes Act of 1978, the authority to ratify could not be used!

The 1987 Department of State Acquisition Regulation (DOSAR) stated:

Quote

(b) The Procurement Executive may ratify an unauthorized contractual commitment if—

(1) The Government has obtained or will obtain benefit resulting from the unauthorized commitment;

(2) The Procurement Executive could have granted authority to enter into a contractual commitment at the time the unauthorized commitment was made and still has the authority to do so;

(3) The resultant contract would have met all requirements of law if made by an appropriate Contracting Officer;

(4) The contracting officer determines the price is fair and reasonable;

(5) The contracting officer recommends payment; and

(6) Funds are available and were available at the time the unauthorized contractual commitment was made.

(c) Unauthorized contractual commitments that involve claims subject to resolution under the Contracts Dispute Act of 1978 shall be processed in accordance with FAR Subpart 33.2.

Emphasis added. Note the "shall."

The Department of Transportation Acquisition Regulation (TAR) of 1987 stated:

Quote

1201.670-2 Authority.

Only contracting officers acting within the scope of their authority (see FAR 1.602) may enter into contracts, and modifications thereto, on behalf of the Government. Subject to the limitations in 1201.670-4 below, the HCA may ratify an unauthorized commitment, provided:

(a) The Government has obtained a benefit resulting from the unauthorized commitment;

(b) The HCA could have granted authority to enter into the commitment at the time it was made and still has the power to do so; and

(c) The resulting contract would otherwise have been binding on the Government if made by an authorized contracting officer.

***

1201.670-4 Limitations on exercise of authority.

The authority in 1201.670-1 may be exercised only where—

(a) Supplies or services have been provided to and accepted by the Government;

(b) The contracting officer determines the price to be fair and reasonable;

(c) An opinion has been obtained from legal counsel as to whether the acquisition is ratifiable;

(d) The contracting officer recommends payment;

(e) Funds are available and were available at the time the unauthorized commitment was made;

(f) Administrative settlement of the unauthorized commitment would not involve a claim subject to resolution under the Contract Disputes Act of 1978; and

(g) Ratification action by the HCA is documented, in writing, in the acquisition file.

Emphasis added.

So, before the addition of the FAR coverage, the FAR supplements of three executive agencies, including the big cahuna, DOD, required that an unauthorized commitment that involved a CDA claim was to be settled pursuant to that authority and not by ratification. ji20874 and I interpret the FAR coverage in a manner that is consistent with that history.

I do not know that all agency supplements of that era said the same, but I'll rest my case on the DFARS, the DOSAR, and the TAR. Using Carl's historical approach, I say that 1.602-3(b)(5) must be interpreted to mean that if an unauthorized commitment  is subject to resolution under the CDA, then that's how it should be handled, not through ratification. No ratification is necessary. The CO can handle it through negotiation and, if necessary, final decision.

By the way, the CDA approach required by FAR 1.602-3(b)(5) and that I described in my scenario is consistent with guidance provided by the Court of Claims in Globe Indemnity Co. v. U.S., 102 Ct. Cl. 21, cert. denied, 324 U.S. 852 (1944):

Quote

[C]ontracting officers and heads of departments should exercise the great powers conferred on them by these contracts to do equity: they should not feel under obligation to take advantage of technicalities, where to do so would defeat justice.

Quod erat demonstrandum.

By the way, I'm not saying to pay the contractor in every case. I'm saying only to process the issue through the lens of FAR Subpart 33.2. If the CO thinks that the contractor should be paid, why do an equitable adjustment and a ratification package? Sheer bureaucracy.

[C Culham]

ji -

1 hour ago, ji20874 said:

what if the ratifying official approves the ratification but the contracting officer rejects the REA or claim (either before or after seeking ratification)

Can't happen after.   Submission of ratification request requires....The contracting officer reviewing the unauthorized commitment determines the price to be fair and reasonable and the CO recommends payment. As for before, the CO can always recommend not ratifying but the ratifying officials decision stands and as the ratifying official must have the authority to enter into a contractual commitment the payment to the contractor will take place if the official says it will.  He/she can make it happen. 

Vern -

19 minutes ago, Vern Edwards said:

the FAR supplements of three executive agencies, including the big cahuna, DOD, required that an unauthorized commitment that involved a CDA claim was to be settled pursuant to that authority and not by ratification.

As you state this was before FAR coverage.   Like anyone the FAR Council can change  mind on what is appropriate and they did

 

20 minutes ago, Vern Edwards said:

i20874 and I interpret the FAR coverage in a manner that is consistent with that history.

The history does not matter what does is current interpretation of the FAR.  An interpretation that has only been challenged as I understand, today!  Case law of 1944 is subject to the changes in regulation and does I might add.

23 minutes ago, Vern Edwards said:

By the way, I'm saying to pay the contractor in every case. I'm saying only to process the issue through the lens of FAR Subpart 33.2. If the CO thinks that the contractor should be paid, why do an REA and a ratification package? Sheer bureaucracy.

I will give you the "not" its free. Otherwise a very weak argument as the FAR as a system (FAR 1.101) is bureaucracy so why do anything it provides guidance for?

27 minutes ago, Vern Edwards said:

Quod erat demonstrandum

Unconvinced and there are facts that support that there are others that have and will continue to agree.

Thanks for the exercise.

 

 

 

[Matthew Fleharty]

1 hour ago, ji20874 said:

Your scenario would require both procedures of FAR 1.602-3 and Subpart 33.2 -- but it is easy to see that this doesn't make sense -- what if the ratifying official approves the ratification but the contracting officer rejects the REA or claim (either before or after seeking ratification)?  No, it is best to read the text in a way that makes sense.  FAR 1.602-3(b)(5) does (NOT) say that a COR constructive change has to be handled under both procedures -- it simply says that such an action is handled under Subpart 33.2, period.

 

 

42 minutes ago, Vern Edwards said:

By the way, I'm (NOT) saying to pay the contractor in every case. I'm saying only to process the issue through the lens of FAR Subpart 33.2. If the CO thinks that the contractor should be paid, why do an REA and a ratification package? Sheer bureaucracy.

Not to be a nitpick, but for the benefit of those reading these forums I think you each forgot a "not" in the sections quoted above (I added the word in bold and underlined text where I thought it was accidently omitted).

[Matthew Fleharty]

8 minutes ago, C Culham said:

Unconvinced and there are facts that support that there are others that have and will continue to agree.

Thanks for the exercise.

C Culham,

The ratification limitations you cite throughout your previous posts and scenarios are only applicable to FAR 1.602-3(b)(2), not FAR 1.602-3(b)(5).  See below:

Quote

(c) Limitations. The authority in subparagraph (b)(2) of this subsection may be exercised only when --

(1) Supplies or services have been provided to and accepted by the Government, or the Government otherwise has obtained or will obtain a benefit resulting from performance of the unauthorized commitment;

(2) The ratifying official has the authority to enter into a contractual commitment;

(3) The resulting contract would otherwise have been proper if made by an appropriate contracting officer;

(4) The contracting officer reviewing the unauthorized commitment determines the price to be fair and reasonable;

(5) The contracting officer recommends payment and legal counsel concurs in the recommendation, unless agency procedures expressly do not require such concurrence;

(6) Funds are available and were available at the time the unauthorized commitment was made; and

(7) The ratification is in accordance with any other limitations prescribed under agency procedures.

So why would you conduct those limitation tests when there is an unauthorized commitment that falls under FAR 1.602-3(b)(5) when the FAR makes it clear they are only applicable to FAR 1.602-3(b)(2)?

[Guest Vern Edwards]

Matthew and Carl--thanks for the "not."

Carl, if history doesn't matter, why did you start your argument with a history lesson?

11 hours ago, C Culham said:

The Federal government has addressed unauthorized commitments since at least 1980 if not prior to in Federal procurement regulations applicable to all agencies and/or individual agency regulations.   Left out of the FAR specifically the matter was addressed in 1988.   References in this thread support this history.   The existence of the Disputes statute has a similar if not longer history.

Through out this history of 35+ years there has been a consensus of interpretation and supporting policy and regulatory statements that provide that an unauthorized commitment must be ratified prior to an actual procurement action taking place. 

For this thread it is now suggested today based a supposed view of the plain language of a single paragraph of FAR 1.602-3, that being FAR 1.602-3(b)(5),  that converting an unauthorized commitment made by a COR, or any other Federal employee , arising under or relating to an existing contract to a equitable adjustment  can be done absent a ratification by a delegated ratifying official.  

Such interpretation does not make sense.

Emphasis added. You accused us of "now" departing from the past on a "supposed" plain language interpretation. It appeared that is why you think our interpretation doesn't make sense. After all that history, we "now" have a new view of the policy. I don't understand how you think. I thought I was being consistent with your approach! History is what you relied on to say that ji20874 and I don't make sense. Now you say that history doesn't matter.

Jeez, man, you test a person's patience.

Here's the policy at 1.602-3(b):

Quote

(b) Policy.

(1) Agencies should take positive action to preclude, to the maximum extent possible, the need for ratification actions. Although procedures are provided in this section for use in those cases where the ratification of an unauthorized commitment is necessary, these procedures may not be used in a manner that encourages such commitments being made by Government personnel.

(2) Subject to the limitations in paragraph (c) of this subsection, the head of the contracting activity, unless a higher level official is designated by the agency, may ratify an unauthorized commitment.

(3) The ratification authority in paragraph (b)(2) of this subsection may be delegated in accordance with agency procedures, but in no case shall the authority be delegated below the level of chief of the contracting office.

(4) Agencies should process unauthorized commitments using the ratification authority of this subsection instead of referring such actions to the Government Accountability Office for resolution. (See 1.602-3(d).)

(5) Unauthorized commitments that would involve claims subject to resolution under 41 U.S.C. chapter 71, Contract Disputes, should be processed in accordance with Subpart 33.2, Disputes and Appeals.

Plain reading: Subparagraph (b)(5) says " in accordance with Subpart 33.2." It does not say: in accordance with paragraph (b)(2) of this subsection and Subpart 33.2.

I'm done.

[Jamaal Valentine]

8 hours ago, C Culham said:

… as the ratifying official must have the authority to enter into a contractual commitment the payment to the contractor will take place if the official says it will.  He/she can make it happen.

This goes back to my original question: does a ratifying official have to be a contracting officer (warranted or otherwise have designated contracting authority)?

Is there consensus that a delegation of ratification authority effectively provides authority for purposes of ratifying an unauthorized commitment covered by that delegation (warrant or no warrant)?

*I originally said warranted or otherwise because in some agencies, high level officials are designated contracting officers solely by virtue of their positions. Note, contracting officers below the level of a head of a contracting activity shall be selected and appointed under FAR 1.603.

***

I would like to thank all who took time to comment. I think this information can help a lot of people.