Ratification: consequences of unauthorized contract commitments|
Posted 4/13/2007 Updated 4/23/2007
Courtesy of Headquarters Air Force Office of Special Investigations
4/13/2007 - ANDREWS AFB, Md. -- Ratification is a term that's not discussed often, but all military and government civilian personnel should become familiar with it because disciplinary actions may be taken or they may be held personally and financially liable in certain situations.
The Federal Acquisition Regulation defines ratification as the act of approving unauthorized commitments by one with authority to do so. Unauthorized commitments are agreements made by government personnel to purchase items with federal funds.
According to the FAR, these agreements aren't binding because the government representative who made them lacked the authority to enter into such agreements on behalf of the government.
As with any other infraction of the law, there are consequences everyone must understand, said Capt. Brian Putnam, Headquarters Air Force Office of Special Investigations Command Acquisition advisor.
"Only warranted contracting officers have the authority to enter into purchase agreements and sign contracts on behalf of the government," said Captain Putnam. "Contracting officers are to consider the advice of specialists in audit, law, engineering and other fields, as appropriate, but no one other than the contracting officer has either implied or actual authority to negotiate contracts.
"The Department of Defense calls upon its employees to achieve great things under a standard of excellence," he said. "Our actions are heavily scrutinized by Congress and the American public, but we meet and, most often, exceed the expectations placed upon us. However, in this atmosphere of decreased manning and increased operations tempo, the success we work so hard to achieve sometimes gets tainted by unauthorized commitments made by those who may not understand completely what they can and cannot do when procuring supplies or services."
Unauthorized commitments take many forms, but consider these common situations:
- A squadron commander wants a microwave oven for the squadron break room. He sees one on sale at an electronics store for $99.95 and asks the squadron NCOIC to get it before the sale ends in two days. The squadron's resource advisor and her alternate are out of the office for two weeks, and no one else has access to the squadron's finances or Government Purchase Card. The NCOIC knows the microwave can be purchased on the GPC, so he buys it himself figuring he will be reimbursed when the resource advisor returns.
- A wing commander directs the purchase of 200 desktop computers and a contract is written with a computer company. Tech Sgt I. Lovemyjob, the wing's computer expert, notices the contract didn't call for the Extreme Hardware Package, which isn't required, but would make the computers more efficient. Sergeant Lovemyjob can't contact the contracting officer because fiscal year-end is keeping the contracting squadron quite busy so she calls the computer company's government sales representative, Mr. Sellitall. Mr. Sellitall tells Sergeant Lovemyjob that it will cost an additional $15,000 to upgrade the computers and still deliver on time. Since Sergeant Lovemyjob knows the commander wants the computers delivered on time, she thinks this is a pretty good deal and tells Mr. Sellitall to do the upgrade.
"Unauthorized commitments place the government in a bad position because the actions taken by the government representative obligated funds in an illegal manner," said Captain Putnam. "When an unauthorized commitment occurs, the contracting office may process a ratification.
"When someone makes an unauthorized commitment, the agreement is not binding on the government; it's between the individual and the contractor," he said. "The FAR states that agencies should expend maximum effort to avoid ratification. Thus, ratification, the act of obligating the government for the individual's debt, is not mandatory."
Local procedures may differ slightly, but the Air Force FAR Supplement delegates ratification authority to the following individuals based on the dollar amounts involved:
- $30,000 or less: the contracting office chief
- $30,001 or more: the head of the contracting activity (usually a wing commander) Regardless of the amount involved, ratification procedures are difficult, time consuming and very embarrassing for the individual who made the unauthorized commitment, he said. Additionally, payment to contractors who acted in good faith is unduly delayed, which causes the government needless embarrassment. Air Force Mandatory Procedure 5301.602-3 requires the unit commander of the one who made the unauthorized commitment to take the following actions:
- A report on the circumstances surrounding the unauthorized commitment
- A statement on corrective actions taken to prevent a recurrence of the event
- A description of disciplinary action taken or an explanation why no action was taken If the government didn't receive and accept the supplies or services, the price was not fair and reasonable, or funds were not available at the time the action was taken, the ratification authority may determine that the unauthorized commitment cannot be ratified. This means the government will not take responsibility for the act and the contractor may hold the individual who committed the act personally and financially liable.
"In the scenarios described earlier, both the NCOIC and Sergeant Lovemyjob had good intentions, but their actions were illegal," said Captain Putnam. "Remember the old adage, 'The road to hell is paved with good intentions.' They could receive disciplinary action and be made to pay for the supplies or services with their personal funds.
"The bottom line is ratification is an embarrassing, costly and time consuming process," he said. "Take precautions to avoid making unauthorized commitments. Save federal dollars and save yourself by calling the base contracting office if you have any question as to actions you wish to take."