What does FAR 1.602-3(c)(3) actually mean?? (The resulting contract would otherwise have been proper if made by an appropriate contracting officer;)

MileHighAcq said:

Based on a plain reading of this statement, it seems to imply that an action is only ratifiable if the contract would have been otherwise proper (i.e., followed all applicable regulations) except for the fact that it was someone without a warrant, or the appropriate warrant who made it.

That's exactly what it means. It doesn't "imply" it, it says it in no uncertain terms.

Of course, what it means in actual practice depends on contracting office management policy and judgment.

Just now, Vern Edwards said:

That's exactly what it means. It doesn't "imply" it, it says it in no uncertain terms.

Of course, what it means in actual practice depends on contracting office management policy and judgment.

yeah, I guess that's what I was getting at...

similar to my last post on here about verbal orders/contracts, it seems like there's a big gap between what the regs say and what we do in actual practice.

also, even from the perspective of the regs, that interpretation covers such a narrow band of unauthorized commitments (from my experience at least), why even bother with it - especially given the associated hassle (HCA approval).

MileHighAcq said:

...there's a big gap between what the regs say and what we do in actual practice.

Noticed that, have you? 🤣

A universal truth. A principle of official life. A law of survival.

MileHighAcq said:

there's a big gap between what the regs say and what we do in actual practice.

I would be interested in what you do or in other words an example of a ratification that you feel occurred that did not meet the "otherwise"?

C Culham said:

I would be interested in what you do or in other words an example of a ratification that you feel occurred that did not meet the "otherwise"?

I'm a procurement analyst, so I see my share of ratifications on their way to the HCA.

From what I've seen, many unauthorized commitments occur when a CO fails to exercise an option, but the contractor continues performance, often with the tacit approval of the COR. If the COR (or any other Government official for that matter) is aware of performance without a contract in place and doesn't take action to stop the performance, they've committed and unauthorized commitment. And since they did not make the determinations required by FAR 17.207(c) and did not extend the contract by written notice, I don't see how it's "otherwise appropriate".

Another common case is when a customer with a purchase card obtains services and they anticipate the work to come in below the micro (and sometimes they're unaware that the micro is $2,500 because the services are subject to the Service Contract Labor Standard), but when the bill comes in, it's over the micro. In such cases they committed and unauthorized commitment since they had no authority to bind the Government over the micro and had not followed publicizing, competition, set-aside, acquisition planning, etc. requirements, did not issue a written order, and if the Service Contract Labor Standards apply, would not have included a wage determination. Again, I don't see how that can be "otherwise appropriate" since it didn't follow basic regulatory requirements.

On 5/19/2023 at 3:27 PM, MileHighAcq said:

Based on a plain reading of this statement, it seems to imply that an action is only ratifiable if the contract would have been otherwise proper (i.e., followed all applicable regulations) except for the fact that it was someone without a warrant, or the appropriate warrant who made it.

So, FAR 1.602-3(c)(3) says, "The authority in paragraph (b)(2) of this subsection may be exercised only when...[t]he resulting contract would otherwise have been proper if made by an appropriate contracting officer."  I think the use of the word, "resulting" here is meaningful.  To me, the focus of what (c)(3) is asking ratifying officials to consider is NOT whether FAR procedures preceding the unauthorized commitment were followed, but whether the actual content of the agreement is proper.

For what it's worth, the Army's 4th Operational Contracting Course Deskbook (at 2-21) identifies an improper contract as one involving an improper contract type or a contract prohibited by law.

It seems the Department of Energy did not share my view that "otherwise proper" was solely about the substance of the agreement itself.  See 48 Fed. Reg. 43772 (Sept. 26, 1983) (proposed 48 CFR 901.603-71(b)) and 49 Fed. Reg. 11922 (Mar. 28, 1984) (final 48 CFR 901.603-71(b) provides in part, “As used herein, the phrase ‘otherwise proper’ means that a ratification of an unauthorized commitment can be made only if there occurred no violation of any substantive legal requirement; (e.g., there can be no ratification unless a sole source can be justified; a determination made that the contractor is not debarred or otherwise ineligible for award; the organizational conflicts of interests reviews and determinations, if required, are completed; and where all other substantive legal requirements have been met.”).  However, even under this interpretation, the agency can, after an unauthorized commitment, take steps that would make an otherwise improper contract proper.

A good source of information about ratification is the Army Contract Attorneys Deskbook.

https://tjaglcs.army.mil/documents/35956/56922/2022+Contract+Attorney+Deskbook.pdf/9a2d2125-61b4-7dbe-8e1c-5ccf1339d9dd?t=1657901660444

The topic is discussed in several places, but see page 3-12 under the heading Unauthorized Commitments.

For an interesting GAO decision, see Maintenance Service & Sales Corporation, 70 Comp. Gen. 664 (Comp.Gen.), B- 242019 (1991). The agency refused to ratify because the unauthorized commitment did not comply with the Competition in Contracting Act. The company then applied to GAO for compensation on a quantum meruit basis, under which the standard is less strict than FAR.

On 5/20/2023 at 7:02 PM, MileHighAcq said:

I'm a procurement analyst

Sorry was away for a few days.  Thank you.

Just because the discussion continues I do find it interesting that there seems a minor disconnect between the definition of  unauthorized commitment in FAR 1.602-3  and what it then takes for ratification at least by my read.   So what is an unauthorized commitment something done by an unauthorized person or something done by an unauthorized person who "otherwise" did not follow procedure?  

Vern Edwards said:

For an interesting GAO decision

Well I stopped researching as other stuff has taken over but I do wonder if somehow the quantum meruit ideal is somehow wrapped up in GAO Policy and Procedures Manual for Guidance of Federal Agencies, Title 4, Chapter 2 (FAR 1.602-3(d)) and if not why GAO would not defer to it as policy to resolve?    

I would think that rather than the HCA (or their delegated authority) doing something like this  - The request to ratify the unauthorized commitment by John Doe for your services of $2501 has been denied.  Your recourse now Contractor X is to seek resolution via GAO and GAO Policy and Procedures Manual for Guidance of Federal Agencies, Title 4, Chapter 2.

 The HCA/delegated authority might want to consider this - 

FAR 33.102 (b) If, in connection with a protest, the head of an agency determines that a solicitation, proposed award, or award does not comply with the requirements of law or regulation, the head of the agency may-

(1) Take any action that could have been recommended by the Comptroller General had the protest been filed with the Government Accountability Office;

For another competition-related (though obviously pre-CICA) example, Nash & Cibinic, Federal Procurement Law (1977), at 71 states, "Where a contracting agency purchased spark plugs on a sole source basis in violation of statutes requiring formal advertising, the agency could not subsequently legitimize the transaction by classifying spark plugs as an experimental item subject to negotiated procurement."  15 Comp. Gen. 618 (1936).  Sorry that my earlier post is wrong.

Jacques said:

So, FAR 1.602-3(c)(3) says, "The authority in paragraph (b)(2) of this subsection may be exercised only when...[t]he resulting contract would otherwise have been proper if made by an appropriate contracting officer."  I think the use of the word, "resulting" here is meaningful.  To me, the focus of what (c)(3) is asking ratifying officials to consider is NOT whether FAR procedures preceding the unauthorized commitment were followed, but whether the actual content of the agreement is proper.

For what it's worth, the Army's 4th Operational Contracting Course Deskbook (at 2-21) identifies an improper contract as one involving an improper contract type or a contract prohibited by law.

yeah, that's what I was hoping the consensus would be - that it basically meant that unless the contract was somehow illegal (e.g., fraud involved), the action could be considered "otherwise proper". but I'm not so sure, because in the typical ratification cases I see, the action was done by a COR or an end user, so there's no contract in place at all prior to the ratification. in addition, the GAO letter to the DOJ that I cite in my initial post seems to support the case that "otherwise proper" means following the regulations, since they basically say that a contract that did not include the required wage determination is not "otherwise proper" and cannot be ratified, and therefore must follow the GAO procedures pursuant to 31 U.S.C. § 71 on the basis of quantum meruit .

Jacques said:

It seems the Department of Energy did not share my view that "otherwise proper" was solely about the substance of the agreement itself.  See 48 Fed. Reg. 43772 (Sept. 26, 1983) (proposed 48 CFR 901.603-71(b)) and 49 Fed. Reg. 11922 (Mar. 28, 1984) (final 48 CFR 901.603-71(b) provides in part, “As used herein, the phrase ‘otherwise proper’ means that a ratification of an unauthorized commitment can be made only if there occurred no violation of any substantive legal requirement; (e.g., there can be no ratification unless a sole source can be justified; a determination made that the contractor is not debarred or otherwise ineligible for award; the organizational conflicts of interests reviews and determinations, if required, are completed; and where all other substantive legal requirements have been met.”).  However, even under this interpretation, the agency can, after an unauthorized commitment, take steps that would make an otherwise improper contract proper.

I'm  not a fan of this interpretation, but I think this is the most reasonable interpretation of FAR 1.602-3(c)(3).

Vern Edwards said:

A good source of information about ratification is the Army Contract Attorneys Deskbook.

https://tjaglcs.army.mil/documents/35956/56922/2022+Contract+Attorney+Deskbook.pdf/9a2d2125-61b4-7dbe-8e1c-5ccf1339d9dd?t=1657901660444

The topic is discussed in several places, but see page 3-12 under the heading Unauthorized Commitments.

For an interesting GAO decision, see Maintenance Service & Sales Corporation, 70 Comp. Gen. 664 (Comp.Gen.), B- 242019 (1991). The agency refused to ratify because the unauthorized commitment did not comply with the Competition in Contracting Act. The company then applied to GAO for compensation on a quantum meruit basis, under which the standard is less strict than FAR.

thanks Vern! hope I can find some downtime this week to get into Deskbook a bit more. the GAO decision you cite is similar to the information contained in the GAO letter to DOJ on the subject. it appears that GAO has held this view of "otherwise proper" for quite some time - which is a lot less generous than I would like.

Jacques said:

For another competition-related (though obviously pre-CICA) example, Nash & Cibinic, Federal Procurement Law (1977), at 71 states, "Where a contracting agency purchased spark plugs on a sole source basis in violation of statutes requiring formal advertising, the agency could not subsequently legitimize the transaction by classifying spark plugs as an experimental item subject to negotiated procurement."  15 Comp. Gen. 618 (1936).  Sorry that my earlier post is wrong.

so going as far back as 1977, GAO seems to have held that "otherwise proper" means having followed applicable laws and regulations. based on that interpretation, I just don't see how most unauthorized commitments are ratifiable under FAR 1.602-3.

That Comptroller General decision from 1936 continues to be cited in McBride & Touhey, 1 Government Contracts: Law, Administration & Procedures § 4.60[4][b].  I think the idea is, if the substantive law can be complied with prior to ratification, then it is within the ratifying official's authority to ratify.

Jacques said:

That Comptroller General decision from 1936 continues to be cited in McBride & Touhey, 1 Government Contracts: Law, Administration & Procedures § 4.60[4][b].  I think the idea is, if the substantive law can be complied with prior to ratification, then it is within the ratifying official's authority to ratify.

I agree. but I think the basic rules governing the acquisition process (funding, publicizing, competition, set-aside, wage rates) are all based on substantive laws. maybe things like not having done acquisition planning, market research, price reasonableness, evaluation and award, etc. can be corrected and if the substantive aspects of the laws and regulations were followed, the action ratified, but otherwise, I think the recourse for contractors is to apply to GAO for relief under quantum meruit.

On 5/22/2023 at 9:45 AM, MileHighAcq said:

...but otherwise, I think the recourse for contractors is to apply to GAO for relief under quantum meruit.

I would think the first place to look when an unauthorized commitment can't be ratified would be FAR Part 50, but I don't have any personal experience with that.

EDIT:  I see FAR 1.602-3(d) now, but see National Parks Serv. Contract--Payments to Subcontractors, B-303906, Dec. 7, 2004.

@Jacques @MileHighAcq

Please explain what you mean by "substantive law." Substantive law versus what other kind? Why not just "law"?

Vern, I suspect what the drafters of the Department of Energy language had in mind was that purely procedural requirements did not necessarily have to be followed at the time of the unauthorized commitment.

Not that the 1936 decision is all that important to the discussion, but I attach it here since it is hard to find.

Comptroller Gen. McCarl to the Sec'y of War , 1936 U.S. Comp. Gen. LEXIS 20.pdf

EDIT:

At the time of the memorandum in The Department of Energy’s Ratification of Informal Commitments and Use of Precontract Cost Authorizations, B-197057 O.M., Aug. 22, 1980, the Federal Procurement Regulation, 41 CFR 1-1.405 provided:

Quote

Execution of otherwise proper contracts made by individuals without contracting authority, or by contracting officers in excess of the limits of their delegated authority may be later ratified. ***  Generally such ratification may be made only by an official on whose behalf the contract was made and then only (a) if he could have given authority to enter into the contract before it was awarded and (b) if he still has power to do so at the time of the ratification.

(emphasis added).  (This is the civilian agency predecessor to what we're discussing.)  The Comptroller General noted in the memorandum, “Under the terms of the quoted regulation, an informal commitment may be ratified only if the commitment could have been properly made by the contracting officer in the first place.  In other words, a contracting officer cannot ratify an agreement which does not include the clauses and conditions required by law or regulations, which would violate any substantive legal requirement, or which would be in excess of the contracting officer's authority.  For example, a contracting officer may not ratify a sole-source commitment of a program official if a sole-source procurement would not have been proper in the first instance or would not be proper at the time of the ratification.” (emphasis added).

Vern Edwards said:

@Jacques @MileHighAcq

Please explain what you mean by "substantive law." Why not just "law"?

I don't think this is quite how we were using it, but since you asked...

Law which governs the original rights and obligations of individuals. Substantive law may derive from the common law, statutes, or a constitution. Substantive law is contrasted with procedural law. 

https://www.law.cornell.edu/wex/substantive_law 

Substantive law is the set of laws that governs how members of a society are to behave.[1] It is contrasted with procedural law, which is the set of procedures for making, administering, and enforcing substantive law.[1] Substantive law defines rights and responsibilities in civil law, and crimes and punishments in criminal law.[1] It may be codified in statutes or exist through precedent in common law.

https://en.wikipedia.org/wiki/Substantive_law

Substantive law and procedural law are terms used to describe and distinguish two different types of law:

Substantive law establishes the rights and obligations that govern people and organizations; it includes all laws of general and specific applicability.
Procedural law establishes the legal rules by which substantive law is created, applied and enforced, particularly in a court of law.

In the United States, both of these types of law are derived from a variety of sources, including common law, constitutions, legislatively enacted statutes, and judicial decisions.

https://ballotpedia.org/Substantive_law_and_procedural_law

I think some laws, like CICA, are foundational for government procurement. others are just laws.

So now we have substantive law, procedural law, and foundational law?

How does this terminology help us to understand ratification?

Vern Edwards said:

So now we have substantive law, procedural law, and foundational law?

How does this terminology help us to understand ratification?

oh yeah, and don't forget annoying law and impossible to understand law (e.g. Buy American Act) too!

on a serious note though, I think it helps us understand what "otherwise proper" means. I suppose you can take an absolutist approach to it and say that either the unauthorized commitment complies with ALL applicable laws and regulations and is therefore ratifiable, or it doesn't and therefore it's not ratifiable. and maybe that's the textbook answer. but I think in the real world people recognize that such an approach isn't practical and looking at whether the unauthorized commitment complied with substantive laws makes more sense. just trying to bridge that "wide gap between what the regs say and what we do in actual practice".

MileHighAcq said:

...I suppose you can take an absolutist approach to it and say that either the unauthorized commitment complies with ALL applicable laws and regulations and is therefore ratifiable, or it doesn't and therefore it's not ratifiable...

I think you need to focus on the authority of the ratifying official, rather than on the unauthorized commitment.  By way of example, make a change to the facts in In Sec'y of War, A-66806, Jan. 16, 1936, 15 Comp. Gen. 618.  Instead of the agency claim the spark plugs were for "experimental purposes," assume the agency COULD come up with a valid post-hoc rationalization for the sole source award.  Would the contract then have been illegal?  It seems to me the answer would be the resulting contract was legal.  In other words, if the Army could have come up with a valid after-the-fact explanation for the sole source award, the GAO would have accepted it and permitted the ratification.

It seems to me if the Government can reform (what would have been) an illegal contract to make it legal, that contract may be ratified.  Perhaps another example:  Say the only illegality in an unauthorized commitment was that it omitted the "Restrictions on the Use of Mandatory Arbitration Agreements" clause at DFARS 252.222-7006 even though the clause was prescribed.  It seems to me the parties can "reform" the unauthorized commitment in the process of awarding a proper contract ratifying the unauthorized commitment to include the mandatory clause, and that would be within the authority of the ratification approval authority.  This is true despite the fact that, in the absence of the clause, one might reasonably describe the resulting  contract as illegal.

Jacques said:

I think you need to focus on the authority of the ratifying official, rather than on the unauthorized commitment.  By way of example, make a change to the facts in In Sec'y of War, A-66806, Jan. 16, 1936, 15 Comp. Gen. 618.  Instead of the agency claim the spark plugs were for "experimental purposes," assume the agency COULD come up with a valid post-hoc rationalization for the sole source award.  Would the contract then have been illegal?  It seems to me the answer would be the resulting contract was legal.  In other words, if the Army could have come up with a valid after-the-fact explanation for the sole source award, the GAO would have accepted it and permitted the ratification.

It seems to me if the Government can reform an illegal contract to make it legal, that contract may be ratified.  Perhaps anther example:  Say the only illegality in an unauthorized commitment was that it omitted the "Restrictions on the Use of Mandatory Arbitration Agreements" clause at DFARS 252.222-7006 even though the clause was prescribed.  It seems to me the parties can "reform" the unauthorized commitment in the process of awarding a proper contract ratifying the unauthorized commitment to include the mandatory clause, and that would be within the authority of the ratification approval authority.  This is true despite the fact that, in the absence of the clause, one might reasonably describe the resulting  contract as "illegal."

I think this only works if you use the looser interpretation of "otherwise proper" - i.e. that the contract is illegal or improper because it doesn't have required clauses or wage determinations. If that's how you interpret "otherwise proper", then yes, the contract could be made proper by modifying it to add the necessary clauses. But if hold to a stricter interpretation of "otherwise proper" to encompass the whole process and not just the resultant contract, then I don't think any amount of after-the-fact modifying and justifying will get you there. Competition is just one aspect of the procurement. The agency would also have had to justify not publicizing and possibly not following set-aside requirements among other things after the fact.

MileHighAcq said:

I think this only works if you use the looser interpretation of "otherwise proper" - i.e. that the contract is illegal or improper because it doesn't have required clauses or wage determinations. If that's how you interpret "otherwise proper", then yes, the contract could be made proper by modifying it to add the necessary clauses. But if hold to a stricter interpretation of "otherwise proper" to encompass the whole process and not just the resultant contract, then I don't think any amount of after-the-fact modifying and justifying will get you there. Competition is just one aspect of the procurement. The agency would also have had to justify not publicizing and possibly not following set-aside requirements among other things after the fact.

I guess I need to better understand what folks think the phrase "resulting contract" means under your second interpretation.

Jacques said:

I guess I need to better understand what folks think the phrase "resulting contract" means under your second interpretation.

to me it means the contract that resulted from the action - in this case, the unauthorized commitment. but for a resulting contract to be proper, it must have followed required laws and regulations in how it was put in place. it isn't just the contract itself. indeed, as I indicated above, most of the ratifications I see don't even have a contract in place until the HCA ratifies the action, and then we put a bilateral contract in place as part of the ratification process. so obviously the contract vehicle that results from the ratification is "proper", and prior to that, there was no contract in place. which again makes me think that FAR 1.602-3 really only applies (from a practical standpoint) to a narrow set of unauthorized commitments committed by acquisition personnel and they actually follow the FAR requirements and put a contract in place and the only issue is that they did not have the proper authority to sign the contract. but when the unauthorized commitment is done by a COR or an end user, they will not have followed the process for putting a contract in place, and indeed, there's not a contract in place until the ratification is approved.

MileHighAcq said:

to me it means the contract that resulted from the action - in this case, the unauthorized commitment. but for a resulting contract to be proper, it must have followed required laws and regulations in how it was put in place. it isn't just the contract itself. indeed, as I indicated above, most of the ratifications I see don't even have a contract in place until the HCA ratifies the action, and then we put a bilateral contract in place as part of the ratification process. so obviously the contract vehicle that results from the ratification is "proper", and prior to that, there was no contract in place. which again makes me think that FAR 1.602-3 really only applies (from a practical standpoint) to a narrow set of unauthorized commitments committed by acquisition personnel and they actually follow the FAR requirements and put a contract in place and the only issue is that they did not have the proper authority to sign the contract. but when the unauthorized commitment is done by a COR or an end user, they will not have followed the process for putting a contract in place, and indeed, there's not a contract in place until the ratification is approved.

I appreciate that the conditional nature of the language at FAR 1.602-3(c)(3)--"would otherwise have been proper"--could lead to that interpretation, but I don't think it is the right one.  Again, the FAR reads, "The authority in paragraph (b)(2) of this subsection [which is the authority of the head of the contracting activity (as delegated under (b)(3)) to ratify an unauthorized commitment] may be exercised only when...[t]he resulting contract would otherwise have been proper if made by an appropriate contracting officer."  The unauthorized commitment is not a contract.  I think the "resulting contract" is the one awarded in conjunction with the ratification.  Nash & Cibinic, Formation of Government Contracts (4th Ed. 2011), at 102 notes, "They [courts and boards] have recommended, however, that ratification authority be liberally exercised in cases where an injustice would result if the government did not become bound.  See Globe Indem. Co. v. United States, 102 Ct. Cl. 21 (1944), cert. denied, 324 U.S. 825 (1945)..."

Jacques said:

I appreciate that the conditional nature of the language at FAR 1.602-3(c)(3)--"would otherwise have been proper"--could lead to that interpretation, but I don't think it is the right one.  Again, the FAR reads, "The authority in paragraph (b)(2) of this subsection [which is the authority of the head of the contracting activity (as delegated under (b)(3)) to ratify an unauthorized commitment] may be exercised only when...[t]he resulting contract would otherwise have been proper if made by an appropriate contracting officer."  The unauthorized commitment is not a contract.  I think the "resulting contract" is the one awarded in conjunction with the ratification.  Nash & Cibinic, Formation of Government Contracts (4th Ed. 2011), at 102 notes, "They [courts and boards] have recommended, however, that ratification authority be liberally exercised in cases where an injustice would result if the government did not become bound.  See Globe Indem. Co. v. United States, 102 Ct. Cl. 21 (1944), cert. denied, 324 U.S. 825 (1945)..."

I like your thinking, because that's how we've been interpreting it - perhaps subconsciously. I've seen responses in the D&F to this requirement along the lines of "if the action had been done by a contracting officer the required regulations would have been followed" and I was like sure, works for me! I've never given that sentence much thought before and maybe because I saw one response that didn't quite make sense to me I started thinking about what that statement actually meant and I think I was getting wrapped around the axle in my head about it.

Quote

The unauthorizedcommitment is not a contract.  I think the "resulting contract" is the one awarded in conjunction with the ratification

I’ve seen quite a few contract files across agencies involving ratifications.  In many instances, the contracts include a statement similar to “this contract results from an authorized commitment ratified by (title of official) on (date).”  The contract contains appropriate clauses and narrative to cover necessary details of the transaction.  I feel this is the best way to handle the matter.

Confusion reigns.

There is no reason to be confused about FAR 1.602-3(c)(3).

There are two problems:

1. lack of authority to contract; and
2. noncompliance with law and regulation.

Cibinic and Nash discuss these matters in Formation of Government Contracts, 4th ed., Chapter 1., Basic principles of Federal Procurement. They discuss the authority problem in Section III, Authority of Government and Contractor Personnel, Subsection A, Government Personnel. They discuss the noncompliance problem in Chapter 1, Section II, Contracting Powers, Subsection C, Contracts Varying from Statutory or Regulatory Requirements.

Ratification (see the definition at FAR 1.602-3(a)) can solve the first problem. It cannot solve the second, which explains FAR 1.602-3(c)(3). The authority to contract does not include the authority to enter into a contract in violation of law or regulation. See FAR 1.602-1. That includes ratifying officials. They cannot ratify an unauthorized commitment that, in addition to being made by a person without authority, did not conform to law or regulation. See FAR 1.602-3(c)(2). See also Cibinic and Nash, pages 102-103, under the heading, Authority to Perform or Authorize Acts Being  Ratified: "[I]legal actions cannot be ratified because officials lack the authority to enter into illegal agreements."

As for quantum meruit recovery, that's too complicated a matter to address here, but there is a huge literature about it.

Vern Edwards said:

Confusion reigns.

There are two problems:

1. lack of authority to contract; and
2. noncompliance with law and regulation.

Cibinic and Nash discuss these matters in Formation of Government Contracts, 4th ed., Chapter 1., Basic principles of Federal Procurement. They discuss the authority problem in Section III, Authority of Government and Contractor Personnel, Subsection A, Government Personnel. They discuss the noncompliance problem in Chapter 1, Section II, Contracting Powers, Subsection C, Contracts Varying from Statutory or Regulatory Requirements.

Ratification (see the definition at FAR 1.602-3(a)) can solve the first problem. It cannot solve the second, which explains FAR 1.602-3(c)(3). The authority to contract does not include the authority to enter into a contract in violation of law or regulation. See FAR 1.602-1. That includes ratifying officials. See FAR 1.602-3(c)(2). See also Cibinic and Nash, pages 102-103, under the heading, Authority to Perform or Authorize Acts Being  Ratified: "[I]legal actions cannot be ratified because officials lack the authority to enter into illegal agreements."

As for quantum meruit recovery, that's too complicated a matter to address here, but there is a huge literature about it.

yeah, confusing for sure. and I think the crux of the matter keeps coming down to whether we are talking only about the resulting contract being legal (terms and conditions compliant with laws and regulations, non-fraudulent purpose, etc.) or about following laws and regulations throughout the process of putting the contract in place. I'm not sure I'm any the wiser about it at this point than I was when I posed the question, but we sure have ratified a lot of unauthorized commitments where the process for putting a contract in place was not followed.

@MileHighAcq 

MileHighAcq said:

the process of putting the contract in place

Give us some examples of such a "process." I say that an unauthorized commitment made on a sole source basis without first preparing and obtaining a J&A cannot be ratified. Is preparing and obtaining a J&A such a "process"?

Could the agency refuse to ratify such a commitment, but then prepare a J&A and award a contract properly to the same company? Yes. But that would not be a ratification of the unauthorized commitment. It would be a proper award.

Do you understand?

Vern Edwards said:

@MileHighAcq 

Give us some examples of such a "process." I say that an unauthorized commitment made on a sole source basis without first preparing and obtaining a J&A cannot be ratified. Is preparing and obtaining a J&A such a "process"?

Could the agency refuse to ratify such a commitment, but then prepare a J&A and award a contract properly to the same company? Yes. But that would not be a ratification of the unauthorized commitment. It would be a proper award.

Do you understand?

yeah, by process I mean things like obtaining a funded PR, conducting and documenting market research and acquisition planning, completing the small business screening form (i.e. set-aside considerations), publicizing to the GPE, soliciting, evaluating, determining price reasonableness, determining contractor responsibility, and awarding. completing a J&A after the fact is one thing (and that's assuming that the sole source can actually be justified), but can you complete all these steps in the process after the fact to make an unauthorized commitment into a proper award? I have a hard time seeing that.

Vern Edwards said:

@MileHighAcq 

I say that an unauthorized commitment made on a sole source basis without first preparing and obtaining a J&A cannot be ratified.

McGraw-Hill Info. Sys. Co, B-210808, May 24, 1984, dealt with a ratification issue under the Federal Procurement Regulation, 41 CFR 1-1.405.  That regulation contains the same "otherwise proper" language contained in the current FAR.  The decision includes the following:

Quote

In applying this provision, there has been some variation in how agencies have interpreted "otherwise proper contracts."

In our view "otherwise proper" does not necessarily connote "otherwise perfect." Where the ratification is of a contract made by an unauthorized, and presumably inexperienced, individual, procedural defects (in addition to the lack of authority) are not unlikely. Therefore, if § 1-1.405 is to have any practical application, ratification of an unauthorized contract which also contains other minor deviations must be considered within the scope of agency discretion. On the other hand, if the defects are such that the contract could not have been properly made at the time, § 1-1.405 ratification is inappropriate.

The test is not whether the contract WAS properly made at the time of the unauthorized commitment, the question is whether it could have been properly made had proper procedures been followed.

MileHighAcq said:

I mean things like obtaining a funded PR, conducting and documenting market research and acquisition planning, completing the small business screening form (i.e. set-aside considerations), publicizing to the GPE, soliciting, evaluating, determining price reasonableness, determining contractor responsibility...

There is no blanket answer that covers all processes. The processes you listed are not all alike.

Failure to carry out a purely administrative process like obtaining a funded PR or conducting and conducting acquisition planning should preclude ratification.

But I do not think ratification can be based on after-the-fact conduct of processes like determining price reasonableness, determining contractor responsibility, publicizing at the GPE, making a set-aside decision, and preparing and obtaining a J&A. Those are statutory and regulatory requirements that must be met before an award can be made. To ratify it would be to authorize a commitment that was made in violation of the law. A ratifying official has no authority to do that. See FAR 1.602-1(c)(3).

What can be done is to refuse to ratify and then conduct those processes and make an award in accordance with the law. If the company to whom the unauthorized commitment was made wins the contract, it can use any work it did pursuant to the unauthorized commitment If it does not win it can seek compensation on a quantum meruit basis or accept it loss and move on.

Jacques said:

The test is not whether the contract WAS properly made at the time of the unauthorized commitment, the question is whether it could have been properly made had proper procedures been followed.

I state the test this way:

1.602-3(c)(3): "The resulting contract would otherwise have been proper if made by an appropriate contracting officer[.]"

In other words, would it have been legal for an appropriate contracting officer to have made the same contract in the same way?

In other words, ratification may be done only if the only defect in the contracting process was lack of authority.

Ratification cures lack of authority, but not other legal defects. A ratifying official cannot waive illegality.

Jacques said:

The test is not whether the contract WAS properly made at the time of the unauthorized commitment, the question is whether it could have been properly made had proper procedures been followed.

well that's confusing as hell because what contract COULD not have been made properly if the proper procedures were followed? seems to me like that would apply to just about any unauthorized commitment other than just plain illegal ones (i.e., those involving fraud or some other illegal purpose). am I missing something here?

The discussion in McGraw-Hill Info. Sys. Co, B-210808 does remind me of the earlier discussion about substantive laws vs procedural ones though.

Vern Edwards said:

There is no blanket answer that covers all processes. The processes you listed are not all alike.

Failure to carry out a purely administrative process like obtaining a funded PR or conducting and conducting acquisition planning should preclude ratification.

But I do not think ratification can be based on after-the-fact conduct of processes like determining price reasonableness, determining contractor responsibility, publicizing at the GPE, making a set-aside decision, and preparing and obtaining a J&A. Those are statutory and regulatory requirements that must be met before an award can be made. To ratify it would be to authorize a commitment that was made in violation of the law. A ratifying official has no authority to do that. See FAR 1.602-1(c)(3).

Reminds me of the earlier discussion about "substantive" vs "procedural" laws. I agree with you - there is a difference in not adhering to some fundamental laws vs not adhering to more procedural regulations like conducting and documenting market research and acquisition planning, solicitation and evaluation, etc.

Vern Edwards said:

I state the test this way:

1.602-3(c)(3): "The resulting contract would otherwise have been proper if made by an appropriate contracting officer[.]"

In other words, would it have been legal for an appropriate contracting officer to have made the same contract in the same way?

which then takes the focus off the "resulting contract" and on to the process itself. did the process itself follow appropriate laws and regulations. and then we need to distinguish between which ones are deal breakers and which ones can be remedied or ignored, because as GAO said, we're not looking for "otherwise perfect".

MileHighAcq said:

Reminds me of the earlier discussion about "substantive" vs "procedural" laws. I agree with you - there is a difference in not adhering to some fundamental laws vs not adhering to more procedural regulations like conducting and documenting market research and acquisition planning, solicitation and evaluation, etc.

The decision cited and quoted by Jacques indicates the distinction:

Quote

In our view ‘otherwise proper’ does not necessarily connote ‘otherwise perfect.’ Where the ratification is of a contract made by an unauthorized, and presumably inexperienced, individual, procedural defects (in addition to the lack of authority) are not unlikely. Therefore, if § 1–1.405 is to have any practical application, ratification of an unauthorized contract which also contains other minor deviations must be considered within the scope of agency discretion. On the other hand, if the defects are such that the contract could not have been properly made at the time, § 1–1.405 ratification is inappropriate.

Emphasis added.

In my view, failure to execute a procedure required by law or regulation and concerning which no discretion is afforded to contracting officials, would preclude ratification.

MileHighAcq said:

which then takes the focus off the "resulting contract" and on to the process itself.

No. Contracting process, contract form, and contract content all matter.

Vern Edwards said:

In my view, failure to execute a procedure required by law or regulation and concerning which no discretion is afforded to contracting officials, would preclude ratification.

that's a pretty strict standard! if something is open to the discretion of contracting officials, then it wouldn't be a "minor deviation" from regulatory requirements. it seems to me that the GAO is opening a the door a bit that an action that didn't strictly follow regulatory requirements may still be ratifiable as long as the deviations from regulations can be considered minor. no?

Vern Edwards said:

No. Contracting process and contract form and content all matter.

agree. what I should have said (and meant in my mind) was that it broadens the focus to include the process as well, not just the resulting contract. my bad.

MileHighAcq said:

that's a pretty strict standard!

Consider the behavior it aims prevent.

In contrast, generally, recovery may be implied in law under quantum meruit or quantum valebant when the government would be unjustly enriched if it were allowed to keep goods or services without paying for them.

Two separate processes and standards for different mischiefs.

Jamaal Valentine said:

Consider the behavior it aims prevent.

By "it," I assume you mean not being liberal in ratifying unauthorized commitments.  I'm curious, @Jamaal Valentine, why you think, in the face of a valid post-hoc rationalization for a sole source award, the contractor should NOT receive the benefit of the bargain (assuming the only thing preventing the ratification is (presumably Vern's interpretation of) FAR 1.602-3(b)(3))?

I know most of this conversation has focused on competition requirements, but what if the illegality at the time of the unauthorized commitment was, for a DoD contract, failing to include the "Restrictions on the Use of Mandatory Arbitration Agreements" clause at DFARS 252.222-7006 in the agreement between the contractor and the person without authority to bind the Government?  I hope we can all agree that the ratifying official doesn't have authority to award the resulting contract without that clause (in the case of a DoD contracting activity).  Should the contractor not get the benefit of his bargain, even if the contractor was continuously in compliance with the clause between the unauthorized commitment and the potential ratification, and the other requirements for a ratification were present, like a fair and reasonable price (FAR 1.602-3(c)(4))?

I don't see how the interpretation of "proper" for which I've been advocating is unfair to the Government.  I certainly can see the potential for a strict interpretation to be unfair to vendors.  In my experience, the vendors that perform in the absence of a valid contract are not sophisticated.  If they don't know enough to avoid working under an unauthorized commitment, are they going to educate themselves to know about FAR Subpart 50.1?  Is the Government working these ratification packages quickly enough to not prejudice the contractor's potential remedies under FAR Subpart 50.1?  See, e.g., the 6 month limit at FAR 50.102-3(d)(1).

EDIT:  I don't normally engage in policy discussions.  The reasons I interpret FAR 1.602-3(c)(3) the way I do is because of the various decisions, memoranda, and commentary I've read, not for the policy reasons discussed in this post.  I think the heart of @Jamaal Valentine's post is a policy argument, so I (perhaps foolishly) responded.

Assume for sake of argument the disagreement in this thread is one where reasonable minds differ, and that I'm not just being a mule.  Assume a ratifying official thinks I might be right but isn't convinced.  (It's my hypothetical, it doesn't have to be realistic.)  How would a ratifying official go about coming to an authoritative resolution?

I personally don't think it is within the contracting chain.  As a practical matter, I think if the ratifying official decided to ratify based on my interpretation, that decision is not really reviewable within the contracting chain.  (Assume some competitor of the vendor learned of the Government post-hoc rationalization for the sole source award and protested to the GAO.  My reading of the decisions related to protests of sole source awards is that the GAO would consider the post-hoc justification, so the GAO likely wouldn't render some authoritative interpretation of FAR 6.302-3(c)(3) in the decision denying the protest (assuming the justification withstood scrutiny).)

I think the better way to get a direct answer to the issue would involving getting a financial manager (FM) to push back on implementing the ratification, perhaps at the encouragement of the ratifying official.  I think the FM could request an advance decision on whether the obligation of funds in connection with the ratification was proper.

(I point this out not in invite "lawlessness" on the part of ratifying officials.)

Jacques said:

EDIT:  I don't normally engage in policy discussions.

Your question is a good one in my estimation.   Discretion comes in when the decision is made to not ratify does it not?  Consider the once under $2500 service that extends to $3,000 or Option not extended that would have been anyway.   And considering your immediate post afterwards why fiscal why not a CO (inclusive of the HCA's delegate)?   Afterall all conflicts are to be resolved at the lowest level (my words) are they not?  Even though not ratified I still see it in the lane of the guiding principles of the  FAR, was it a contract or not?  

In the end it all depends on every single fact of the instant unauthorized commitment but if all the other considerations of FAR 1.602-3(c) except (3) why wouldn't the agency exercise their discretion provided by the guiding principles of the FAR with regard to whether a contractor should be paid or not?   References FAR 1.602-3(4) along with FAR 33.102(b) or 1.602-3(5) along with FAR 33.204.

Jacques said:

I'm curious, @Jamaal Valentine, why you think, in the face of a valid post-hoc rationalization for a sole source award, the contractor should NOT receive the benefit of the bargain (assuming the only thing preventing the ratification is (presumably Vern's interpretation of) FAR 1.602-3(b)(3))?

Can you identify where I said this? I don’t think I did because it wouldn’t make sense since the seller could seek quasi-contractual relief under quantum meruit or quantum valebant.

Jacques said:

I know most of this conversation has focused on competition requirements, but what if the illegality at the time of the unauthorized commitment was, for a DoD contract, failing to include the "Restrictions on the Use of Mandatory Arbitration Agreements" clause at DFARS 252.222-7006 in the agreement between the contractor and the person without authority to bind the Government?

Under FAR 1.401(b), “[t]he omission of any solicitation provision or contract clause when its prescription requires its use” is a deviation from FAR. This is the kind of thing a ratifying official can ratify, assuming the deviation is within their authority/discretion.

DFARS 252.222-7006 is not required in all contracts and applicability to a particular contract or subcontract is waiverable.

Maybe ratifying officials are better suited for these types of actions and administrative law judges [types] are better suited for the other.

Jacques said:

Assume for sake of argument the disagreement in this thread is one where reasonable minds differ, and that I'm not just being a mule.  Assume a ratifying official thinks I might be right but isn't convinced.  (It's my hypothetical, it doesn't have to be realistic.)  How would a ratifying official go about coming to an authoritative resolution?

The plain language is clear and unambiguous and does not lead to an absurd result. Thus, apply the plain meaning rule.

Moreover, we have to give meaning to the rest of FAR, which provides a mechanism for resolving actions that cannot be ratified under the subpart.

 Finally, we have case law that supports this interpretation.

Sorry.  When I say, "benefit of the bargain," I mean the price agreed to between the vendor and the individual lacking authority who attempted to enter into the contract.  That number isn't always the same as "as much as he deserves" or "as much as they were worth."

I'm really super curious about the significance of your discussion of deviations.  Please help me connect the dots as to why it is relevant to this discussion.  If the ratifying official and the vendor cannot reform the agreement to make it legal, then you would never get to whether or not a deviation is possible.  (By the way, not to complicate matters, but I think a deviation from including the clause at FAR 252.222-7006 is "precluded by law," to quote FAR 1.402.)

Jamaal Valentine said:

The plain language is clear and unambiguous and does snot lead to an absurd result. Thus, apply the plain meaning rule.

The point of my post wasn't to force an unwilling ratifying official to look elsewhere for help.  If the ratifying official wants to deny ratification, that decision isn't really subject to review.  For some folks, the fact it isn't subject to review is proof enough that the decision is entrusted to the discretion of the decision maker.  Others might want to dig a little deeper.

I think you are getting overwhelmed and I’m not sure what you know about ’institutional ratifications’ and the FAR System. However, not all clauses are mandated by law.

It might be helpful to focus on a specific fact pattern rather than abstractions. I don’t want to misled or be misunderstood.

Jacques said:

The point of my post wasn't to force an unwilling ratifying official to look elsewhere for help.  If the ratifying official wants to deny ratification, that decision isn't really subject to review.  For some folks, the fact it isn't subject to review is proof enough that the decision is entrusted to the discretion of the decision maker.  Others might want to dig a little deeper.

What do you mean isn’t subject to review? Review by whom? I’ve been a ratifying official and my decisions were surely subject to review.

Jamaal Valentine said:

What do you mean isn’t subject to review? Review by whom? I’ve been a ratifying official and my decisions were surely subject to review.

I meant review outside the contracting functional chain of your organization.

Jamaal Valentine said:

I think you are getting overwhelmed and I’m not sure what you know about’ institutional ratifications.’

The OP is about the meaning of FAR 1.602-3(c)(3), so let's limit the discussion to ratifications under FAR 1.602-3, please.

Jacques said:

The OP is about the meaning of FAR 1.602-3(c)(3), so let's limit the discussion to ratifications under FAR 1.602-3, please.

So what is your question as it relates to this? Assuming you have one, please be clear and concise. Otherwise, I’ll continue enjoying your commentary. Cheers!

Jacques said:

How would a ratifying official go about coming to an authoritative resolution?

😂 Ask their lawyer for a written opinion. That is what I'd do before ratifying anything. To quote Bogie, "I stick my neck out for nobody."

Jamaal Valentine said:

So what is your question as it relates to this? Assuming you have one, please be clear and concise. Otherwise, I’ll continue enjoying your commentary. Cheers!

I think the question is in the title of the thread - what does "resulting contract would otherwise have been proper" mean?

it seems there are two schools of thought on the matter - 1. that it's really the "resulting contract" being proper that matters, and 2. it's both the "resulting contract" and the process by which the contract was put in place that must be "otherwise proper" for the action to be ratifiable. In other words, can a "resulting contract" be considered "otherwise proper" if all the regulatory requirements were not followed?

Jacques said:

I'm really super curious about the significance of your discussion of deviations.  Please help me connect the dots as to why it is relevant to this discussion.  If the ratifying official and the vendor cannot reform the agreement to make it legal, then you would never get to whether or not a deviation is possible.  (By the way, not to complicate matters, but I think a deviation from including the clause at FAR 252.222-7006 is "precluded by law," to quote FAR 1.402.)

The deviation from FAR approval authority and ratifying official(s) are likely contracting officers by certificate of appointment or by virtue of their position (e.g., Agency Head or HCA). If a FAR deviation is what is keeping the resulting contract from being otherwise proper, the certain officials could remedy this if they may deviate from FAR. Thus, the resulting contract would otherwise have been proper if made by an appropriate contracting officer (e.g., Agency Head or HCA).

Also, DFARS 252.222-7006’s applicability to a particular contract or subcontract is waiverable.

NOTE: “the head of the contracting activity, unless a higher level official is designated by the agency, may ratify an unauthorized commitment.” FAR 1.602-3(b)

MileHighAcq said:

I think the question is in the title of the thread - what does "resulting contract would otherwise have been proper" mean?

I understand your question. I was asking Jacques about any question he may have.

MileHighAcq said:

In other words, can a "resulting contract" be considered "otherwise proper" if all the regulatory requirements were not followed?

I believe the answer is yes [it can]. I offered the deviation from FAR as one example. Remember, the FAR System includes agency supplements.

While “[n]o contract shall be entered into unless the contracting officer ensures that all requirements of … regulations, and all other applicable procedures, including clearances and approvals, have been met,” I believe Agency Heads and HCAs can deviate from or waive some of these requirements. I believe they may do so through ratifications.

Jamaal Valentine said:

While “[n]o contract shall be entered into unless the contracting officer ensures that all requirements of … regulations, and all other applicable procedures, including clearances and approvals, have been met,” I believe Agency Heads and HCAs can deviate from or waive some of these requirements. I believe they may do so through ratifications.

In Formation, Cibinic and Nash discuss deviations and waivers in pages 69-72.

Jamaal Valentine said:

The deviation from FAR approval authority and ratifying official(s) are likely contracting officers by certificate of appointment or by virtue of their position (e.g., Agency Head or HCA). If a FAR deviation is what is keeping the resulting contract from being otherwise proper, the certain officials could remedy this if they may deviate from FAR. Thus, the resulting contract would otherwise have been proper if made by an appropriate contracting officer (e.g., Agency Head or HCA).

Also, DFARS 252.222-7006’s applicability to a particular contract or subcontract is waiverable.

NOTE: “the head of the contracting activity, unless a higher level official is designated by the agency, may ratify an unauthorized commitment.” FAR 1.602-3(b)

wouldn't it be easier to just modify the contract to add the missing clause? assuming I guess that it's just an oversight and there isn't some valid reason for not having the clause in the contract.

Jamaal Valentine said:

I believe the answer is yes [it can]. I offered the deviation from FAR as one example. Remember, the FAR System includes agency supplements.

While “[n]o contract shall be entered into unless the contracting officer ensures that all requirements of … regulations, and all other applicable procedures, including clearances and approvals, have been met,” I believe Agency Heads and HCAs can deviate from or waive some of these requirements. I believe they may do so through ratifications.

so are you saying is that in choosing to ratify an action, the HCA is in essence waiving process requirements and deviating from contract requirements (Ts&Cs), which they have the authority to do? in that case a ratification is the ratifying official saying even though the "resulting contract" is not "otherwise proper" because it was not done by a CO and the appropriate processes weren't followed, by ratifying the action, I'm essentially waiving the process requirements and deviating from any contract requirements - which is within my authority. is that basically it?

MileHighAcq said:

wouldn't it be easier to just modify the contract to add the missing clause?

Sure. I’ll go as far as saying this is the most likely course of action throughout government. Nonetheless, under FAR, the contracting officer lacked the authority to award the contract without the required clause, right?

Jamaal Valentine said:

Sure. I’ll go as far as saying this is the most likely course of action throughout government. Nonetheless, under FAR, the contracting officer lacked the authority to award the contract without the required clause, right?

right. but we're talking here about ratifications, where the person lacked the authority enter into a contract, not a contracting officer, and really, in most cases there's no contract in place at all until the action is ratified.

it gets really tricky with FAR 1.602-1 because we issue contracts all the time where the CO missed a required clause or two, or missed a step or two in the process (e.g., did not synopsize properly, did not document market research, did not get proper approvals on a J&D or missed a required D&F, etc.). Are we going to say that all those are unauthorized commitments requiring ratification? I think not. but that's beyond the purview of this thread.

MileHighAcq said:

but we're talking here about ratifications, where the person lacked the authority enter into a contract

it gets really tricky with FAR 1.602-1 because we issue contracts all the time where the CO missed a required clause or two, or missed a step or two in the process (e.g., did not synopsize properly, did not document market research, did not get proper approvals on a J&D or missed a required D&F, etc.). Are we going to say that all those are unauthorized commitments requiring ratification? I think not. but that's beyond the purview of this thread.

I think we can agree that either the Government representative has the authority or lacks it. What happens when they lack the authority? Here, you’re talking about ratifications [within or outside of FAR].

I mentioned institutional ratifications earlier, but I’ll leave that idea there for you to research if interested.

I suggest reading the reference Vern provided earlier. Check out ‘unauthorized variations’ and contract avoidance.

Vern Edwards said:

In Formation, Cibinic and Nash discuss deviations and waivers in pages 69-72.

I think a ratifying official could invoke the Christian Doctrine to add a missing mandatory clause.

Vern Edwards said:

I think a ratifying official could invoke the Christian Doctrine to add a missing mandatory clause.

Brilliant!

EDIT:  I came back here to compose a post saying Vern had convinced me I was reading FAR 1.602-3(c)(3) incorrectly.  For what it's worth, I got there from the definition of unauthorized commitment.  As noted in FAR 1.602-3(a):

Quote

Unauthorized commitment, as used in this subsection, means an agreement that is not binding solely because the Government representative who made it lacked the authority to enter into that agreement on behalf of the Government.

Usually what that means to me is that all the "elements of a contract" are there except authority:  offer, acceptance, consideration, sufficiently definite terms, etc.  Another element of a contract is that the subject matter of the contract is legal.  If the contract is void at its inception rather than merely being voidable, then there's more afoot relevant to the existence of a binding contract than just lack of authority.

If the putative "unauthorized commitment" does not qualify as an "unauthorized commitment" because it is missing more than just a Government representative with authority to enter into the agreement on behalf of the Government, then the agreement does not even qualify as an "unauthorized commitment."

I think Vern's reference to the Christian Doctrine solves that hiccup for me.

Jacques said:

If the putative "unauthorized commitment" does not qualify as an "unauthorized commitment" because it is missing more than just a Government representative with authority to enter into the agreement on behalf of the Government, then the agreement does not even qualify as an "unauthorized commitment."

I think Vern's reference to the Christian Doctrine solves that hiccup for me.

so does this lead you to conclude that most actions where a government representative bound the government (i.e. directed a contractor to perform work or deliver a product and the contractor did so) would not even qualify as an "unauthorized commitment" (per the definition) because there were more issues with the action than simply the person binding the government not having the authority to do so, and therefore aren't subject to ratification pursuant to FAR 1.602-3? I guess in that case such issues would have to be resolved by GAO under quantum meruit.

on the other hand, is it possible that FAR 1.602-3 and the definition of "unauthorized commitment" don't speak to process because the process is immaterial for the purposes of ratifying an action? that the only thing that matters in cases where a person without authority bound the government is whether the agreement would be binding (regardless of the process) if a person with authority had done it? I know FAR 1.602-1(b) seems to argue against that, but it doesn't say that if "all requirements of law, executive orders, regulations, and all other applicable procedures, including clearances and approvals, have NOT been met, then you don't have a valid contract", rather, it seems to read more like a warning to COs to ensure that they meet "all requirements of law, executive orders, regulations, and all other applicable procedures, including clearances and approvals" before entering into a contract, not necessarily that unless they had done so, a valid contract does not exist.

I don't know, maybe I'm talking myself in circles, but given how FAR 1.602-3(c)(3) only talks about the "resultant contract", being proper had a CO signed it, and not the process, and similarly how the definition of "unauthorized commitment" speaks only to the agreement itself, not the process, maybe it is not about the process, but simply the agreement/contract itself.

MileHighAcq said:

I guess in that case such issues would have to be resolved by GAO under quantum meruit.

Sorry for being petty, but before I forget, I'm pretty sure the GAO doesn't handle this workload anymore.  If I have my references right, 31 USC 3702 was the basis for the GAO's claims settlement authority discussed in Title 4, Chapter 2 of its "Policy and Procedures Manual for Guidance of Federal Agencies."  That statute has changed, but the FAR reference has not been updated.  For DoD, if I'm reading DoDI 1340.21 correctly, the Defense Office of Hearings and Appeals handles these types of claims.  If the vendor wants to file under FAR Subpart 50.1, as I understand it, for DoD, each of the three services has a "Contract Adjustment Board" that hears requests for extraordinary contractual relief.

MileHighAcq said:

I don't know, maybe I'm talking myself in circles...

There it is!

Jacques said:

Sorry for being petty, but before I forget, I'm pretty sure the GAO doesn't handle this workload anymore.  If I have my references right, 31 USC 3702 was the basis for the GAO's claims settlement authority discussed in Title 4, Chapter 2 of its "Policy and Procedures Manual for Guidance of Federal Agencies."  That statute has changed, but the FAR reference has not been updated.  For DoD, if I'm reading DoDI 1340.21 correctly, the Defense Office of Hearings and Appeals handles these types of claims.  If the vendor wants to file under FAR Subpart 50.1, as I understand it, for DoD, each of the three services has a "Contract Adjustment Board" that hears requests for extraordinary contractual relief.

good catch. yes, it's now OMB for most cases for civilian agencies.

Vern Edwards said:

There it is!

yup, here we are! it's a good place to be - exploring as many aspects of an issue as possible so that when I make a decision or recommend a course of action, I can support it either way.

I’ve been in this field longer than just about anybody here.  Maybe it’s just pure chance I wasn’t exposed to all this but I’ve never seen ratifications be this involved.  My experience also includes seeing ratifications all across the government as a consultant.  The company I worked for did lots of acquisition type support including procurement office reviews and associated files.  Because ratifications are such a sensitive subject, that’s one area where we really focused on whenever we came across them.  

The most common, and to me personally the best way to handle ratifications is first documenting all the details and providing the ratifying official with all the summary information.  This is after reviews by senior procurement officials and legal counsel.  The detailed issues discussed here never seemed to have come up, particularly the scrutiny discussed here about whether the contract would otherwise be authorized.  After ratification, the contract specialist and contracting officer put together a contract file adhering to the FAR as closely as possible.  This including complying with CICA, when applicable, and all the other laws, regulations and policies.  Considering none of the instances I ever encountered when through the scrutiny described here, I just am shaking my head.

I did see one humorous commitment and the file.  A law enforcement agent had drug smugglers  under surveillance.  They loaded and boarded an aircraft.  The agent ran into a charter office and told the pilot to literally “follow that plane.”  The bill was something like $60,000.

formerfed said:

I’ve been in this field longer than just about anybody here.  Maybe it’s just pure chance I wasn’t exposed to all this but I’ve never seen ratifications be this involved.  My experience also includes seeing ratifications all across the government as a consultant.  The company I worked for did lots of acquisition type support including procurement office reviews and associated files.  Because ratifications are such a sensitive subject, that’s one area where we really focused on whenever we came across them.  

The most common, and to me personally the best way to handle ratifications is first documenting all the details and providing the ratifying official with all the summary information.  This is after reviews by senior procurement officials and legal counsel.  The detailed issues discussed here never seemed to have come up, particularly the scrutiny discussed here about whether the contract would otherwise be authorized.  After ratification, the contract specialist and contracting officer put together a contract file adhering to the FAR as closely as possible.  This including complying with CICA, when applicable, and all the other laws, regulations and policies.  Considering none of the instances I ever encountered when through the scrutiny described here, I just am shaking my head.

I did see one humorous commitment and the file.  A law enforcement agent had drug smugglers  under surveillance.  They loaded and boarded an aircraft.  The agent ran into a charter office and told the pilot to literally “follow that plane.”  The bill was something like $60,000.

yeah, this one is on me. as I explained in one of my posts, I was just reviewing a ratification file and the writeup under FAR 1.602-3(c)(3) struck me as being particularly non-sensical, and it got me thinking and wondering what that statement really meant. I've reviewed dozens of ratifications before, and it never occurred to me before to question that because the rationale provided made sense on some level.

I'm just here to learn, in my never-ending quixotic quest to make some kind of sense of government regulations related to acquisitions.

On 5/22/2023 at 4:58 AM, Jacques said:

So, FAR 1.602-3(c)(3) says, "The authority in paragraph (b)(2) of this subsection may be exercised only when...[t]he resulting contract would otherwise have been proper if made by an appropriate contracting officer."  I think the use of the word, "resulting" here is meaningful.  To me, the focus of what (c)(3) is asking ratifying officials to consider is NOT whether FAR procedures preceding the unauthorized commitment were followed, but whether the actual content of the agreement is proper.

Are you distinguishing the resulting ‘contract’ from the unauthorized commitment or treating the terms synonymously as used in that subsection? (FAR 1.602-3(c)(2) and (c)(3) seem related (really 1-7 are read together)).

 Reminder: FAR 2.101 defines ‘contract’

Jamaal Valentine said:

Are you distinguishing the resulting ‘contract’ from the unauthorized commitment or treating the terms synonymously as used in that subsection? (FAR 1.602-3(c)(2) and (c)(3) seem related (really 1-7 are read together)).

 Reminder: FAR 2.101 defines ‘contract’

if I may, the terms are not synonymous because of a technicality - which is that a contract is signed by a person with authority to do so, but an unauthorized commitment is not. that's why an "unauthorized commitment" is defined as an "agreement" rather than a contract, and the distinction draws is "solely because the Government representative who made it lacked the authority to enter into that agreement on behalf of the Government."

however, the similarity is that the focus in both cases is on the end result - the "resulting contract" and the "agreement", not on the process.

Ratification applies to authority issues. It does not apply to compliance issues regarding procedure or contract content.

You cannot ratify a commitment that, had it been made by a contracting officer with requisite authority to make that kind of commitment, would have been illegal because the contracting officer did not comply with a law regarding procedure or contract content.

It's very, very simple. Read Cibinic and Nash, and think.

You ratify unauthorized commitments, not improperly made and written commitments. It's just someone who has authority approving after the fact an act of someone who did not.

Vern Edwards said:

Ratification applies to authority issues. It does not apply to compliance issues regarding procedure or contract content.

You cannot ratify a commitment that, had it been made by a contracting officer with requisite authority to make that kind of commitment, would have been illegal because the contracting officer did not comply with a law regarding procedure or contract content.

It's very, very simple. Read Cibinic and Nash, and think.

in that case (if it's just an authority issue) all you need to do is have someone with authority ratify the "agreement" created by the unauthorized commitment and, bam, you have a resultant contract that's otherwise appropriate! forget any compliance issues relating to procedure and contract content.

MileHighAcq said:

in that case (if it's just an authority issue) all you need to do is have someone with authority ratify the "agreement" created by the unauthorized commitment and, bam, you have a resultant contract that's otherwise appropriate! forget any compliance issues relating to procedure and contract content.

Bingo! (Reading that you have settled that ratifications relate to authority issues; forget any compliance issues relating to procedure and content)

MileHighAcq said:

forget any compliance issues relating to procedure and contract content.

@MileHighAcq I'm sorry, but I think you're being willfully uncomprehending.  A poor man's Joseph Heller.

Jamaal Valentine said:

Are you distinguishing the resulting ‘contract’ from the unauthorized commitment or treating the terms synonymously as used in that subsection? (FAR 1.602-3(c)(2) and (c)(3) seem related (really 1-7 are read together)).

 Reminder: FAR 2.101 defines ‘contract’

No sir...does not a CO decide issues pre-contract and post contract.

Additionally I fear discussion of Christian and other legal doctrines are misplaced.  The CO should make a reasonable decision at the lowest level.  If the contractor does not like it the take it to tribunal appropriate for a "legal" decision.

Vern Edwards said:

A poor man's Joseph Heller.

That's a tremendous compliment!

I know, I slightly ignored the second paragraph of your post (You cannot ratify a commitment that, had it been made by a contracting officer with requisite authority to make that kind of commitment, would have been illegal because the contracting officer did not comply with a law regarding procedure or contract content.) because it was contrary to my desired interpretation.

Vern Edwards said:

You cannot ratify a commitment that, had it been made by a contracting officer with requisite authority to make that kind of commitment, would have been illegal because the contracting officer did not comply with a law regarding procedure or contract content.

okay, I'll bite. so what happens when a contracting officer signs a contract but did not fully comply with a law regarding procedure or contract content? do you not have a legally binding contract? I suppose you can say "no, and you need to remedy it by complying with the requirements with regard to procedures and contract content after the fact". but suppose you cannot remedy every aspect of it (e.g., you award to a large business when the requirement was automatically set aside for SBs and there are SBs who can perform the work, so you can't dissolve the set-aside after the fact). do you then not have a legally binding contract? do you terminate the contract / cancel the PO and start over? what if no one discovers that the contract is isn't legally binding and the contractor completes the work and you close out the contract? does the contract just go down in the history of the agency as an illegal contract? I don't know the answers, I just know that from a practical standpoint, people are going to miss things that can't be remedied afterwards. I don't favor such an absolutist approach.

MileHighAcq said:

I'm just here to learn, in my never-ending quixotic quest to make some kind of sense of government regulations related to acquisitions.

Thinking, analyzing, and questioning is good.  We all need to do that more

formerfed said:

Thinking, analyzing, and questioning is good.  We all need to do that more

Amen 🙏🏾

MileHighAcq said:

so what happens when a contracting officer signs a contract but did not fully comply with a law regarding procedure or contract content? do you not have a legally binding contract?

Maybe yes, maybe no. It depends on what law the CO did not comply with.  See Cibinic and Nash.

MileHighAcq said:

so what happens when a contracting officer signs a contract but did not fully comply with a law regarding procedure or contract content?

Then the CO may have created an unauthorized commitment.

MileHighAcq said:

so what happens when a contracting officer signs a contract but did not fully comply with a law regarding procedure or contract content? do you not have a legally binding contract?

See Cibinic and Nash's discussion of Contracts Varying from Statutory or Regulatory Requirements, Unauthorized Variances, in Formation, pp. 72 - 75:

Quote

When unauthorized procedures or terms and conditions are used, a variety of consequences may follow. In some cases, the government may be permitted to avoid the contract. In other instances, the contract may be rewritten to add a mandatory clause or exclude a prohibited clause. Finally, the contractor may be able to require the government to abide by mandatory procedures.

The most drastic consequence of a contract made in violation of a statute or regulation with the force and effect of law is that the government has the right to avoid the contract. Such contracts have been described as "void ab initio"... "invalid"... or "illegal"...

When I entered the contracting field, Formation of Government Contracts and Administration of Government Contracts were foundational textbooks. You would see them on the bookshelves of many COs. Not today. Most government offices won't buy it for their trainees, and most government personnel won't spend their own money for it. 

I will go so far as to say that if you are a contracting "professional" and don't own and read those books, then you are engaged in a battle of wits, and you are unarmed. Invest in your career. Then, get with a few of your colleagues and form a reading and discussion circle.

MileHighAcq said:

so what happens

At one time I too was a procurement analyst.  Here you go....

CO Warrant to $10 million 

CO awards a purchase ordered valued at $150K to a current Federal employee unknowingly.   Discovered after almost all  work complete. Payment to be made in one payment.   Contractor/individual was performing the work.

The contract was deemed to be an unauthorized commitment (FAR 1.603-2(a)).

Agreement was ratified by the head of agency (FAR 3.6).

C Culham said:

At one time I too was a procurement analyst.  Here you go....

CO Warrant to $10 million 

CO awards a purchase ordered valued at $150K to a current Federal employee unknowingly.   Discovered after almost all  work complete. Payment to be made in one payment.   Contractor/individual was performing the work.

The contract was deemed to be an unauthorized commitment (FAR 1.603-2(a)).

Agreement was ratified by the head of agency (FAR 3.6).

Interesting story, but just because someone thought the contract was an unauthorized commitment doesn't make it one.  I offer it is not an unauthorized commitment for a contracting officer to award a VOIDABLE (vs. void ab initio) contract if the contract value was within the warrant authority of that contracting officer.

EDIT:  To be more complete, I wouldn't even characterize the award of a void ab initio contract as an unauthorized commitment.  The void contract is void not because of anything having to do with the contracting officer's warrant.

C Culham said:

At one time I too was a procurement analyst.  Here you go....

CO Warrant to $10 million 

CO awards a purchase ordered valued at $150K to a current Federal employee unknowingly.   Discovered after almost all  work complete. Payment to be made in one payment.   Contractor/individual was performing the work.

The contract was deemed to be an unauthorized commitment (FAR 1.603-2(a)).

Agreement was ratified by the head of agency (FAR 3.6).

No violation of the policy, since the CO did not do so knowingly.  In any case, see FAR 3.602.

C Culham said:

CO awards a purchase ordered valued at $150K to a current Federal employee unknowingly.

“Unknowingly” vs. the prohibition against “knowingly.”

Vern Edwards said:

See Cibinic and Nash's discussion of Contracts Varying from Statutory or Regulatory Requirements, Unauthorized Variances, in Formation, pp. 72 - 75:

When I entered the contracting field, Formation of Government Contracts and Administration of Government Contracts were foundational textbooks. You would see them on the bookshelves of many COs. Not today. Most government offices won't buy it for their trainees, and most government personnel won't spend their own money for it. 

I will go so far as to say that if you are a contracting "professional" and don't own and read those books, then you are engaged in a battle of wits, and you are unarmed. Invest in your career. Then, get with a few of your colleagues and form a reading and discussion circle.

Thanks for that. I've only heard, never read. I have some Cibinic and Nash books (source selection and cost reimbursement contracting), but not the two you mentioned. I'll have to see if my HCA will splurge for it, though probably not at this point since we're mostly remote, so it wouldn't be "shared" by the entire office.