Ratification Authority

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):

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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:

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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.

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.

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.

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.

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?

Yes. That is separate from the Disputes Act cert.

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.

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!!!!!!!!!

@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

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...../legacy/reg/08d1e0912121d727.html

"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

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

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):

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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.

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. 

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.

Vern Edwards said:

intellectually ineffective

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.

Vern Edwards said:

I don't write for fossils.

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.  

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!

Vern Edwards said:

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

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/.

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.

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

Carl:

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?

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?

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. 

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.

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 (/legacy/reg/19a8ba12b7ed2d34.html) 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.

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.

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.

ji -

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 -

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

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.

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?

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.

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.

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).

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)?

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

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

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.

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.

Jamaal –  I believe you will find the answer within your agency’s FAR supplement and procurement policy surrounding it.  Below is from the AGAR, USDA’s supplement to the FAR.  Admittedly I am providing for both the purpose of your question as well in interest of the side discussion of this thread. From a read of many of the individual agency supplements to the FAR it seems plain language can get muddled!!!!!  

I have followed the AGAR by the USDA’s Forest Service Acquisition Regulation which in reality is probably policy as it is not codified in the CFR.

So in this case a warrant is needed, while in other agencies no warrant is indicated for the ratifying official but I hazard to guess that the actual act of issuing a purchase order, contract, or modification to a contractor to confirm a ratification is done by a warranted CO.

AGAR 401.602 Contracting officers.

401.602-3 Ratification of unauthorized commitments.

(a) Definitions. "Ratification," as used in this section, means the signed, documented action taken by an authorized official to approve and sanction a previously unauthorized commitment.

"Unauthorized commitment," as used in this section, means an agreement made by a Government representative who lacked the authority to enter into a contract on behalf of the Government.

(b) Policy. The HCA may delegate ratification authority to the chief of the contracting office.

(c) Procedure. Whenever an official of the cognizant contracting activity who is authorized to ratify unauthorized commitments learns that a person or firm has assumed work as a result of an unauthorized commitment, that official shall take the following actions:

(1) Immediately inform any person who is performing work as a result of an unauthorized commitment that the work is being performed at that person's risk;

(2) Inform the individual who made the unauthorized commitment of the seriousness of the act and the possible consequences;

(3) Ensure that the individual who made the unauthorized commitment furnishes all records and documents concerning the commitment and a complete, written statement of facts, including, but not limited to: a statement as to why a contracting officer was not used; why the vendor was selected and a list of sources considered; a description of work to be performed or products to be furnished; the estimated or agreed price; whether an appropriation is available for the work; and whether performance has begun. Under exceptional circumstances, such as when the individual who made the unauthorized commitment is no longer available to attest to the circumstances of the unauthorized commitment, the ratifying official may waive these requirements; and

(4) Decide whether ratification is proper and proceed as follows:

(i) If ratification is not justifiable, provide the cognizant program office, contracting office, and the unauthorized contractor with an explanation of the decision not to ratify.

(ii) If ratification appears adequately justified, ratify the action and retain or assign the contract to a successor contracting officer if necessary.

(iii) Maintain related approval, decisional, and background documents in the contract file for audit purposes.

(iv) Notify the cognizant program supervisor or line officer about the final disposition of the case; the notification may include a recommendation that the unauthorized commitment should be further considered a violation of USDA's employee conduct regulations.

4G01.602-3 - Ratification of Unauthorized Commitments

(a)  Ratification authority may be delegated to the Chief of the Contracting Office (COCO) if the COCO is warranted for actions up to the limits of their Simplified Acquisition Threshold (SAT) Contracting Officer appointment authority (that is, Simplified A and B warrants).  If the COCO is not warranted, or if the action exceeds the SAT, ratification authority is limited to the HCA or HCAD.

Matthew – I understand your comment but my read is this.  “Policy” at (b) has no and/or.  So each sentence stands on its own.

So the policy is –

Ratifications of any unauthorized commitment must follow (c) as this number (2) paragraph does not carve out any exceptions.

Extending to the discussion in this thread (5) is saying (noting that I am repeating myself) once ratified per (2) then follow Contract Disputes if the contractor files a claim again noting that an REA is sometimes a claim and sometimes is not.

Vern –

I was only following your lead on “history” because you said this “ I can change my mind in the course of 17 years. I can change it in an instant if it serves my purpose. “   So as I said everyone can change their mind even the drafters of procurement policy and the courts in the 73 years from 1944 through to today.

When all is said and done and referencing the response I have provided to Jamaal in this thread agencies are no further in making the bureaucratic process of controlling unauthorized commitments less bureaucratic.   And in the very example we have been discussing I agree ratification should be simple but I retain my thinking that leaving it to CO’s solely in the case of unauthorized commitments arising under or relating to  a contract is absent proper oversite for proper fiscal control and for prevention of fraud, waste and abuse.  I agree that everyday CO’s handle the matter of an unauthorized commitment in the manner you and ji suggest but as I have tried to relay it is not the best oversight.   I stated early on that ratifications in some instances should be a slam dunk and in the case that has been used as an example in this thread it is one that should be but all the same a ratification should take place before the REA becomes a modification to the contract.

C Culham said:

Matthew – I understand your comment but my read is this.  “Policy” at (b) has no and/or.  So each sentence stands on its own.

So the policy is –

Ratifications of any unauthorized commitment must follow (c) as this number (2) paragraph does not carve out any exceptions.

Extending to the discussion in this thread (5) is saying (noting that I am repeating myself) once ratified per (2) then follow Contract Disputes if the contractor files a claim again noting that an REA is sometimes a claim and sometimes is not.

C Culham,

I don't know what FAR you're reading - paragraph ( c ) is clearly applicable to ONLY paragraph (b)(2) and paragraph (b)(5) doesn't even use the word "ratify" or "ratification" it uses the terms "claims" and "processed."  I think Vern provided as good an explanation as possible and I attempted to show you through a different lens, though it seems you're stuck in your own beliefs (which if you take the time to think carefully, contradict themselves..."each sentence stands on its own").  So be it.

Matthew Fleharty said:

I don't know what FAR you're reading

Matthew Fleharty said:

you're stuck in your own beliefs (which if you take the time to think carefully, contradict themselves..."each sentence stands on its own").

Matthew - Please do not start.  

I am reading the current FAR, current supplements to the FAR, and current  interpretations of the FAR  that ratification as provided for in FAR 1.602-3 is a process where a Government official makes an after-the-fact approval of an unauthorized commitment (obligation) that was made by a Government employee who did not have the authority to otherwise obligate the Government. The obligation is not binding on the Government because the person lacked authority to make the obligation, so the seller (FAR Part 2 definition of a contract) has no legal basis to demand payment. In order for the seller to get paid, an appropriate Government official must ratify the unauthorized commitment, making the obligation binding after the fact.  A seller that has done work in response to an unauthorized commitment may well submit the REA, but the REA can not be acted on until it is determined that a valid obligation exists - ratification does this.    

Now folks will try all kinds of things to throw out to change the scenario first stated in this thread as to how an unauthorized commitment can simply be handled under Contract Disputes such as implied contract or quantum merit.  Yes they might have a bearing but they are common at law doctrines that the CO would express to the ratifying official to consider in approving or not the unauthorized commitment. 

I have thought about what I have read, very carefully, I might add.   I do not drink the potion just because someone tells me I have to.   I determine on my own through foundations whether I should and then I either drink it or I do not.  And that is it!

Well, I wasn’t quite done after all.

I have never seen a better example of the conflicts that arise from “thinking outside the box.”

Have you ever taken a touchy-feely class in which you were asked to solve the nine-dot-one-line puzzle? If you’re not familiar with that puzzle and its solution, it’s shown here https://www.youtube.com/watch?v=XrwnrpFVugw and at many other websites.

As you can see, you cannot solve the puzzle while staying inside the “box” formed by the nine dots. You have to go outside the box in order to solve it.

Some people complain that the solution is a cheat. But careful review of the rules will show that they do not state that you have to stay in the box (or that you could not go outside the box). Most people encountering that puzzle for the first time assume that is the rule (I did—my wife had to show me), but it isn’t. Making that assumption is a case of being in a “box”.

By “thinking outside the box” I’m not talking about breaking the rules. I’m talking about interpreting them without assumptions and with your eyes wide open.

If someone believes, assumes, or thinks that there is one definite interpretation of everything in FAR, then they might be in a box. (It has happened to me, and I have done it to myself.) If so, they might be troubled by what seems to be an unorthodox interpretation. The interpretation is not demonstrably wrong--although some people will go through contortions trying to prove that it is--but someone in a box might think: That simply is not so! It’s against the rules!

I discuss a momentous example of going outside the box here: /legacy/a/4b0e91de957e6124.pdf

In this thread Carl Culham and I have been bickering about the proper interpretation of the rule about ratification of unauthorized commitments. The rule is in FAR 1.602-3, which prescribes the ratification procedure.

Quote

1.602-3 Ratification of unauthorized commitments.

(a) Definitions.

“Ratification,” as used in this subsection, means the act of approving an unauthorized commitment by an official who has the authority to do so.

“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.

(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.

(c) Limitations. The authority in paragraph (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.

(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.

Our disagreement centers on subparagraph (b)(5). We discussed that rule in the context of the following scenario and assertion, which I posted:

Quote

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.

In opposition to that post Carl has asserted that the CO cannot agree to pay the contractor without first obtaining a ratification of the COR’s unauthorized commitment. I don't agree.

What does paragraph (b)(5) mean in terms of specific procedure? It's not immediately apparent. The FAR councils put it there without explanation. Arguably, it is subject to more than one interpretation, and so I’m going to interpret it as best I can, which from Carl’s perspective is outside the box.

I interpret the plain language of FAR 1.602-3(b)(5)--which comes at the very end of paragraph (b); which explicitly directs COs to the CDA and FAR Subpart 33.2; which does not refer to subparagraphs (b)(2) or (c); and which does not contain the words ratify and ratification, which appear in all of the other subparagraphs of paragraph (b)--as telling COs to settle claims involving unauthorized commitments pursuant to FAR Subpart 33.2 instead of FAR 1.602-3(b)(2) and (c).

Consider the following:

• Within paragraph (b), paragraphs (b)(2) and (b)(5) are at the same level of subordination and neither mentions the other.
• Paragraph (b)(2) and (c) refer to each other. Neither refers to (b)(5), and (b)(5) does not refer to them.
• Paragraph (b)(5), is a complete sentence, and, as Carl said, "So each sentence stands on its own." The sentence that comprises (b)(5) does not say: 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 and paragraphs (b)(2) and (c) of this subsection.
• Paragraph (b)(5) contemplates Contract Disputes Act (CDA) claims that involve unauthorized commitments. The CDA gives the contracting officer sole authority to decide "any" claims relating to a contract.
• Neither the CDA nor FAR Subpart 33.2 make any mention of ratification being a condition precedent to settlement or issuance of a contracting officer final decision.
• Except for the Department of Education FAR Supplement, 48 CFR 3401.602-3(b)(5), I know of no regulation, policy statement, or case law that requires ratification as a condition precedent to a CO final decision. Arguably the Department of Education’s policy is the exception that proves the rule.
• Finally, the ratification procedure in FAR 1.602-3(b)(2) and (c) is not prescribed by statute and is not explicitly applicable to CDA claims. FAR 1.102(e) and 1.102-4(e) say that if the law does not require us to do something, then we don’t have to, and that if it does not prohibit us from doing something, then we may do it.

Some might ask under what authority the CO in my scenario could grant a contract price adjustment. After all, the government is not contractually bound by unauthorized acts of CORs. The CO could deny the REA and a subsequent claim on that basis, but she does not have to deny it. I say that the issue confronting the CO in the scenario is not whether the COR had authority and not whether the contractor is contractually entitled. I say that the issue is whether the contractor should be compensated as a matter of equity. I say that ratification is not necessary. The CO can use his own authority to grant relief in the interests of fairness and to avoid a dispute, if possible, as urged by FAR 33.204.

Some might ask where the law says that a CO can do that? Well, where does the law say that a CO cannot? FAR 1.602-2, Responsibilities, says “contracting officers should be allowed wide latitude to exercise business judgment. Contracting officers shall… (b) ensure that contractors receive impartial, fair, and equitable treatment.” I say that the CO could compensate the contractor even if he or she is not legally required to do it, if equity demands it.

In a case that I cited in an earlier post, the old Court of Claims (predecessor to the Federal Circuit) said: “Contracting 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.”

If the CO thinks that agreeing to a contract price adjustment is a matter of fairness, then the CO should grant the requested relief, assuming that it’s fair and reasonable. The contractor provided the government with a necessary service, one that that the CO would have ordered if he or she had been able, one that saved government money. COs supposed to exercise business judgment. Would it be good business to deny a reasonable request for compensation, to refuse to “do equity”? Doesn’t the government have an implied duty of fair dealing? Wouldn’t reasonable compensation for services needed and received be fair dealing and good judgment in this case?

The skirmish between Carl and me is of a kind that is fought in contracting offices almost daily. It is of a kind that has been fought in contracting offices since time immemorial whenever the rules governing a situation are not explicit or are vague or ambiguous in some way.

As contracting practitioners, each of us will either do what we think best or what we’re told to do, or we’ll freeze, stall, and do nothing for fear of being wrong. Each of us must choose his or her own approach to reading and interpreting the FAR when an issue arises.

Some assert that the FAR is an obstacle to innovation. Others say that it’s only an obstacle to those who make it that way. See, e.g.:

Don’t Fight The FAR: Innovation And Regulation Can Go Hand In Hand http://www.publicspendforum.net/blogs/jonathan-messinger/2017/01/10/podcast-dan-ward-far-federal-acquisition-regulation-innovation

Can the federal acquisition process support innovation? https://www.fedscoop.com/really-needs-done-acquisition-reform/ (Be patient. It takes a moment for that to load.)

Reform the FAR? Maybe you should try reading it first… https://about.bgov.com/blog/reform-the-far-maybe-you-should-try-reading-it-first

What does innovation really mean? http://www.federaltimes.com/articles/what-does-innovation-really-mean

FAR Part 1: ‘If it’s not prohibited, it’s allowed’https://fcw.com/blogs/lectern/2014/05/far-part-1.aspx

If any of you decide that you will read the plain language of the regulation, read the regulation as a whole, apply the policies in FAR 1.102(e) and 1.102-4(e), and occasionally think outside the box, then learn how to state and frame an issue and how to argue and see both sides of a disagreement. Be ever ready for those who might say, “You must do this,” “You can’t do that,” or “You can’t do that that way.” Be ready to lose some skirmishes and an occasional battle. And be ready to be wrong from time, because it’ll happen.

Finally, a few colleagues reacted with this: Oh, hell, if you think you should pay the contractor just issue a backdated change order and consider it documenting the file. 

Vern Edwards said:

Finally, a few colleagues reacted with this: Oh, hell, if you think you should pay the contractor just issue a backdated change order and consider it documenting the file.

Hmmm. If you think you should pay the contractor just lie and back date necessary documentation in the automated procurement system. After all, it's only a little white lie. Everbody's doing it these days, aren't they? 

How about trying something more honest? Like, the COR tells the KO the next day that they had to direct the contractor and couldn't reach the KO and the KO or ACO creates a change order letter or change order mod , with funds, and issues it that day. 

Edit: as one who has reviewed and/or written hundreds of construction contract mods, one can't necessary tell by reading a mod file that the work was or wasn't directed prior to the paperwork.  Of course, if the change is large enough to require an audit or review of payrolls or other contractor procurement files, they might   reveal to someone that the activity or activities preceded the written order...

Certainly, one can truthfully document an effective date earlier than the actual mod signature date in the mod.  That's not necessarily "backdating". I'm not sure and have asked a colleague whether it is even possible to "backdate" newly  created documents or actions in the automated contracting systems these days.

Who said anything about lying? The purpose of backdating is to document the file to cover contractor costs. I backdated stuff more than once and put a memo in the file. Backdating is not necessarily illegal. It depends on how and why it's done.

See for example EDL Construction, Inc., ASBCA No. 39599, 90-3 BCA P 23049:

Quote

On 8 June 1989, the Government took usuable possession of the building, backdating the occupancy date to 24 May 1989 to relieve EDL of responsibility for some liquidated damages because of the Government's failure to inspect for 8 days after EDL's request (R4, tab 17).

By the way, the courts have found implied authority when a COR has ordered a contractor to do something in an emergency. No ratification necessary. A CO can do the same. Issuing a backdated change order would just be documenting the file.

More on backdating. This quote is from a Court of Federal Claims decision (not a contracting decision) in which the plaintiff complained that the FBI backdated documents:

Quote

There is “nothing nefarious” about the cancellation and backdating of Plaintiff's records; the FBI simply self-identified and remedied a payment error. Gov't Reply at 7. Therefore, Plaintiff's claim for backpay is based upon a mistake in classification that was corrected before this case was filed. Gov't Reply at 7.

Williams v. U.S., 130 Fed. Cl. 761 (2017)

Without clarification of the context of the original comment, I assume that it means assigning an earlier date to the document(s) than the actual date(s). "Oh hell, ...just issue a backdated change order..."

Vern Edwards said:

More on backdating. This quote is from a Court of Federal Claims decision (not a contracting decision) in which the plaintiff complained that the FBI backdated documents:

Williams v. U.S., 130 Fed. Cl. 761 (2017)

In this context, backdating the documentation was necessary to correct an error to show the actual dates,  not to change the story.

On SF30, in block 3, "Effective Date," I'd put the date on which the COR gave the direction and in block 16C I'd put the actual date on which I signed the mod.

Contracting Officership 101.

Vern Edwards said:

On SF30, in block 3, "Effective Date," I'd put the date on which the COR gave the direction and in block 16C I'd put the actual date on which I signed the mod.

Contracting Officership 101.

Thanks for the clarification.  I agree with that course of action, consistent with what I said above.

In a memo to file I'd explain the circumstances, state that the COR took an appropriate course of action in a situation of urgency in which immediate action was necessary and there was no way to contact me in a timely fashion--the action that I would have taken had the COR been able to contact me. I'd explain that the COR's action and the contractor's cooperation saved government money and were in the best interests of the government and that I considered it to be within the scope of his authority notwithstanding the COR appointment letter.

Vern Edwards said:

In a memo to file I'd explain the circumstances, state that the COR took an appropriate course of action in a situation of urgency in which immediate action was necessary and there was no way to contact me in a timely fashion--the action that I would have taken had the COR been able to contact me. I'd explain that the COR's action and the contractor's cooperation saved government money and were in the best interests of the government and that I considered it to be within the scope of his authority notwithstanding the COR appointment letter.

Vern, Thanks for the further clarification.

One more thing. I would write a letter to the COR, copy to his boss, my boss, and the contractor, commending him for taking an appropriate course of action under unusual circumstances, but reminding him that in ordinary circumstances, or when he can reach me it time for me to take action, he has no authority to modify the contract.

Vern Edwards said:

One more thing. I would write a letter to the COR, copy to his boss, my boss, and the contractor, commending him for taking an appropriate course of action under unusual circumstances, but reminding him that in ordinary circumstances, or when he can reach me it time for me to take action, he has no authority to modify the contract.

Yep

I appreciate that Vern has reposted his previous posts of this discussion as they provided a refreshed look at what has been said.

Vern has provided that the contractor has submitted a “non-claim”.  Then he goes on to say that the REA can be settled under the Contract Disputes.

How can the Contract Disputes be used to settle an REA that is a non-claim?   The answer is quite easy as the REA as it has been stated in this particular instance is neither a written demand or written assertion, it is a request of equitable adjustment,  as such is not subject to Contract Disputes.

As I stated in my very first post in this discussion “I fear the discussion is too broad with regard to CDA.”   And it remains that way.

C Culham said:

Vern has provided that the contractor has submitted a “non-claim”.  Then he goes on to say that the REA can be settled under the Contract Disputes. How can the Contract Disputes [sic] be used to settle an REA that is a non-claim?

As I previously posted, here is FAR 1.602-3(b)(5):

Quote

(5) Unauthorized commitments that would [conditional mood-not does] 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. The answer is quite easy as the REA as it has been stated in this particular instance is neither a written demand or written assertion, it is a request of equitable adjustment,  as such is not subject to Contract Disputes.

The REA doesn't have to actually be a claim for the CO to process it in accordance with Subpart 33.2. As I previously posted, see FAR 33.204:

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.

But if Carl is still unconvinced, the CO could tell the contractor to complete the claim certification so the REA would be a claim. Easy peasy.

Vern Edwards said:

t if Carl is still unconvinced, the CO could tell the contractor to complete the claim certification so the REA would be a claim. Easy peasy.

But that, of course, defeats the intent of the government's policy at 33.204 to make reasonable efforts to resolve controversies prior to the submission of a claim. 

Like Vern, the last time I checked, 33.204 is under "Subpart 33.2", seemingly in accordance with FAR 1.602-3(b)(5).

Vern Edwards said:

The REA doesn't have to actually be a claim for the CO to process it in accordance with Subpart 33.2. As I previously posted, see FAR 33.204:

The above quote does not see congruent with the DFARS.  Likewise the easy peasy is now becoming more messy pesi.  Sounds like all the documentation that is being proposed like writing a letter, asking now for two certifications, or is it just one, is tantamount to doing a request for ratification?   I already did the ratification request and got it approved and issued the modification by the time I waded through letters, certifications, etc.     Just saying but like Vern I will let others be the judge. 

243.204-71 Certification of requests for equitable adjustment.

(a) A request for equitable adjustment to contract terms that exceeds the simplified acquisition threshold may not be paid unless the contractor certifies the request in accordance with the clause at 252.243-7002.

(b) To determine if the dollar threshold for requiring certification is met, add together the absolute value of each cost increase and each cost decrease. See PGI

243.204-71(b) for an example.

(c) The certification required by 10 U.S.C. 2410(a), as implemented in the clause at 252.243-7002, is different from the certification required by 41 U.S.C. 7103, Disputes. If the contractor has certified a request for equitable adjustment in accordance with 10 U.S.C. 2410(a), and desires to convert the request to a claim under the Contract Disputes statute, the contractor shall certify the claim in accordance with FAR subpart 33.2.

252.243-7002  Requests for Equitable Adjustment.

As prescribed in 243.205-71, use the following clause:

REQUESTS FOR EQUITABLE ADJUSTMENT (DEC 2012)

      (a)  The amount of any request for equitable adjustment to contract terms shall accurately reflect the contract adjustment for which the Contractor believes the Government is liable.  The request shall include only costs for performing the change, and shall not include any costs that already have been reimbursed or that have been separately claimed.  All indirect costs included in the request shall be properly allocable to the change in accordance with applicable acquisition regulations.

      (b)  In accordance with 10 U.S.C. 2410(a), any request for equitable adjustment to contract terms that exceeds the simplified acquisition threshold shall bear, at the time of submission, the following certificate executed by an individual authorized to certify the request on behalf of the Contractor:

I certify that the request is made in good faith, and that the supporting data are accurate and complete to the best of my knowledge and belief.

(Official’s Name)

(Title)

      (c)  The certification in paragraph (b) of this clause requires full disclosure of all relevant facts, including¾

              (1)  Certified cost or pricing data, if required, in accordance with subsection 15.403-4 of the Federal Acquisition Regulation (FAR); and

              (2)  Data other than certified cost or pricing data, in accordance with subsection 15.403-3 of the FAR, including actual cost data and data to support any estimated costs, even if certified cost or pricing data are not required.

      (d)  The certification requirement in paragraph (b) of this clause does not apply to¾

              (1)  Requests for routine contract payments; for example, requests for payment for accepted supplies and services, routine vouchers under a cost-reimbursement type contract, or progress payment invoices; or

              (2)  Final adjustments under an incentive provision of the contract.

Joel - Actually the FAR says this -

"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."

Not this

joel hoffman said:

But that, of course, defeats the intent of the government's policy at 33.204 to make reasonable efforts to resolve controversies prior to the submission of a claim.

So are you saying that a person who lacks authority and makes an unauthorized commitment has made a contract?  If so why have ratification at all?   For Contract Disputes to kick in you must have a "contractual issue" shouldn't you?

@Joel:

Carl said:

C Culham said:

So are you saying that a person who lacks authority and makes an unauthorized commitment has made a contract?  If so why have ratification at all?   For Contract Disputes to kick in you must have a "contractual issue" shouldn't you?

There is a contractual issue. The REA in my scenario seeks relief in a matter related to a contract. Whether the COR did or did not have authority to direct the contractor is an issue that the CO, by law, must decide and issue a final decision.

A person without actual authority to change a contract might have had implied authority to do so. See Baistar Mechanical, Inc. v. U.S., 128 Fed. Cl. 504 (COFC) (Sept. 28, 2016). See also Cibinic, et. al. Administration of Government Contracts, 5th, 41-44. That is a question the CO in my scenario would have to consider and a matter that she will have to decide.

Pursuant to FAR, the ratification process does not apply in scenarios such as the one that I described. As to why have ratification at all, it's for cases when a government employee without authority makes a buy that is unrelated to the administration of any existing contract.

I'm off to the ranch this morning for several days to help brand calves. It's six driving hours east of Portland, and we have no reliable internet service out there, so I won't be able to respond to any more of Carl's posts. In any case, I've made the best arguments that I can, so you and other readers are on your own. You either buy my position by now or you don't.

Vern

C Culham said:

Joel - Actually the FAR says this -

"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."

Not this

So are you saying that a person who lacks authority and makes an unauthorized commitment has made a contract?  If so why have ratification at all?   For Contract Disputes to kick in you must have a "contractual issue" shouldn't you?

Q1:  No. 

Q2: N/A  there is no contract.  

Q3: I was simply replying to Vern's suggestion that if you aren't convinced that the matter doesn't have to be ripened to a "dispute" to be handled under FAR 33.2, the KO could tell the contractor to turn it into a formal claim.  To do that would be in contradiction to the policy stated in 33.204, which is for the Government to try to resolve the matter before it becomes a claim.  FAR 33.204 is under FAR 33.2, so the matter doesn't necessarily have to be in dispute and/or a formal claim.

Also Q3: In the example described, I'm assuming that there was some type of emergency or other situation where the COR and/or contractor were trying to mitigate impacts of delays in issuing corrective actions and where the COR directed an in-scope change (without the authority to do so) after trying to contact the KO.  So,  one could assume that it is a "contractual issue",  versus an out of scope UCA.  

- As for "why have a ratification at all?" , certainly for UCA/ out of scope new contract actions - if and when the KO/government wants to pay the contractor.  Possibly for in-scope, purposely directed changes.  However, I wasn't addressing every situation.  

In this instance, I suggested that (assuming that the KO would have issued a change order on the original day, had he/she known of the need - as described in the scenario) the  COR should tell the KO the next day that they had to direct the contractor and couldn't reach the KO. The KO or ACO could create a change order by letter or change order mod as appropriate, with funding, and issue it that day or ASAP, before it becomes a "controversy" and probably before the contractor could expend a whole lot of extra cost. 

I agreed that the KO should remind all involved that this was an anomaly and that the COR doesn't have the authority to issue changes.

Things might be different if it was a situation where the COR and the contractor  failed to promptly notify the contracting officer of the directed change.   While the changes clause allows for 20 or more days to notify the government of a directed change, in our post aWard conference with the contractor,  the government instructs the contractor to immediately notify the ACO or KO that it has received a directive which it believes to be a change to the contract.

Under the circumstances described in the scenario under this thread, I believe that would be the proper course of action.

I think this is an excellent discussion touching on a more existential point: "The words used in the FAR"  vice "What the FAR is trying to tell me".

While the words of 1.602-3 are a bit messy, it  is clearly telling me that "Ratifications are like deputizing someone after they shoot the bad guy; not the best disincentive to  people taking the law into their own hands!  So if you can resolve your issue without a ratification, and under the terms of the contract, do it!"    Validation comes from the fact that I can apply this interpretation without contravening a single provision of 1.602-3.

Trying to parse the FAR always leads to frustration and argument.  I've found that applying obvious guiding principles provides clarity that is often lacking in the words.

C Culham said:

Joel - Actually the FAR says this -

"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."

Not this 

Quote

On April 10, 2017 at 9:04 PM,  joel hoffman said: 

But that, of course, defeats the intent of the government's policy at 33.204 to make reasonable efforts to resolve controversies prior to the submission of a claim.

Carl, I'm confused.  It should be obvious that telling the contractor to perfect a claim out of a non-claim defeats the purpose of a stated policy in 33.204.  I was paraphrasing part of the policy, using the active voice, rather than the passive voice. The policy urges  [presumably, the contracting officer per the first sentence in the paragraph] to make reasonable efforts to resolve controversies prior to [the contractor] submitting a claim.

 Hard to resolve a non-claim before it becomes a formal claim if you tell the contractor to convert the non-claim issue into a formal claim so that you can resolve it as a claim,  isn't it?  

I didn't mention the first part of the policy. The second sentence is certainly part of the policy, in my opinion. 

As for the DFARS required certification for REAs, it was required by a separate law long ago, even though the language is essentially the same as that for a claim certification.

Joel:

If the particular passage is unclear to some, the contracting officer is responsible for the action --under FAR conventions-- unless another party is expressly cited. (FAR 1.108(f))

Jamaal Valentine said:

Joel:

If the particular passage is unclear to some, the contracting officer is responsible for the action --under FAR conventions-- unless another party is expressly cited. (FAR 1.108(f))

Thanks, Jamaal. I wasn't trying to say that I am confused about the actor in the sentence. Yes, per your citation, I presumed that the actor in this situation is the KO, but the government's policy should also apply to organizations and to anyone administering contracts. I was taught not to coach a contractor to or how to submit a claim but to try to resolve issues before they become claims.  Formal claims invoke procedural processes and a lot of time and effort.  Most construction contractors that I have worked with and all of the big defense contractors that I have worked with on major Systems contracts avoided turning issues into formal claims, if at all possible.  The USACE has promoted formal and informal partnering processes with contractors and with all stakeholders since the late 80's. USACE policy encourages the use of Alternative Dispute Resolution processes, to avoid unnessary reliance on the formal claims process and litigation. There are MANY players involved in these processes not only the KO.

For gosh sakes, if there was a situation under the contract (see Vern's second post in this thread, last Thursday) where the KO was unreachable and the COR took action to save the taxpayers unnecessary expense and probably to minimize disrupting the contractor's operations. The contractor cooperated and the KO agrees that, had he/she known of the situation, he/she would have issued a change order.  Why should the KO tell the contractor to submit a claim so that he/she could resolve the matter of payment as a claim (irrespective of merit of the claim) instead of going through yet another procedural process (ratification)?  The KO ought to take some initiative and just issue a change order the next day!

I am confused why Carl said that the FAR doesn't "say" that the government's policy at 33.204 is to make reasonable efforts to resolve controversies prior to the submission of a claim.  I just reworded the second FAR sentence in the active voice to express policy. 

To me, the second sentence is part of the policy at 33.204. Otherwise, it shouldn't have been included in the same paragraph as the first sentence. 

[See Merriam Webster definition of "say"].

P.S. , I   Doubt that Vern was seriously suggesting that KO's should encourage or direct a contractor to submit a formal claim so that the KO could resolve an unauthorized commitment under FAR 33.2 to avoid the ratification process.  I believe he was saying that FAR 33.2 doesn't only cover formal claims but also matters that could become claims under the contract, regardless of merit/entitlement of the issue (33.204). He said - to emphasize the point-  if Carl cant accept that,  then he could direct the contractor to submit a claim to be able to resolve the matter without ratification.

REA'n Maker said:

I've found that applying obvious guiding principles provides clarity that is often lacking in the words.

I wonder if the Guiding Principles are based on sound logic and are not really as messy as they have been made out to be in this thread?

http://www.cbca.gsa.gov/files/decisions/2010/HYATT_06-15-2010_1165__ENGAGE_LEARNING_INC_508.pdf

http://www.cbca.gsa.gov/files/decisions/2016/POLLACK_03-31-16_2294__AMERICOM_GOVERNMENT_SERVICES_INC.pdf

On 4/11/2017 at 11:11 PM, joel hoffman said:

As for the DFARS required certification for REAs, it was required by a separate law long ago, even though the language is essentially the same as that for a claim certification

Yeah; and the work required of the poor Contract Specialist is practically identical: Rule 4 File, COFD, etc.  

Not to start Nerd War III, but I've often wondered other than the certification, what IS different between an REA and a Claim, practically?  The REA that I worked ended up being a negotiation like almost any other, albeit with a lot more legal input. But at the end of the day, when it was in the  government's best interests to settle on a particular requested cost adjustment, it was the CO's call (e.g., "Although the litigation risk associated with denying the requested cost of this item are low, it is in the Government's best interests to incorporate this cost into the COFD for the purpose of avoiding a formal claim.")

An REA is a request for an adjustment under a contract clause like the changes clause. If the REA meets the requirements of a claim as per FAR, then its an REA thats a claim. Otherwise, its an REA thats not a claim. Vern Edwards wrote something about this in his blog I think.

Rea'n Maker, I'm not sure exactly what your question was concerning the difference between a claim and an REA.  However, to me, the practical differences are that a claim accrues interest while an REA does not.  The cost of pursuing an REA is an allowable contract administration cost (assuming the cost elements are otherwise allowable in accordance with FAR Part 31) while the cost of pursuing a claim is not an allowable cost.  An REA can be resolved by the contracting officer, but a contracting officer may lose the ability to resolve a claim if it gets to the Court of Federal Claims where the government is represented by the Justice Department.  An REA may require the submission of truthful cost or pricing data but no such data is required for a claim.  There are different time limits within which a claim and REA must be asserted.

Quote

Reflectone's REA is clearly “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.”   Reflectone, a contracting party, submitted a written document to the CO demanding the payment of $266,840 which it asserted the government owed for delaying performance of the contract by furnishing defective goods.   The submission was certified and requested a CO decision.   Consequently, Reflectone's REA satisfies all the requirements listed for a CDA “claim” according to the plain language of the first sentence of FAR 33.201.   The REA is not a “routine request for payment” and, therefore, the fourth sentence of the FAR definition does not apply here to require, inter alia, a pre-existing dispute as to either liability or amount.   Because we conclude that Reflectone's REA is a “claim” according to the FAR, we further conclude that the Board has jurisdiction to review the CO's denial of Reflectone's REA.

Reflectone v. Dalton, U.S. Court of Appeals for the Federal Circuit, July 26, 1995, 93-1373.

If an REA meets the requirements for a claim it is an REA that is a claim.

On 4/14/2017 at 0:07 PM, Retreadfed said:

However, to me, the practical differences are that a claim accrues interest while an REA does not.  The cost of pursuing an REA is an allowable contract administration cost (assuming the cost elements are otherwise allowable in accordance with FAR Part 31) while the cost of pursuing a claim is not an allowable cost.  An REA may require the submission of truthful cost or pricing data but no such data is required for a claim.  There are different time limits within which a claim and REA must be asserted.

Good points, all.  But as I said, practical differences associated with resolving either are almost non-existent.

(I believe the Claim requires the cert, while an REA does not.  Unless I am misunderstanding your point.)

If you have a DoD contract, an REA requires certification as well as a claim.  However, there are different certifications for each.