1.602-3 Ratification of unauthorized commitments
Source: FAR 1.602-3 on acquisition.gov
Unauthorized commitments can only be ratified under strict conditions, and contractors should ensure government representatives have proper authority before accepting agreements.
Overview
FAR 1.602-3 addresses the ratification of unauthorized commitments—agreements made by government personnel who lacked the authority to bind the government. This section defines key terms, outlines agency policy to discourage unauthorized commitments, and establishes the process and limitations for ratifying such actions when they occur. It also clarifies the roles of contracting officers and agency officials in reviewing and approving ratifications, and provides guidance for handling nonratifiable commitments.
Key Rules
- Definitions
- "Ratification" is the approval of an unauthorized commitment by an authorized official. "Unauthorized commitment" is an agreement not binding on the government because the representative lacked authority.
- Policy
- Agencies must minimize unauthorized commitments and use ratification procedures only when necessary. Ratification authority generally rests with the head of contracting activity or higher, and may not be delegated below the chief of the contracting office.
- Limitations
- Ratification is only allowed if the government received a benefit, the ratifying official has proper authority, the contract would have been proper if made by a contracting officer, the price is fair and reasonable, payment is recommended by the contracting officer and legal counsel, funds were available at the time, and agency procedures are followed.
- Nonratifiable Commitments
- If a commitment cannot be ratified, it may be resolved through the GAO claims process or under FAR subpart 50.1, with legal advice required.
Responsibilities
- Contracting Officers: Review unauthorized commitments, determine price reasonableness, recommend payment, and ensure compliance with agency procedures.
- Contractors: Ensure they only accept commitments from authorized government representatives to avoid payment risks.
- Agencies: Establish procedures, designate ratification authority, and discourage unauthorized commitments.
Practical Implications
- This section exists to protect the government from unauthorized obligations and to provide a controlled process for resolving such situations. Contractors risk nonpayment if they act on unauthorized commitments. Agencies must ensure robust training and oversight to prevent unauthorized actions and follow strict procedures when ratification is necessary.
(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 http://uscode.house.gov/view.xhtml?req=granuleid%3AUSC-prelim-title41-chapter71&saved=%7CZ3JhbnVsZWlkOlVTQy1wcmVsaW0tdGl0bGU0MC1jaGFwdGVyMzctZnJvbnQ%3D%7C%7C%7C0%7Cfalse%7Cprelim&edition=prelim" target="_blank">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.