Have you made an unauthorized commitment lately?
(Interpretation and construction)
Military personnel (Laws, regulations and rules)
|Author:||Smith, Eugene J.|
|Publication:||Name: U.S. Army Medical Department Journal Publisher: U.S. Army Medical Department Center & School Audience: Professional Format: Magazine/Journal Subject: Health Copyright: COPYRIGHT 2012 U.S. Army Medical Department Center & School ISSN: 1524-0436|
|Issue:||Date: Jan-March, 2012|
|Topic:||Event Code: 960 International politics; 930 Government regulation; 940 Government regulation (cont); 980 Legal issues & crime Advertising Code: 94 Legal/Government Regulation Computer Subject: Government regulation|
|Product:||Product Code: 9101286 Military Law; 9104111 Active Military Personnel NAICS Code: 92219 Other Justice, Public Order, and Safety Activities; 92811 National Security|
|Organization:||Government Agency: United States. Government Accountability Office|
|Geographic:||Geographic Scope: United States Geographic Code: 1USA United States|
Have you made an unauthorized commitment lately? If you are a US Army Medical Command (MEDCOM) employee who interacts with contractors, vendors, or other nongovernmental individuals who provide goods or services to MEDCOM, the answer may be yes, and you may not yet know it. This article discusses what constitutes an unauthorized commitment, how it commonly occurs, at what point does it occur, why the occurrence date is significant, who is legally liable, why it is important to avoid causing it, why some of them cannot be corrected, and how to reduce the occurrence of unauthorized commitments within MEDCOM.
WHAT IS AN UNAUTHORIZED COMMITMENT?
The Federal Acquisition Regulation (FAR) (48 CFR chap 1) contains the basic policies and procedures that federal government executive agencies must use to acquire goods and services. The FAR defines an unauthorized commitment as:
Although the Department of Defense has issued the Defense Federal Acquisition Regulation Supplement (DFARS) (2) and the Department of the Army has issued the Army Federal Acquisition Regulation Supplement (AFARS) (3) to implement the FAR, neither the DFARS nor the AFARS further defines, clarifies, or explains the phrase "unauthorized commitment." At first glance, the FAR's definition may seem straightforward since it specifies only 4 simple requirements for a communication or transaction to meet the definition of an unauthorized commitment:
1. There must be an agreement, commonly referred to in everyday language as a deal or an arrangement.
2. The agreement must have been made by a federal government representative.
3. The agreement must have been made on behalf of the United States.
4. The agreement must not be legally binding, also known as legally enforceable in court, solely because the government representative who made the agreement lacked the authority to act on behalf of the United States.
The regulatory definition in the FAR is not as simple or as comprehensive as it may initially appear. Upon closer examination, that definition leaves at least 3 major questions unanswered. First, the definition does not identify the status of the other party to the arrangement. Could an arrangement between 2 government representatives meet the definition of an unauthorized commitment? Second, the definition does not specify who qualifies as a "government representative." Could a government representative be the personnel of a government contractor? Third, the definition does not identify what authority is needed to properly act on behalf of the United States. Does a commanding general, subordinate commander, first sergeant, sergeant major, director, or department chief have enough rank or authority to make legally binding agreements on behalf of the United States? With help from the US Government Accountability Office (GAO), we know the answers to these questions will always be a clear and unambiguous, NO. One role of the GAO is to support congressional oversight by auditing agency operations to determine whether federal funds are being spent efficiently and effectively, and by investigating allegations of illegal and improper activities. In 1980, the GAO investigated alleged unauthorized commitments within a specific executive agency. (4) In the report, the GAO's working definition of an unauthorized commitment was
The GAO's definition clarifies that the government representative in the FAR's definition must be a federal employee (civil servants and military members are federal employees), the agreement must be with a contractor (a person not a federal employee), and the authority to make legally enforceable agreements on behalf of the United States is contracting officer authority, not military command authority.
The picture becomes much clearer when we view the FAR's de finition in light of the GAO's clarifications. We see that an unauthorized commitment actually has the following 5, not 4, specific parts or requirements:
1. There must be an agreement.
2. The agreement must have been made by a federal government employee.
3. The agreement must have been made on behalf of the United States.
4. The agreement must not be legally binding solely because the federal government employee who made the agreement did not have contracting officer authority to act on behalf of (legally bind) the United States.
5. The agreement must have been made with a person who was not a United States government employee.
That 5-part definition is a more comprehensive, accurate, and usable definition to use when deciding whether an unauthorized commitment has occurred. Now that we have a clear, comprehensive, accurate, and usable definition of an unauthorized commitment, we can now explore how unauthorized commitments commonly occur within MEDCOM.
THE CONTRACTING OFFICER'S REPRESENTATIVE
It is physically impossible for a MEDCOM contracting officer to personally manage or administer every contract for which he or she is responsible, therefore, contracting officer's representatives (CORs) are designated to assist in managing and administering the contracts. The COR is a government employee who has received special training in contract administration issues, (5,6) and who has been appointed in writing by the contracting officer. The COR serves as the "eyes and ears" of the contracting officer in locations where the contract requires the contractor to actually perform the services or deliver goods. The job of the COR is to see that the contractor is performing all services as stated in the contract, and to promptly report all problems to the contracting officer. The role of the COR is so important to proper contract administration that the Department of Defense, the Department of the Army, and MEDCOM require the contracting officer to appoint an adequately trained COR for all service contracts prior to award of the service contract. Further, MEDCOM requires a general officer or member of the senior executive service to confirm in writing that the contracting officer has indeed appointed or will appoint an adequately trained COR for all MEDCOM service contracts valued over $100,000 prior to award. (7-9) The COR must be a military member or federal civil servant because COR duties are inherently governmental functions due to the amount of discretion and judgment necessary to perform these duties. (6,10)
HOW DO UNAUTHORIZED COMMITMENTS COMMONLY OCCUR WITHIN MEDCOM?
There are 5 ways unauthorized commitments commonly occur. Four of those situations involve a federal employee who is not a contracting officer, who either:
(a) arranges for or permits MEDCOM to continue to receive goods or services after the lawful contract has expired, or
(b) arranges for or permits MEDCOM to receive goods or services when there was no lawful contract, or
(c) arranges for or permits MEDCOM to receive goods or services that are not included in the existing lawful contract, or
(d) directs or permits contractor personnel to deliver goods or perform services under terms and conditions contrary to those of the lawfully awarded contract.
All of the above situations commonly occur within MEDCOM. Although they usually occur at medical treatment facilities, each situation may occur just as easily at an administrative office. The fifth type of unauthorized commitment (Situation (e)) involves a contracting officer who purports to act on behalf of the United States, but the dollar amount of the agreement exceeds his or her designated contracting authority. This situation rarely occurred within MEDCOM during the last decade, perhaps because of the checks and balances in the contracting process.
As previously described, the COR serves as the eyes and ears of the contracting officer. The general rule is that the COR has no authority to serve as the "mouth" of the contracting officer, and is limited to the authority granted by the contracting officer in the COR's appointment letter. Therefore, a COR or any other member of a department or MEDCOM office unintentionally makes an unauthorized commitment by ordering goods or services after the contract for those goods or services has expired. If the COR, department chief, office director, or anyone else other than a contracting officer tells or permits the vendor to deliver goods or perform services because he or she honestly but incorrectly believes a contract still exists, that person unintentionally makes an unauthorized commitment. The same is true if that person honestly but incorrectly believes that a new contract to continue a particular contract service has already been awarded because the paperwork was submitted to the contracting office many weeks ago, but in fact the contract had not yet been awarded. Yes, a government employee may make an unauthorized commitment without intending to do so. Yes, a government employee may make an unauthorized commitment even if he or she orders goods or services that the government actually needed and the government actually received and used the goods or services to accomplish a critical part of the mission. These kinds of unauthorized commitments occur because the person incorrectly assumes that a prior contract is still in existence, or that the contracting office has already awarded a follow-on contract for the goods or services in question. The person's beliefs and intents are irrelevant for the purpose of determining if the person made an unauthorized commitment. The sole focus in determination as to whether an unauthorized commitment occurred is whether the government employee had authority to act on behalf of the government in arranging to obtain the goods or services from the vendor.
The COR or other member of a MEDCOM organization makes an unauthorized commitment by arranging to receive goods or services when there is no contract for those goods or services. Since a government official can make an unauthorized commitment by acting under an honest but incorrect belief that there is an existing contract, it logically follows that the same action by an official in a situation where there never was an actual contract also creates an unauthorized commitment.
Unauthorized commitments occur in situations where the government official, being unfamiliar with the rules concerning who has authority to legally bind the government, purports to act on behalf of the government based on the official's military rank, civil service grade, and/ or duty title. This situation is different from the earlier situations in which the government official incorrectly believed he or she was following proper procedures. In this situation, the government official is unaware of the proper procedures or elects to disregard the proper procedures. It takes time to process paperwork. Although time is valuable, a lack of planning or a failure to follow proper emergency procedures is irrelevant to the definition of an unauthorized commitment. (1) Even when time is of the essence and a MEDCOM medical facility or other MEDCOM organization needs goods or services that are not already under a contract, the only authorized method of getting them quickly is through the proper contracting process. Needing it now is not an exception or defense for creating an unauthorized commitment.
An unauthorized commitment occurs when a government official who lacks proper authority orders particular goods or services that are not included on the existing contract. An example: there is an existing contract for goods or services X1 through X1001. That contract may have been in place for several years and the medical facility or other MEDCOM organization had never needed goods or services other than X1 through X1001 during the contract period. A new, bona fide need for goods or services X1002 may arise due to the arrival of a new provider, new person, or new patient; addition of new capabilities; or because of changes in other legitimate circumstances. An unauthorized commitment occurs if a government official other than a contracting officer orders goods or services X1002 on behalf of the government before the contracting officer modifies the contract to add these particular goods or services. This is true because goods or services X1002 is not among the goods or services the "noncontracting officer" government official is authorized to order under the terms of the existing contract. In a more specific example, let us suppose there is an existing contract for EEMMR Smith Knee Company to provide specified knee implant items to Best Army Medical Center. A new surgeon has been assigned, hired, or contracted to perform surgeries, including knee replacement surgeries, at Best Army Medical Center. The new surgeon has a legitimate reason to use knee implant items that are not listed on the contract with EEMMR Smith Knee Company, or on any other contract available to Best Army Medical Center. If a government official then arranges for any vendor to supply these different knee implant items, an unauthorized commitment is created because these items are not available under an existing contract. The same situation exists if the government official arranges for EEMMR Smith Knee Company to supply these knee implant items, because these items are not listed on their existing contract with the government.
An unauthorized commitment occurs when a government official, who lacks proper authority, directs or permits contractor personnel to deliver goods or perform services under terms and conditions contrary to those of the lawfully awarded contract. If the contract requires the contractor to only perform services from Monday through Friday, any government official other than a contracting officer causes an unauthorized commitment by directing or permitting contractor personnel to perform services on a Saturday to help government employees eliminate a backlog, or help meet a need for services on that day. Changing the performance dates or increasing the amount of contract services makes the government liable for an upward adjustment in the contract price. Only a contracting officer has authority to direct or permit changes in contract performance that may result in the government owing more money to the contractor, or receiving less goods or services. Likewise, if the contract requires the contractor to perform particular kinds of services, any government official other than a contracting officer causes an unauthorized commitment by directing or permitting contractor personnel to perform other kinds of services. For example, if the contract provides only for cleaning floors and carpets, directing or permitting contractor personnel to take out the trash is an unauthorized commitment. Since contractor personnel are authorized to be on government property solely for the purpose of performing the services specified in the government contract with their employer, they have no authority to provide free services on behalf of their employer. Even if contractor personnel have authority to provide free services on behalf of their employer or on behalf of themselves, such actions raise legal issues related to accepting gifts on behalf of the government. Gifts of goods or volunteer services must be processed in accordance with specific Department of Defense and Army rules. (11,12) These procedures are designed to protect the interest of the government and the gift-giver, but are not convenient for everyday use.
The fifth type of unauthorized commitment occurs when a contracting officer purports to obligate the government in a contract that exceeds his or her warrant authority. (13-15) Just as a commander does not have unlimited authority to command, some contracting officers hold contracting warrants that limit their authority to contract on behalf of the government. If the contracting officer exceeds the dollar threshold or other limitation of his or her contracting warrant, such action causes an unauthorized commitment because the contracting officer is acting without contracting authority. This is the same situation that occurs when any other government official purports to contract on behalf of the government without having the required contracting authority. For example, an unauthorized commitment occurs if a contracting officer with a contracting warrant that is limited to awarding contracts up to $2 million awards a contract for $3 million. Similarly, an unauthorized commitment occurs if a COR or other government official exceeds his or her delegated authority to order goods or services under an existing contract vehicle. For example, suppose the contracting officer delegates authority to a government official to order up to $5,000 worth of goods or services in a single order under a specific blanket purchase agreement. (16,17) If that government official places an order for $6,000 in goods or services on the specified blanket purchase agreement, or places an order for $4,000 not using the specified blanket purchase agreement, an unauthorized commitment occurs. The government official exceeded his or her delegated authority to order goods or services on behalf of the government.
WHO IS LEGALLY RESPONSIBLE FOR COMMITTING THE UNAUTHORIZED COMMITMENT?
Is the vendor legally responsible for committing the unauthorized commitment? After all, the vendors know (or should know) if they have contracts with the government, and know (or should know) the respective goods or services each contract requires the vendor to provide. While that may be true, vendors are not legally responsible for causing the unauthorized commitment. Remember, the government's definition of an unauthorized commitment looks at the actions of a government employee, not at the actions of the vendor's employees. (1) The definition is the same even if the same vendor repeatedly provides goods or services to the government with full knowledge that those goods or services are not covered by a lawful government contract. The vendor's financial risk, eagerness, or overeagerness to sell goods or services to the government has no role in the definition of an unauthorized commitment. However, the vendor does face a potential financial risk, which will be discussed later.
Commander Or Supervisor
Is the commander or the supervisor legally responsible for committing the unauthorized commitment? After all, the commander and the supervisor are responsible for what happens in their organization. That may be true, but the commander and the supervisor are not legally responsible for creating the unauthorized commitment. Again, the government's definition of an unauthorized commitment looks at the actions of the government official who actually made the arrangements with the vendor on behalf of the government without having proper authority. (1)
The Responsible Government Official
Yes, the government official who made the arrangements with the vendor on behalf of the government is the person legally responsible for creating the unauthorized commitment. A government official may create an unauthorized commitment by words or actions that cause the vendor to deliver goods or services on behalf of the government. A clear example is when a government official calls the vendor and tells the vendor to deliver a specified amount of particular goods or services to a designated location by a certain date for use by the government. The vendor does not know what the government needs until someone inside the government provides that specific information. If a government official provides this information to a vendor to obtain pricing information while conducting market research (18,19) or for any other reason, the burden is on that government official to make it clear to the vendor that their communication is not an order by the government for goods or services. Another clear example is a government official directing contractor personnel to perform services not included under the contract, or directing them to perform a greater quantity of services that the amount specified in the contract. Both situations cause the contractor to incur extra cost. Since goods or services are not free, the contractor naturally expects to be paid extra money for providing the extra goods or services.
A government official may also commit an unauthorized commitment by inaction or omission. For example, suppose the contract expires on Monday, but the contractor's personnel show up on Tuesday and continue to perform the same services, but the government official in charge of monitoring the contract services does nothing to stop that performance. If that government official knows (or reasonably should have known) about the contractor's continued performance and does nothing to stop it, that person commits an unauthorized commitment.
The bottom line; a government official may commit an unauthorized commitment by commission or by omission. The question is whether that person's actions or inactions with the vendor caused the vendor to deliver goods or perform services under the incorrect belief that this person had authority to act on behalf of the government.
AT WHAT POINT DOES AN UNAUTHORIZED COMMITMENT OCCUR?
The unauthorized commitment occurs at the moment the government official, without authority, completes the arrangements for the vendor to provide goods or services on behalf of the government. A government official may have several communications over many months with a vendor to discuss the needs of the government. Or, the government official may have only one communication--in person, by phone, by fax, or by email--with the vendor concerning the needs of the government. The amount of back and forth communications is not the key to determining the point at which the unauthorized commitment occurs. It occurs at the point when the government official and the vendor reach a general understanding or deal concerning what the vendor will do and how much the government will pay the vendor for doing it. The price need not be expressly stated. The facts may show the price was implied to be the amount the government paid the last time, derived from the vendor's catalog, or is simply what the parties incorrectly believe to be the contract price. By definition, the unauthorized commitment occurs at the time the government official, without authority, completes the arrangements for the vendor to provide goods or services on behalf of the government. The unauthorized commitment does not occur later when the vendor actually delivers the goods or performs the services.
In the case of an unauthorized commitment created by omission, the unauthorized commitment occurs at the time the government official knows, or should have reasonably known, of the vendor's continued performance without the benefit of a contract. The vendor will normally submit an invoice for payment at the same prices as in the expired contract.
WHAT IS THE SIGNIFICANCE OF THE DATE ON WHICH THE UNAUTHORIZED COMMITMENT OCCURRED?
It is critically important to determine the correct date on which the unauthorized commitment occurs because of fiscal law reasons. If the unauthorized commitment is later approved or ratified by a government official with authority to do so, the money must come from the fiscal year in which the unauthorized commitment was made. (20)
In some instances, the unauthorized commitment may have occurred 2 or more fiscal years ago, the vendor may have provided the goods or services one or more fiscal years ago, a government official may not have discovered and reported the situation until last fiscal year, and it may not be ratified or approved until this fiscal year. This is the case if the government official made the unauthorized deal with the vendor in August of fiscal year 2008, the vendor delivered the goods or services on time in November of fiscal year 2009, the vendor did not submit a proper invoice to the government until July of fiscal year 2010, and the transaction was not approved until December of fiscal year 2011. Using the wrong fiscal year money to pay the vendor is a Bona Fide Need Rule violation, a statutory violation. (21,22) That is why is it critically or criminally important to document in which fiscal year the unauthorized commitment occurred. That task becomes harder and harder the closer to the end of the fiscal year that the unauthorized commitment occurs, and government personnel with personal knowledge of communications between the vendor and the government official are no longer available to provide information. The absence of government officials with personal knowledge of the facts may mean having to rely on the "paper trail" to reconstruct what happened, and when it happened.
WHY IS IT IMPORTANT TO AVOID COMMITTING AN UNAUTHORIZED COMMITMENT?
One reason it is important to avoid committing unauthorized commitments is because committing them is a regulatory violation. The regulations say do not do it. (23,24) If you do not have a contracting officer's warrant that gives you authority to enter into contracts or make deals on behalf of the government, comply with the regulations and do not do it. Even in emergencies, there should be enough time to contact the COR, permit the COR to notify the contracting officer, and allow the contracting officer to make the necessary arrangements to avoid mission failure. The COR must be contacted so that an authorized government official may promptly take the proper contracting steps for mission success. If the COR is unavailable for any reason, the proper action is to contact the on-duty contracting officer that services your organization to quickly obtain the required goods and services.
Another reason it is important to avoid committing an unauthorized commitment is the harsh financial impact on the vendor. After the contracting officer has put a contract vehicle in place under which to make the payment, the vendor must still wait for the Defense Finance and Accounting Service to make the payment. Because of processing and paying times, it could take several months before the vendor actually receives payment, even if the unauthorized commitment is immediately discovered. As you might imagine, it is a severe financial hardship for small businesses to wait several months for payment from the government while those small businesses must meet weekly payroll and other operating costs.
Another reason it is important to avoid making an unauthorized commitment is the potential for personal financial disaster. Of course, a civil service official is subject to possible adverse personnel actions for failing to correctly perform his or her job since his or her job does not include making unauthorized commitments. Those adverse actions are stipulated in Army Regulation 690-700, (25) Chapter 751, Table 1-1, Offense 14, as shown in the Figure. A military official is subject to possible punishment under Article 134 of the Uniform Code of Military Justice. (26) The beginning of personal financial disaster for civil service officials and/or military members could also be the end of their government employment. Such is very unlikely to occur in MEDCOM, especially on a first offense and when the person was acting in good faith to get the mission accomplished. However, the other path to personal financial disaster could be a vendor suit for payment against the person who created the unauthorized commitment in his or her personal capacity, because the rules prohibited the government from ratifying the unauthorized commitment. If the vendor delivered goods and services as agreed, but the rules prohibit the government from paying the vendor for those goods and services, the vendor has a legal right to file a lawsuit against a government official in his or her personal capacity for full payment for those goods and services agreed to by that government official. Having to personally pay tens of thousands or hundreds of thousands of dollars for goods and services used by the government, plus interest, court costs, and attorney fees, would most likely be a personal financial disaster for most government employees.
Another reason it is important to avoid making an unauthorized commitment is the large amount of MEDCOM human resources required to process an unauthorized commitment action. The ratification process--the formal contracting procedures used to determine if the government can and should pay the vendor for the goods or services--is time-consuming. (1) Under current MEDCOM Pamphlet 715-2, (27) the vendor will almost always have to create and submit a special invoice. The vendor's usual invoice will almost never contain the special language required for the vendor to certify that the vendor delivered the goods or services to the government, and to certify that the vendor has not yet been paid for these goods or services. To avoid submitting a false claim, (28) the vendor must take the time to verify the facts, prepare the new special invoice, certify that invoice, and submit it to the government. In addition to obtaining a proper invoice, the person who made the unauthorized commitment must complete and sign a portion of MEDCOM Form 141-R to provide the facts as to what happened. The supervisor of the person must complete and sign another portion of that form to confirm the facts. The first colonel or civilian equivalent official in the person's supervisory chain must also complete and sign a portion of the MEDCOM Form 141-R. If the incident occurred at a military medical facility, the commanding officer of that medical facility must also complete and sign a portion of the form. All of this takes time, especially when you consider that individuals may be on leave or have changed duty stations. Completed documentation goes to the contracting officer for a decision or recommendation, depending on the amount of money involved. It takes time for the contracting officer to reach a decision or recommendation because he or she is usually busy awarding new contracts or administering existing contracts. If the contracting officer finds that the vendor should receive payment, the contracting office must wait for the budget office of the person who made the unauthorized commitment to provide a funding document with full funding certified for the proper fiscal year within which the unauthorized commitment occurred. The contracting officer must send the file to the legal office for review (29) to make sure the proposed payment is legal. It is common for a legal review to require a long time. It takes even more time if the file is legally insufficient and more documentation must be gathered. Once the file receives "legally sufficient" status, the contracting officer or a higher level contracting official signs the MEDCOM Form 141-R to approve the payment. The contracting officer must then issue a new contract vehicle to the vendor, or modify the existing contract to have a contract vehicle under which to make the payment. If the amount of the unauthorized commitment is $100,000 or more, the ratification process includes an in-person or video teleconference appearance by specific officials before the Head of the Contracting Activity (currently a dual-hatted responsibility of the Chief of Staff, MEDCOM) to explain the situation and remedial measures. (30) All of this processing time consumes taxpayers' money to pay many government employees to process unauthorized commitment forms, instead of paying them to do their "real" jobs.
WHY ARE SOME UNAUTHORIZED COMMITMENTS NOT RATIFIABLE?
The FAR requires legal review (29) of all proposed ratification actions because there are limitations on approving ratifications of unauthorized commitments. An unauthorized commitment cannot be legally ratified unless 1 specific conditions are satisfied. (31,32)
1. The vendor must have already provided the goods or services to the government, and the government must have already accepted them, or the government has otherwise obtained or will obtain a benefit from performance of the unauthorized commitment. If the vendor has not yet provided the goods or services, the unauthorized commitment cannot be legally ratified, regardless of the amount of expenses the vendor incurred in preparing to deliver the goods or services.
2. A government official must have proper authority to ratify an unauthorized commitment. Government officials do not have ratification authority based on their military rank or civil service grade. Only specified government officials with contracting authority have ratification authority. In addition, officials with ratification authority have limitations on the dollar amount they are authorized to ratify. (33) It is legally impermissible to split the unauthorized commitment for the purpose of avoiding an approval threshold.
3. The contract that results from the ratification action must have otherwise been proper if it had been originally made by an appropriate contracting officer. In other words, the unauthorized commitment cannot be properly ratified if contracting or fiscal law rules would have prohibited a contracting officer from entering into the original agreement on behalf of the government. One example: if contracting rules required the government to acquire the goods or services from a small business, but the unauthorized commitment is with a large business.
4. The contracting officer reviewing the unauthorized commitment must determine that the invoiced price is fair and reasonable. To make this determination, the contracting officer relies on market research, (18) personal knowledge, prices listed on existing contracts for the same or for similar goods or services, and other reasonable means. If the invoiced price is too high, the contracting officer has authority to negotiate a lower invoice price.
5. The contracting officer must recommend payment of the invoice, and legal counsel must concur in that recommendation. The contracting officer has a duty to gather the facts and comply with various contracting statutes, regulations, rules, and policies before making a recommendation. The legal counsel has a duty to review the file for legal sufficiency.
6. The correct amount and correct kind of government funds must have been available at the time the unauthorized commitment occurred, and those funds must be currently available to pay the invoiced amount. To know if the required funds were available and are still available, the contracting officer relies on a certification from a resource management official in the organization of the person who made the unauthorized commitment.
7. An unauthorized commitment cannot be legally ratified unless it complies with all other limitations prescribed under Army procedures. For example, local agency procedures could further restrict the dollar thresholds at which various contracting officials have authority to ratify the unauthorized commitment.
HOW TO REDUCE THE NUMBER OF UNAUTHORIZED COMMITMENTS WITHIN MEDCOM?
The number of unauthorized commitments may be reduced within MEDCOM by some or all of the following actions:
Education--This is the first step in knowing what comprises an unauthorized commitment, recognizing situations that are likely to result in an unauthorized commitment, and understanding why it is so important to avoid creating an unauthorized commitment. Without the education piece of the equation, government employees will not know what are unauthorized commitments, why they are highly undesirable, or how to avoid causing them to occur. Education is so important that all Office of the Surgeon General and MEDCOM employees are required to receive unauthorized commitment training as part of their annual ethics training. (34) The MEDCOM Health Care Acquisition Activity has created a video to facilitate this annual training and increase awareness of the need to avoid causing unauthorized commitments. Most unauthorized commitments occur because government employees are not aware that they lack authority to enter or change contracts on behalf of the government.
Attention to details--A lack of attention to details results in many unauthorized commitments. Too many government officials are paying inadequate attention to the terms and conditions of the existing contract, including the contract expiration date. As discussed earlier, ordering goods/services that are not included on the contract or continuing to order goods/services after the contract has expired will result in an unauthorized commitment. Paying closer attention to exactly what goods or services are covered by the contract and the available period for obtaining them will reduce the number of unauthorized commitments.
Planning--Some unauthorized commitments occur because of a lack of adequate planning to properly contract for the necessary goods or services before they are actually needed to accomplish the mission. Obviously, when individuals need something in their personal lives, they can make a quick trip to the store of their choice and purchase the item of their choice with personal funds. When the government needs something and will use appropriated funds to purchase the item, statute requires the government shopper to follow certain competition rules before obligating the government to part with taxpayers' money. (35) Depending on the amount of money involved, these competition rules require the government to give some degree of notice to the public so that interested sellers will have a fair opportunity to compete in the sale of their goods and services to the government. Compliance with the competition procedures takes time. This is why the customer sometimes assumes that a new contract is in place because the contracting office has had the requirement, the funding document, and the rest of the acquisition package for weeks, or even months. Advance planning is required to give the contracting office enough time to properly award a contract for the goods and services in routine situations. There are some sole-source, shortcut procedures for legitimate emergencies, but not for use when the customer creates the urgency by failing to perform adequate acquisition planning. (36)
Accountability--This is the final step in reducing the number of unauthorized commitments. Being held personally accountable for creating an unauthorized commitment should be an extra personal incentive for government employees to learn about unauthorized commitments and to avoid creating them. As can be easily imagined, increasing personal accountability by taking appropriate disciplinary actions against MEDCOM personnel who create unauthorized commitments is much more challenging when the offenders act solely for the benefit of the military mission and without any personal gain. To get the job done and the absence of personal gain are 2 consistent features of unauthorized commitments created in MEDCOM. While these 2 features may be admirable, they are totally irrelevant to the legal issue of whether an unauthorized commitment occurred.
Because health care costs tend to be relatively high, unauthorized commitments for health care goods and services also tend to be relatively large. You may wonder how large is "relatively large." A review of MEDCOM Form 747-R submissions over the last decade determined that the most expensive unauthorized commitment in MEDCOM for that period occurred in 2006 in the amount of $656,483.40 for nucleic acid test kits and testing services for HIV-1, Hepatitis C, and the West Nile Virus (MEDCOM Form 747-R dated September 14, 2007). The single largest series of unauthorized commitments for the same goods and services during the last decade occurred from March 14, 2005 through July 6, 2005 when MEDCOM personnel made 365 unauthorized commitments totaling $646,168.89 to the same vendor for the same kind of goods and services for patient care of amputee patients of Operations Enduring Freedom/Iraqi Freedom (MEDCOM Form 747-R dated July 21, 2005). Although these goods and services were needed and were used to accomplish the mission in both situations, the unauthorized commitments could have been avoided by providing proper training, paying adequate attention to details, planning to meet the needs for future contract goods and services, and having a consistent history of holding individuals personally accountable for creating unauthorized commitments. There is seldom, if ever, a situation where an unauthorized commitment cannot be avoided. Customers should always contact their servicing contracting office when they have routine or urgent needs for goods or services that are not covered by an existing contract. The contracting officer has the authority to legally bind the government by creating a legal obligation for the government to pay for goods and services.
For all of the reasons presented in this article, when situations conducive to creating an unauthorized commitment occur, MEDCOM personnel must resist the temptation to take a chance on accomplishing the mission through unauthorized means. Instead of creating an unauthorized commitment to get the job done, MEDCOM personnel should contact their servicing contracting office, day or night, and acquire the goods and services through proper contracting means.
(1.) Federal Acquisition Regulation, Subchapter A, Part 1, Paragraph 1.602-3(a). https://www.acquisition. gov/far/loadmainre.html.
(2.) Defense Federal Acquisition Regulation Supplement. Washington, DC: US Dept of Defense; 1998 [2011 update]: Subpart 201.6. Available at: http://www.acq.osd.mil/dpap/dars/dfars/pdf/r2011 1004/201_6.pdf.
(3.) Army Federal Acquisition Regulation Supplement. Washington, DC: US Dept of the Army; 2001 (2010 update): Subsection 5101.602-3. Available at: http://farsite.hill.af. mil/reghtml/regs/other/afars/5101. htm#P225_28467.
(4.) Comptroller General of the United States. Unauthorized Commitments: An Abuse of Contracting Authority in the Department of Energy. Washington DC: US General Accounting Office; December 4, 1980. Report EMD-81-12. Available at: http://archive.gao.gov/f0202/114245.pdf. Accessed October 6, 2011.
(5.) Federal Acquisition Regulation, Subchapter A, Part 1, Paragraph 1.602-2(d). Available at: https://www.acquisition.gov/far/loadmainre.html.
(6.) Defense Federal Acquisition Regulation Supplement. Washington, DC: US Dept of Defense; 1998 [2011 update]: Paragraph 201.602-2(2). Available at: http://www.acq.osd.mil/dpap/dars/dfars/pdf/r20111004/201_6.pdf.
(7.) Deputy Secretary of Defense. Memorandum: Monitoring Contract Performance in Contracts for Services. Washington, DC: US Dept of Defense; August 22, 2008. Available at: https://acc.dau.mil/CommunityBrowser.aspx?id=278831. Accessed October 6, 2011.
(8.) Army Regulation 70-13: Management and Oversight of Service Acquisitions. Washington, DC: US Dept of the Army; July 30, 2010: paragraphs 2-2.f, 2-5.
(9.) Office of The Surgeon General. Memorandum: MEDCOM Policy on In-sourcing/Civilian Hiring Actions (CHA) and Service Contract Approval (SCA) Requests. Fort Sam Houston, TX: US Army Medical Command; February 26, 2010:2. OTSG/MEDCOM Policy Memo 10-007.
(10.) Federal Acquisition Regulation, Subchapter A, Part 1, Subparagraph 1.602-2(d)(1). Available at: https://www.acquisition.gov/far/loadmainre.html.
(11.) 31 USC [section] 1342.
(12.) Comptroller General of the United States. Gifts of Goods and Services to the Government. Washington, DC: US General Accounting Office; March 4, 2002. Opinion B-289903. Available at: www.gao.gov/decisions/appro/289903.pdf. Accessed October 6, 2011.
(13.) Federal Acquisition Regulation, Subchapter A, Part 1, Paragraph 1.602-1(a). Available at: https://www.acquisition.gov/far/loadmainre.html.
(14.) Federal Acquisition Regulation, Subchapter A, Part 1, Paragraph 1.603-3(a). Available at: https://www.acquisition.gov/far/loadmainre.html.
(15.) Army Federal Acquisition Regulation Supplement. Washington, DC: US Dept of the Army; 2001 (2007 update): Subparagraph 5101.602-1(b)(2). Available at: http://farsite.hill.af.mil/reghtml/regs/other/ afars/5101.htm#P225_28467.
(16.) Federal Acquisition Regulation, Subchapter C, Part 13, Subparagraph 13.303-3(a)(3). Available at: https://www.acquisition.gov/far/current/html/ Subpart%2013_3.html#wp1092057.
(17.) Federal Acquisition Regulation, Subchapter C, Part 13, Subparagraph 13.303-3(a)(4). Available at: https://www.acquisition.gov/far/current/html/ Subpart%2013_3.html#wp1092057.
(18.) Federal Acquisition Regulation, Subchapter B, Part 10. Available at: https://www.acquisition.gov/far/ current/html/FARTOCP10.html#wp266706.
(19.) Army Federal Acquisition Regulation Supplement. Washington, DC: US Dept of the Army; 2001 (2010 update): Section 5110.002. Available at: http:// farsite.hill.af.mil/reghtml/regs/other/afars/5110. htm#P3_34.
(20.) Federal Acquisition Regulation, Subchapter A, Part 1, Subparagraph 1.602-3(c)(6). Available at: https://www.acquisition.gov/far/loadmainre.html.
(21.) 31 USC [section] 1502(a).
(22.) General Accounting Office. Principles of Federal Appropriations Law. Vol 1. 3rd ed. Washington DC: Office of the General Counsel, GAO; January 2004:5.11-5.15. Available at: http://www.gao.gov/special.pubs/d04261sp.pdf.
(23.) Federal Acquisition Regulation, Subchapter A, Part 1, Paragraph 1.602-1(b). Available at: https://www.acquisition.gov/far/loadmainre.html.
(24.) Federal Acquisition Regulation, Subchapter A, Part 1, Paragraph 1.602-3(b). Available at: https://www.acquisition.gov/far/loadmainre.html.
(25.) Army Regulation 690-700: Personnel Relations and Services (General). Washington, DC: US Dept of the Army; 1981. Available at: http://www.apd.army.mil/cpol/cpo.asp.
(26.) 64 Stat. 109, 10 USC, chap 47.
(27.) MEDCOM Pamphlet 715-2: US Army Medical Command Request for Approval of Unauthorized Commitment Processing Ratifications. Fort Sam Houston, Texas: Headquarters, US Army Medical Command; March 10, 2005.
(28.) 31 USC [section]3729.
(29.) Federal Acquisition Regulation, Subchapter A, Part 1, Subparagraph 1.602-3(c)(5). Available at: https://www.acquisition.gov/far/loadmainre.html.
(30.) Health Care Acquisition Activity Policy Letter 1102: Policy and Procedures Regarding Unauthorized Commitments. Fort Sam Houston, Texas: Headquarters, US Army Medical Command; May 31, 2011:para 7g2.
(31.) Federal Acquisition Regulation, Subchapter A, Part 1, Paragraph 1.602-3(c). Available at: https://www.acquisition.gov/far/loadmainre.html.
(32.) Army Federal Acquisition Regulation Supplement. Washington, DC: US Dept of the Army; 2001 (2010 update): Paragraph 5101.602-3-90. Available at: http://farsite.hill.af.mil/reghtml/regs/other/afars/5101.htm#P225_28467.
(33.) Army Federal Acquisition Regulation Supplement. Washington, DC: US Dept of the Army; 2001 (2010 update): Paragraph 5101.602-3(b). Available at: http://farsite.hill.af.mil/reghtml/regs/other/afars/5101.htm#P225_28467.
(34.) Office of The Surgeon General. Memorandum: Policy and Procedures Regarding Unauthorized Commitment Training (UAT). Fort Sam Houston, Texas: US Army Medical Command; March 3, 2010. OTSG/MEDCOM Policy Memo 10-010.
(35.) 10 USC [section]2304(c).
(36.) Federal Acquisition Regulation, Subchapter B, Part 6, Section 6.301(c)(1). Available at: https://www.acquisition.gov/far/loadmainre.html. Available at: https://www.acquisition.gov/far/ current/html/Subpart%206_3.html#wp1086841.
Lt Col (Ret) Eugene J. Smith, JAG, USAF
Lt Col (Ret) Smith is a Contracts Law Attorney Advisor with the Office of the Staff Judge Advocate, US Army Medical Command, Fort Sam Houston, Texas.
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. (1)
... an informal agreement, between a contractor and a federal employee who does not have contracting officer authority, to begin work. (4(pvii))
Offense Nature of Offense First Offense Second Offense 14. Failure to a. Violation of Written 1-14 day observe written administrative reprimand to 1 suspension regulations, rules or day suspension orders, rules, regulations or procedures where safety to persons or property is not endangered. b. Violation of Written 30 day administrative reprimand to suspension to rules or removal removal regulations where safety to persons or property is endangered. c. Violations of official security regulations. Action against National Security: (1) Where Written 1-14 day restricted reprimand to 5 suspension information is day suspension not compromised and breach is unintentional. (2) Where Written 30 day restricted reprimand to suspension to information is removal removal compromised and breach is unintentional. (3) Deliberate 30 day Removal violation. suspension to removal Offense Nature of Offense Third Offense Remarks 14. Failure to a. Violation of 5 day observe written administrative suspension to regulations, rules or removal orders, rules, regulations or procedures where safety to persons or property is not endangered. b. Violation of Removal administrative rules or regulations where safety to persons or property is endangered. c. Violations of official security regulations. Action against National Security: (1) Where 5 day See AR 380-67 * restricted suspension to and 5 USC information is removal [section]7532 not compromised and breach is unintentional. (2) Where Removal restricted information is compromised and breach is unintentional. (3) Deliberate violation. * Army Regulation 380-67: Personnel Security Program, September 9, 1988
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