Authority to spend taxpayers' dollars rests with just a few
September 23, 2013
Only a select few people have the authority to obligate money on behalf of the U.S. government. If, without understanding the rules, a person obligates the U.S. government without that authority, they may be instead obligating themselves as a party to the contract.
The government is not required to spend funds on any goods or services procured by unauthorized personnel. Unfortunately, such purchases do occur. Thus there are procedures to handle those situations.
Nonetheless, to avoid serious financial liability, everyone needs to understand who has the authority to commit the government to purchases or contracts, and when.
Federal laws and regulations are very clear: Only a contracting officer can purchase goods or services or contract for them on behalf of the government. Without a warrant as a contracting officer, issued by an authorized government official, an individual cannot commit the government. If they do, they are in effect establishing a personal commitment and possibly personal financial liability for the action.
Congress has given authority to specific individuals, referred to as head of the contracting activity, to obligate taxpayer dollars in commercial transactions and all contracting matters. HCAs are usually general officers or senior executive service employees.
The HCA delegates authority down to principal assistants responsible for contracting and, through the use of warrants, to contracting officers, commonly referred to as KOs. PARCs are generally in command or direct a brigade-size element, while KOs work at various levels procuring a host of goods and services for Department of Defense. These individuals execute the procurement of most goods and services that DOD purchases.
Their specific authority strictly defines the ability of people in these positions to use taxpayer dollars. Each level of authority carries with it discretion to make procurement decisions based on the dollar value and type of contract.
To help manage the multitude of contracts across DOD, contracting officer representatives are appointed by HCAs or their designees within units that receive the procured goods or service. A COR has no authority to bind the government, but instead is the eyes and ears for the KO who is managing the contract. The COR performs specific technical or administrative functions relating to the contract. Importantly, typical COR designations do not authorize them to take any action, such as modification of the contract, which obligates the payment of money.
In addition to these acquisition personnel, a government purchase card holder has the authority to make purchases for the government, but only within the confines of the card limit and the Army regulation outlining GPC operating procedures. A GPC holder uses the card to purchase a large variety of items in order to support his or her unit's mission. These items are those that are not recurring expenses and that cannot be efficiently procured using the normal supply system.
But purchase procedures sometimes go wrong. As noted above, the government is required to honor only contracts created by people acting within the scope of their authority to enter into them. A person who obligates the government who in fact did not have the authority to do so has only obligated themselves as a party to the contract. The government is not required to spend funds on any goods or services procured by unauthorized personnel.
But there is a mechanism for making good on an unauthorized commitment.
Say the unit did in fact need those items and had the proper procedures been followed, the KO would have entered into a contract for the items. That KO can ratify the UAC under particular circumstances.
The KO may ratify a UAC in part or in whole if the following conditions are met:
• The government has received and accepted supplies or services, or the government has obtained or will obtain a benefit from the contractor's performance of an unauthorized commitment.
• At the time the unauthorized commitment occurred, the ratifying official could have entered into, or could have granted authority to another person to enter into, a contractual commitment that the official has authority to exercise.
• The resulting contract would have been proper if made by an appropriate contracting officer.
• The price is fair and reasonable.
• The KO recommends payment and legal counsel concurs, unless agency procedures expressly do not require such concurrence.
• Funds are available and were available when the unauthorized commitment occurred.
• Ratification is within limitations prescribed by the agency.
The ratification process is long and drawn out, requiring the unit to complete a multipage request for ratification of unauthorized commitment. The content of this form is provided by the local contracting activity and must thoroughly explain who made the UAC and why, what corrective action was taken such as disciplining the individual, and the signature of the first general officer or senior executive service employee in the chain of command.
If the contents of the form or the facts of the situation do not comply with the above rules, the UAC cannot be ratified. If the contents of the form do comply, the KO is not required to ratify the UAC, and the individual who acted without authority could remain personally liable for the expense.
There are legal ramifications for people who make a UAC for the government. At worst, they have obligated themselves for the cost of the contract and may be forced to pay for the items. At best, they must be retrained, have administrative disciplinary action taken and the GO or SES in their command knows they overstepped their bounds of authority
If a person does not hold the title of KO or trained GPC holder, they do not have authority to bind the government in contracts for goods or services. If a person needs goods or service, the local contracting activity will conduct procurements to support the mission.