Unauthorized Commitments

Unauthorized Commitment - DefinitionA written or oral contractual commitment or

agreement made by an individual who lacks or does not have sufficient authority to make the commitment or enter into an agreement on behalf of the Laboratory

Delegation of Authority to Commit Expenditure of Funds

Field Order AuthorityDelegated from the Procurement and Property

Manager to named individuals in Facilities Division.Limited to $25,000 or 10% of subcontract value,

whichever is less.Authorizes the individual to direct extra/changed

work in the field if necessary to keep the project on track.

Direction to the subcontractor must be in writing and must include a ceiling price.

Does not authorize the individual to agree to a final price for the work.

Subcontractor cannot get paid for the change until the subcontract is formally modified in writing.

LBNL Policy on Unauthorized CommitmentsRegulations and Procedures

Manual Chapter 11.Procurement Standard Practice 1.3

Regulations and Procedures Manual – Chapter 11Authority to make contractual

commitments is specifically delegated to individuals assigned to Procurement.

Commitments made by individuals without authority are unauthorized and must be ratified in order to be paid.

Ratification is based on determination that the action would otherwise have been proper and in the best interest of the Laboratory.

Indicators of an Unauthorized ProcurementRequisition or memo requesting an item or

service already received or started.Invoice without a purchase order number.Invoice from a construction or A/E

subcontractor greater than the price of the subcontract.

Commitment made after expiration of a blanket or other subcontract.

Examples of Unauthorized Commitments Committing funds in excess of one’s delegated authority. Commitment of funds by an unauthorized individual. Requesting or accepting materials or services when a contract

has not been awarded. Authorizing a vendor to perform work or deliver materials

without written delegated authority. Authorizing work that exceeds the value of the subcontract or

that extends beyond the term of the subcontract. Authorizing additional/changed work from an A/E subcontractor

that results in additional cost. Authorizing a change to the work that exceeds $25,000 or 10%

of the value of the subcontract. Ordering materials or services outside the scope of the

subcontract. Authorizing a release under a blanket if not designated in the

subcontract. Directing another individual to do the above, whether

intentionally or not.

Exception for EmergenciesEmergency is a circumstance that requires

a procurement in order to avoid, eliminate or reduce hazardous or destructive situations involving persons or property.

Does not occur during normal working hours.Contact Procurement instead.

If necessary requires appropriate requisitions, approvals and emergency justification on first business day following the occurrence.

Ways to Avoid Emergency CommitmentsMaintain reasonable inventory of

replacement/repair items.Identify one or more procurement

specialists and provide names and after hours contact information to people who work after hours.

Establish blanket subcontracts for items/services that may be needed in an emergency.

Ratification of Unauthorized CommitmentsProcurement specialist will:Advise the vendor to stop work if possible

and that work is being performed at risk.Advise the unauthorized individual not to

use delivered material until the action has been ratified.

Instruct the unauthorized individual on proper procedures.

Establish a Ratification Log number, complete Section I of the Unauthorized Commitment form and send the form to the Division for completion.

Memorandum Required in Section II of the FormCircumstances that led to the unauthorized

procurement.Description of the material service and why it is

needed.An explanation as to why the selected vendor was

chosen and a list of other vendors considered.Requires a Sole Source Justification form if >$100K.

Estimated cost or agreed upon price.Reason why ratification is in the best interest of the

Laboratory.Statement as whether performance has started and

how much work has been completed.Explanation of actions that will be taken to assure that

unauthorized commitments will not occur in the future.Explanation of the disciplinary action initiated with the

individual who made the commitment.

ApprovalsDivision Director must sign the form

indicating that ratification is appropriate and disciplinary action is appropriate to the circumstances.

Procurement Specialist signs to indicate that the procurement would otherwise have been properSole source justifiedPrice is reasonableIf foreign, purchase is justified under Buy

American ActCost is allowableVendor is not debarred

ApprovalsProcurement Specialist Recommends

ratification to Group ManagerGroup Manager recommends ratification to

Procurement and Property Manager<$50,000 – Procurement and Property

Manager can make final determination>$50,000 – OCFO must make final

determination.

Vendor cannot be paid until the action is ratified.