2 Unauthorized Commitment - Definition A 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
3 Delegation of Authority to Commit Expenditure of Funds UC PresidentLaboratory DirectorProcurement and Property ManagerDesignated individuals assigned to the Procurement Department
4 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.
5 LBNL Policy on Unauthorized Commitments Regulations and Procedures Manual Chapter 11.Procurement Standard Practice 1.3
6 Regulations and Procedures Manual – Chapter 11 Authority 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.
7 Indicators of an Unauthorized Procurement Requisition 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.
8 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.
9 Exception for Emergencies Emergency 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.
10 Ways to Avoid Emergency Commitments Maintain 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.
11 Ratification of Unauthorized Commitments Procurement 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.
12 Memorandum Required in Section II of the Form Circumstances 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.
13 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
14 Approvals Vendor cannot be paid until the action is ratified. Procurement 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.