S.C. Code Regs. § § 19-445.2015

Current through Register Vol. 48, No. 11, November 22, 2024

Section 19-445.2015 - Unauthorized or Illegal Procurements

A. Decision to Ratify or Declare Void

(1) Upon discovering after award either (a) that a person lacking actual authority has made an unauthorized award or modification of a contract or (b) that a contract award or modification is otherwise in violation of the Consolidated Procurement Code or these regulations, the appropriate official, as defined in section G below, must decide to either ratify the contract in accordance with this regulation or acknowledge and declare the contract null and void. If ratified, the contract may be continued or terminated. The contract may be ratified only if ratification is in the interest of the State.

(2) The factors pertinent in determining the State's interest include, but are not limited to:

(a) the seriousness of the procurement deficiency;

(b) the degree of prejudice to the integrity of the competitive procurement system;

(c) the good faith of the public officials and contractors involved;

(d) the extent of performance;

(e) the costs to the State in either terminating the contract or declaring it null and void, if any;

(f) the urgency of the acquisition; and

(g) the impact on the using agency's mission.

B. Decision to Continue or Terminate Contract. If a contract is ratified, the appropriate official must decide to either (1) continue the contract, or (2) terminate the contract and proceed as provided in section C below. A contract award or modification that is in violation of the Consolidated Procurement Code or these regulations may be continued only if the appropriate official determines an urgent and compelling need exists that cannot otherwise be met without undue burden on the State. If no such urgent and compelling need exists, the ratified contract must be terminated and the State shall proceed as provided in section C below. A contract that was ratified solely because a person lacking actual authority made an unauthorized award or modification, as described in item A(1)(a) above, does not require an urgent and compelling need to support its continuation.

C. Settlement of Terminated Contracts. If a contract is terminated as allowed by this regulation, the State shall, as appropriate and by agreement with the supplier, return any supplies delivered for a refund at no cost to the State or at a minimal restocking charge. If a contract is terminated and a termination claim is made, settlement shall be made in accordance with the contract. If there are no applicable termination provisions in the contract, settlement shall be made on the basis of actual costs directly or indirectly allocable to the contract through the time of termination. Such costs shall be established in accordance with generally accepted accounting principles. Profit shall be proportionate only to the performance completed up to the time of termination and shall be based on projected gain or loss on the contract as though performance were completed. Anticipated profits are not allowed.

D. Settlement of Void Contracts. If a contract is acknowledged as null and void pursuant to section A above, the State shall endeavor to return those supplies delivered under the contract that have not been used or distributed, and no further payments shall be made under the contract. In addition, the State is entitled to recover the greater of (1) the difference between payments made under the contract and the contractor's actual costs up until the contract was declared null and void, or (2) the difference between payments under the contract and the value to the State of the supplies, services, information technology, or construction it obtained under the contract.

E. Bad Faith. Notwithstanding section D above, the State is entitled to recover all amounts paid if the appropriate official determines that the recipient of the contract acted in bad faith. Bad faith shall not be assumed. Without limitation, specific findings showing deception, dishonesty, reckless disregard of clearly applicable laws or regulations, or deliberate breach of contract scope limits, support a finding of bad faith.

F. State's Remedies Not Limited. Regardless of its ratification of a contract, the State shall be entitled to any damages it can prove under any theory including but not limited to contract and tort.

G. Appropriate Official. The appropriate official to make the decisions authorized by sections A, B, and E above, or the determination addressed in item H(2) below, is the chief procurement officer, the head of a purchasing agency, or, for a contract with a total potential value no greater than $100,000, a designee of either officer, above the level of the person responsible for the person committing or authorizing the act. If a contract award or modification is made in violation of the Consolidated Procurement Code or these regulations, and the value of the contract exceeds the certification of the purchasing agency or one hundred thousand dollars, the chief procurement officer must concur in the written determination before any further action is taken, unless the contract is declared null and void. In all circumstances, the chief procurement officer must concur in any determination finding bad faith.

H. Determinations.

(1) All decisions authorized by sections A, B, and E above shall be supported by a written determination of appropriateness conforming to the requirements of Section 11-35-210.

(2) The written determination must include the facts and circumstances surrounding the improper act, what corrective action is being taken to prevent recurrence, and the action taken against the individual committing the act.

(3) In most circumstances, the decisions authorized by sections A, B, and E above are unnecessary for a contract that has been completely performed. Accordingly, the determination in those instances maybe limited to the information required by subsection H(2).

I. Reporting. Every quarter, each governmental body shall submit to the Materials Management Officer a record listing all contract awards or modifications discovered as described in item A(1) above, along with copies of the applicable written determinations. The Materials Management Officer shall submit a copy of the record to the board on an annual basis and such record shall be available for public inspection.

J. Miscellaneous.

(1) In the context of an administrative review conducted under Article 17, sections G, H, and I above are inapplicable, and the appropriate official to make the decision authorized by sections A, B, and E is the chief procurement officer or Procurement Review Panel, as applicable.

(2) This Regulation does not apply to a determination pursuant to R.19-445.2085C.

S.C. Code Regs. § 19-445.2015

Amended by State Register Volume 19, Issue No. 2, eff February 24, 1995; State Register Volume 23, Issue No. 5, eff May 28, 1999; State Register Volume 31, Issue No. 5, eff May 25, 2007; State Register Volume 44, Issue No. 04, eff. 4/24/2020.