Entitlement to Payment

An agency requested a decision as to whether an equipment company was entitled to payment of $378 under an equipment rental agreement which the agency believed was improper. The agency purchasing agent signed an equipment rental agreement for a total cost of $13,740. However, the purchasing agent only had authority to contract up to $10,000 and did not realize that she had exceeded her purchasing authority until after she had signed the document. Without the purchasing agent's knowledge, the rental agreement was sent to the equipment company. The equipment was supplied and the company received periodic payments. When the matter came to the purchasing agent's attention, she took immediate action to have the agreement terminated and the equipment removed. By the time this was done, the charges totaled $11,725 and the equipment company had been paid $11,347. The agency believed the rental agreement should have been advertised rather than awarded under the small purchase procedures which appeared to have been done in this case. The courts and GAO have recognized that in appropriate circumstances payment may be made for goods furnished on a quantum meruit basis, the reasonable value of work or labor. However, a right to payment on this basis requires a showing that the Government received a benefit and the unauthorized action was expressly or impliedly ratified by authorizing Government contracting officials. In this case, the record indicated that the Government received a benefit and that the amount claimed was considered reasonable. An implied ratification could be inferred from the agency's referral of the matter to GAO seeking relief for the contractor. Therefore, the equipment company was entitled to payment on a quantum meruit basis for the use of its equipment. The balance of $378, if otherwise correct, was authorized for payment.