Request for Settlement Reconsideration

An industrial firm requested reconsideration of a settlement which partially denied its claim for payment for goods and services provided to the Government under improper purchase orders. The settlement authorized the Government to reimburse the claimant on a quantum valebant basis for only part of its claim, because the Army concluded that the reasonable value of the goods provided was 58 percent of the prices listed for these items on the claimant's invoices. The protester supplied a variety of stock items to the Army under a Blanket Purchase Agreement (BPA) for a period of 2 months. However, the Army withheld payment because numerous irregularities were found in the purchases. GAO has recognized that in appropriate circumstances payment may be made on a quantum valebant basis under a purported contract, which is invalid, because the contract was entered into without following the required procedures. The record indicated that the Government received a benefit by retaining the items supplied by the protester under the improper BPA purchase; ratification was inferred from the retention of the items and the contracting officer's recommendation that the protester be paid for the value of the goods it supplied. The price stipulated in an invalid contract may not be accepted as the measure of quantum valebant recovery when the price is excessive compared with the price of similar goods available to the Government. There was an average markup of about 42 percent in the prices charged by the protester compared with the prices of similar goods available from others. Thus, it was held that the previous settlement reflected fairly and accurately the value of the goods supplied to the Army. Consequently, payment was not authorized for the amount claimed, and the previous settlement was affirmed.