Liability of Government for Payment of Work Performed Without Contract

B-201987: Jun 24, 1981

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An advance decision was requested by the Corps of Engineers regarding the Government's liability for payment for work performed by a company without a formally executed contract. The Corps reported that the company was the low bidder under a 1979 solicitation for concrete masonary which was delayed for several months. During this delay, favorable river conditions existed for working, and the company and its subcontractor began to clear the area. The Corps stated that although no contract existed at the time, the work was done with the knowledge and consent of Corps personnel whose primary work responsibility would have been to supervise such work if it had been under contract. Subsequently, the Corps determined that no contract lawfully could be awarded under the 1979 solicitation because a Departmet of Labor wage detemination included in the solicitation had expired. Consequently, the company was informed that it would not be awarded a contract; the 1979 solicitation was canceled, and the procurement was readvertised later. Another company was the low bidder and received the new solicitation. Thereupon, the original company submitted a request to the Corps for payment for the construction site work it had performed. Although no written contract existed between the Corps and the company, in appropriate circumstances, payment may be made for services rendered on a quantum meruit basis. Recognition of a right to payment on that basis, however, requires a showing that the Government received a benefit and ratification by an authorized contracting official of the Government. While some construction site work still remained for the awardee, the Corps stated that the company's work provided a direct benefit to the Government. However, the Corps stated that when it issued the second solicitation it erred in failing to delete the work completed by the protester. GAO held that the company should not be held responsible for the Corps error in the award of the second contract since some benefit may have accrued to the Government at the time its work was performed. The Corps did not establish a basis upon which GAO cannot approve a quantum meruit payment, since there was nothing which indicated what amount was considered to be reasonable for the work the company completed. Therefore, the company should be paid on a quantum meruit basis.