B-205946.OM, SEP 7, 1982

B-205946.OM: Sep 7, 1982

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PRECIS-UNAVAILABLE THE COMPTROLLER GENERAL: WE ARE FORWARDING THE CLAIM OF AMERICAN STERILIZER COMPANY FOR $761.41. THE CONTRACTING OFFICE'S CHIEF COUNSEL DOES NOT BELIEVE THE CLAIMANT CAN AVOID LIABILITY FOR THE EXPENSE OF REPAIRS BY USING THE GROUNDS THAT THE STERILIZER WAS NOT UNDER NORMAL WARRANTY. IT IS NOT CLEAR IF THE CONTRACTING OFFICER IS RECOMMENDING DENIAL OR SEEKING PAYMENT AUTHORITY AT A HIGHER LEVEL. WE ARE FORWARDING THE MATTER FOR YOUR CONSIDERATION AND INSTRUCTIONS. THESE EXPENSES WERE INCURRED BY AN AMSCO SERVICE REPRESENTATIVE WHO REPAIRED AN AMSCO VACAMATIC "S" STERILIZER AND ULTRASONIC CLEANER AT THE REQUEST OF ARMY PERSONNEL WHO LACKED ANY CONTRACTING AUTHORITY AND MISTAKENLY BELIEVED THAT THE WORK WOULD BE COVERED BY AN EXPRESS WARRANTY.

B-205946.OM, SEP 7, 1982

PRECIS-UNAVAILABLE

THE COMPTROLLER GENERAL:

WE ARE FORWARDING THE CLAIM OF AMERICAN STERILIZER COMPANY FOR $761.41. THE CLAIMANT SEEKS REIMBURSEMENT FOR ENGINEERING SERVICES AND TRAVEL AND LIVING EXPENSES PROVIDED TO THE DEPARTMENT OF THE ARMY WITHOUT CONTRACTUAL COVERAGE.

THE ARMY REQUESTED REPAIR SERVICES FOR A STERILIZER UNIT AT THE 5TH GENERAL HOSPITAL, STUTTGART, GERMANY. THE CONTRACTING OFFICE'S CHIEF COUNSEL DOES NOT BELIEVE THE CLAIMANT CAN AVOID LIABILITY FOR THE EXPENSE OF REPAIRS BY USING THE GROUNDS THAT THE STERILIZER WAS NOT UNDER NORMAL WARRANTY. COUNSEL STATES THAT THE EQUIPMENT HAD AN IMPLIED WARRANTY THAT IT WOULD FUNCTION PROPERLY UPON INSTALLATION.

THE CONTRACTING OFFICER, IN HIS LETTER OF 18 MARCH 1981, RESTATES THE OBJECTIONS OF THE CHIEF COUNSEL AND THEN RECOMMENDS THAT THE CLAIM NOT BE APPROVED FOR LOCAL PAYMENT. IT IS NOT CLEAR IF THE CONTRACTING OFFICER IS RECOMMENDING DENIAL OR SEEKING PAYMENT AUTHORITY AT A HIGHER LEVEL.

THEREFORE, SINCE THE QUESTIONS OF WARRANTY COVERAGE AND THE CONTRACTING OFFICER'S RECOMMENDATION LEAVE THE DISPOSITION OF THE CLAIM IN DOUBT, WE ARE FORWARDING THE MATTER FOR YOUR CONSIDERATION AND INSTRUCTIONS.

ATTACHMENT

INDORSEMENT

ASSOCIATE DIRECTOR, AFMD-CLAIMS GROUP

RETURNED. WE REFER TO THE CLAIM OF AMERICAN STERILIZER COMPANY (AMSCO) FOR $761.41.

AMSCO SEEKS REIMBURSEMENT FOR ENGINEERING SERVICES AND TRAVEL AND LIVING EXPENSES PROVIDED TO THE DEPARTMENT OF THE ARMY (ARMY), 5TH GENERAL HOSPITAL, STUTTGART, WEST GERMANY, IN DECEMBER 1979. THESE EXPENSES WERE INCURRED BY AN AMSCO SERVICE REPRESENTATIVE WHO REPAIRED AN AMSCO VACAMATIC "S" STERILIZER AND ULTRASONIC CLEANER AT THE REQUEST OF ARMY PERSONNEL WHO LACKED ANY CONTRACTING AUTHORITY AND MISTAKENLY BELIEVED THAT THE WORK WOULD BE COVERED BY AN EXPRESS WARRANTY. IN REFERRING THIS CLAIM TO OUR OFFICE, THE CHIEF, FIELD SERVICES DIVISION, U. S. ARMY FINANCE AND ACCOUNTING CENTER, STATES THAT "CONSIDERATION FOR PAYMENT OF THE CLAIM ON A QUANTUM MERUIT BASIS WOULD APPEAR TO BE PROPER." ON THE BASIS OF THE RECORD PRESENTED, WE AGREE THAT PAYMENT ON A QUANTUM MERUIT BASIS IS JUSTIFIED.

ALTHOUGH THE UNITED STATES CANNOT BE BOUND BEYOND THE ACTUAL AUTHORITY CONFERRED UPON ITS AGENTS BY STATUTE OR REGULATION, THE COURTS AND OUR OFFICE HAVE RECOGNIZED THAT, UNDER APPROPRIATE CIRCUMSTANCES, PAYMENT MAY BE MADE FOR SERVICES RENDERED ON A QUANTUM MERUIT BASIS (THE REASONABLE VALUE OF WORK OR LABOR) OR FOR GOODS FURNISHED ON A QUANTUM VALEBANT BASIS (THE REASONABLE VALUE OF GOODS SOLD AND DELIVERED). RECOGNITION OF A RIGHT TO PAYMENT ON THIS BASIS, HOWEVER, REQUIRES A SHOWING (1) THAT THE GOVERNMENT RECEIVED A BENEFIT AND (2) THAT THE UNAUTHORIZED ACTION HAS BEEN EXPRESSLY OR IMPLIEDLY RATIFIED BY AUTHORIZED GOVERNMENT CONTRACTING OFFICIALS. SEE ACTION - COMPENSATION FOR UNAUTHORIZED SERVICES PROVIDED GOVERNMENT, B-202744, MAY 4, 1981, 81-1 CPD 339, AND CASES CITED.

ACCORDING TO THE RECORD, THE STERILIZER WAS DELIVERED IN APRIL 1979, BUT WAS NOT READY FOR USE UNTIL DECEMBER 4, 1979. THE DELAY WAS APPARENTLY DUE TO THE NEED FOR ENGINEERING SUPPORT WHICH WAS NOT OBTAINED FOR A CONSIDERABLE LENGTH OF TIME. APPARENTLY, NO AMSCO REPRESENTATIVE WAS PRESENT AT THE TIME OF THE FINAL CHECKOUT - THAT IS, WHEN THE UNIT WAS FINALLY CONSIDERED FULLY INSTALLED. THE MEDICAL PERSONNEL AT THE 5TH GENERAL HOSPITAL HAD TO CALL THE AMSCO REPRESENTATIVE IN ENGLAND TO SEEK TECHNICAL ASSISTANCE. IT ALSO APPEARS THAT, AT THE TIME OF THIS CALL, THE MEDICAL PERSONNEL BELIEVED THAT ANY REPAIRS AMSCO PERFORMED WOULD BE UNDER WARRANTY.

ON DECEMBER 11, 1979, AN AMSCO SERVICEMAN, WHO WAS ON THE EUROPEAN CONTINENT FOR OTHER SERVICE CALLS, ARRIVED AT THE 5TH GENERAL HOSPITAL AND SPENT APPROXIMATELY 7 HOURS WORKING ON THE UNIT. AFTER THE WORK WAS DONE AND THE UNIT PLACED IN OPERATION, THE SERVICEMAN INFORMED THE MEDICAL PERSONNEL FOR THE FIRST TIME THAT HIS WORK ON THE STERILIZER WAS NOT UNDER AN EXPRESS WARRANTY.

SHORTLY AFTER THE SERVICE CALL, AMSCO REQUESTED PAYMENT OF $761.41. SINCE IT WAS NOW CLEAR TO THE MEDICAL PERSONNEL INVOLVED THAT NO WARRANTY APPLIED, THEY REFERRED AMSCO'S CLAIM TO THE PROPER CONTRACTING OFFICIAL, EXPLAINING THAT AN EMERGENCY SITUATION HAD EXISTED AND THAT THE REQUEST TO AMSCO WAS MADE UNDER THE MISTAKEN BELIEF THAT THE WORK WOULD BE COVERED BY WARRANTY. AFTER INVESTIGATING THE FACTS OF THE CASE AND SATISFYING HERSELF THAT THE AMOUNT CLAIMED WAS REASONABLE, THE CONTRACTING OFFICER REFERRED WHAT SHE TERMED A "NO DOUBT" CLAIM TO LOCAL LEGAL COUNSEL FOR REVIEW. ARMY COUNSEL, HOWEVER, CONCLUDED THAT THE CLAIM WAS DOUBTFUL, ARGUING, WITHOUT ANY DETAILED EXPLANATION, THAT SOME TYPE OF WARRANTY PROBABLY EXISTED AND, EVEN IF IT DID NOT, THAT THERE WAS AN IMPLIED WARRANTY THAT THE STERILIZER WOULD FUNCTION UPON INSTALLATION. THE CLAIM WAS THEN FORWARDED THROUGH THE U. S. ARMY FINANCE AND ACCOUNTING CENTER TO OUR OFFICE AS A DOUBTFUL CLAIM.

THERE IS NO DISPUTE THAT THE GOVERNMENT RECEIVED A BENEFIT OR THAT THE AMOUNT CLAIMED IS REASONABLE. AS TO THE EXISTENCE OF AN EXPRESS WARRANTY, AMSCO TOLD THE MEDICAL PERSONNEL THAT THE ONLY WARRANTY IT PROVIDES ON EQUIPMENT SUPPLIED UNDER GSA AND VA CONTRACTS FOR INSTALLATION OUTSIDE THE CONTINENTAL UNITED STATES IS:

"THE EQUIPMENT IS LIMITED TO AMSCO REPLACEMENT OF DEFECTIVE PARTS DUE TO FAULTY WORKMANSHIP OR

DESIGN IF RETURNED PREPAID TO OUR FACTORY." THIS WAS APPARENTLY UNDERSTOOD BY THE 5TH GENERAL HOSPITAL'S HIGHER ECHELON, AND THE ARMY HAS NOT PRESENTED EVIDENCE OF ANY OTHER EXPRESS WARRANTY.

UNDER THE FACTS PRESENTED, AMSCO'S EXPRESS WARRANTY PROVIDED THE SOLE REMEDY FOR WARRANTY SERVICE ON THE STERILIZER. IN OTHER WORDS, THE UNIT HAD TO BE RETURNED TO AMSCO'S FACTORY IN THE UNITED STATES FOR ANY WORK CLAIMED TO FALL UNDER THE WARRANTY. AMSCO WAS UNDER NO OBLIGATION TO PROVIDE ON SITE WARRANTY SERVICE, AND ANY SUCH ON SITE SERVICE MUST BE CONSIDERED A SEPARATE PROCUREMENT ACTION.

SINCE THE CLAIM IS NOT BARRED BY ANY WARRANTY COVERAGE, THE GOVERNMENT RECEIVED A BENEFIT, AND GOVERNMENT CONTRACTING OFFICIALS HAVE IN EFFECT RATIFIED THIS UNAUTHORIZED PROCUREMENT ACTION, PAYMENT OF THE CLAIM IS AUTHORIZED ON A QUANTUM MERUIT BASIS.