B-220466, B-222333, B-223113, DEC 9, 1986, OFFICE OF GENERAL COUNSEL

B-220466,B-223113,B-222333: Dec 9, 1986

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

WEST VIRGINIA DISTRICT OF THE IRS IS UNNECESSARY. IRS IS AUTHORIZED TO CURE THE DEFICIENCY IN EACH ACCOUNTABLE OFFICER'S ACCOUNT BY MAKING AN ACCOUNTING ADJUSTMENT. AN IMPREST FUND CASHIER WHO WAS REQUIRED BY IRS TO REIMBURSE HER ACCOUNT AS A CONSEQUENCE OF A SIMILAR IMPROPER PAYMENT SHOULD BE REIMBURSED. BROWN: THIS IS IN RESPONSE TO YOUR LETTER DATED SEPTEMBER 11. WHO WAS REQUIRED TO REIMBURSE AN IMPREST FUND IN THE AMOUNT OF $217.50 AS A CONSEQUENCE OF A SIMILAR IMPROPER EXPENDITURE. IT IS NOT NECESSARY TO RELIEVE ANY OF THE ACCOUNTABLE OFFICERS IN QUESTION. ALTHOUGH WE AGREE WITH IRS THAT THE REPLENISHMENT VOUCHERS IN QUESTION WERE NOT PAYABLE FROM THE SMALL PURCHASES IMPREST FUND NOR WERE PROPER CONTRACTING PROCEDURES FOLLOWED.

B-220466, B-222333, B-223113, DEC 9, 1986, OFFICE OF GENERAL COUNSEL

APPROPRIATIONS/FINANCIAL MANAGEMENT - ACCOUNTABLE OFFICERS - CASHIERS - LIABILITY - ILLEGAL/IMPROPER PAYMENTS - QUANTUM MERUIT/VALEBANT DOCTRINE APPROPRIATIONS/FINANCIAL MANAGEMENT - ACCOUNTABLE OFFICERS - CERTIFYING OFFICERS - LIABILITY - ILLEGAL/IMPROPER PAYMENTS - QUANTUM MERUIT/VALEBANT DOCTRINE DIGEST: INTERNAL REVENUE SERVICE (IRS) REQUEST FOR RELIEF FROM LIABILITY PURSUANT TO 31 U.S.C. SEC. 3528(B) ON BEHALF OF FIVE CERTIFYING OFFICERS WHO ERRONEOUSLY CERTIFIED FOR PAYMENT A TOTAL OF $4,003.15 IN IMPREST FUND REPLENISHMENT VOUCHERS FOR IMPROPERLY PROCURED MOVING SERVICES AT THE PARKERSBURG, WEST VIRGINIA DISTRICT OF THE IRS IS UNNECESSARY. UNDER THE EQUITABLE JURISDICTION OF GAO'S CLAIMS SETTLEMENT AUTHORITY, 31 U.S.C. SEC. 3702 (1982), THIS OFFICE AUTHORIZES PAYMENT OF THE LABORERS INVOICES UNDER A THEORY OF QUANTUM MERUIT. IRS IS AUTHORIZED TO CURE THE DEFICIENCY IN EACH ACCOUNTABLE OFFICER'S ACCOUNT BY MAKING AN ACCOUNTING ADJUSTMENT, DEBITING THE APPROPRIATE ACCOUNT FROM WHICH THE LABORERS INVOICES PROPERLY MAY BE PAID, AND CREDITING THE APPROPRIATE ACCOUNTS OF THE ACCOUNTABLE OFFICERS IN QUESTION. FOR SIMILAR REASONS, AN IMPREST FUND CASHIER WHO WAS REQUIRED BY IRS TO REIMBURSE HER ACCOUNT AS A CONSEQUENCE OF A SIMILAR IMPROPER PAYMENT SHOULD BE REIMBURSED.

MR. BILLY J. BROWN:

THIS IS IN RESPONSE TO YOUR LETTER DATED SEPTEMBER 11, 1985, REQUESTING RELIEF FROM LIABILITY ON BEHALF OF FIVE INTERNAL REVENUE SERVICE (IRS) CERTIFYING OFFICERS. THE CERTIFYING OFFICERS IN QUESTION CERTIFIED FOR PAYMENT A TOTAL OF $4,003.15 IN IMPREST FUND REPLENISHMENT VOUCHERS WHICH INCLUDED CHARGES FOR IMPROPERLY PROCURED CASUAL LABOR AT THE IRS PARKERSBURG, WEST VIRGINIA DISTRICT. THIS LETTER ALSO CONCERNS THE LIABILITY OF MS. GARNET POWELL, AN IMPREST FUND CASHIER AT THE PARKERSBURG IRS OFFICE, WHO WAS REQUIRED TO REIMBURSE AN IMPREST FUND IN THE AMOUNT OF $217.50 AS A CONSEQUENCE OF A SIMILAR IMPROPER EXPENDITURE.

IT IS NOT NECESSARY TO RELIEVE ANY OF THE ACCOUNTABLE OFFICERS IN QUESTION. ALTHOUGH WE AGREE WITH IRS THAT THE REPLENISHMENT VOUCHERS IN QUESTION WERE NOT PAYABLE FROM THE SMALL PURCHASES IMPREST FUND NOR WERE PROPER CONTRACTING PROCEDURES FOLLOWED, WE FIND THAT ALL THE ELEMENTS JUSTIFYING PAYMENT FOR THE SERVICES ON A QUANTUM MERUIT BASIS ARE PRESENT IN THIS CASE. AS EXPLAINED MORE FULLY BELOW, WE AUTHORIZE THE IRS TO MAKE THE PROPER ACCOUNTING ADJUSTMENTS, WITH THE RESULT THAT THE PROPER AGENCY ACCOUNTS WILL BE DEBITED IN AMOUNTS REPRESENTING THE FAIR VALUE OF THE SERVICES PERFORMED. THESE AMOUNTS SHOULD THEN BE CREDITED TO THE IMPREST FUNDS FROM WHICH THE ORIGINAL PAYMENTS WERE MADE. THE RESULTING OVERPAYMENT IN MS. POWELL'S FUND SHOULD THEN BE REIMBURSED TO HER.

BACKGROUND

ON SEVERAL OCCASIONS FROM APRIL 1983 TO MID-1984, IRS OFFICIALS AT THE PARKERSBURG IRS FACILITIES MANAGEMENT BRANCH ACQUIRED THE SERVICES OF NON- IRS PERSONNEL TO MOVE FURNITURE AND OTHER EQUIPMENT IN THE LOCAL AREA. FORMAL CONTRACTS WERE AWARDED FOR THE SERVICES. IN EACH INSTANCE AN EMPLOYEE AT THE FACILITIES MANAGEMENT BRANCH USED SMALL PURCHASE PROCEDURES TO PAY TEMPORARY, CASUAL LABORERS TO ACCOMPLISH THE TASK. FOLLOWING EACH JOB, A COMPLETED INVOICE WAS SUBMITTED TO AN IMPREST FUND CASHIER, INDICATING THAT THE SERVICES HAD BEEN RECEIVED AND REQUESTING PAYMENT TO THE LABORERS. EACH TIME, THE CASHIER PAID THE REQUESTED AMOUNTS OUT OF THE BRANCH SMALL PURCHASES IMPREST FUND AND SUBMITTED REPLENISHMENT VOUCHERS TO A REGIONAL CERTIFYING OFFICER, REQUESTING ISSUANCE OF REPLENISHMENT CHECKS. EACH REPLENISHMENT VOUCHER WAS CERTIFIED AS CORRECT AND PROPER BY THE CERTIFYING OFFICER. FIVE DIFFERENT CERTIFYING OFFICERS WERE INVOLVED, OVER A 16-MONTH PERIOD.

IN AUGUST 1984, A NEWLY-APPOINTED CHIEF OF THE FACILITIES MANAGEMENT BRANCH REFUSED TO AUTHORIZE PAYMENT OF AN IMPREST FUND REPLENISHMENT VOUCHER WHICH INCLUDED CHARGES FOR CASUAL LABOR, SIMILAR TO THE VOUCHERS HERE IN QUESTION, ON THE GROUND THAT IT WAS IMPROPER TO USE THE SMALL PURCHASES IMPREST FUND FOR THE PAYMENT OF SUCH EXPENSES. (AS A RESULT OF THE REFUSAL OF THE BRANCH CHIEF TO AUTHORIZE PAYMENT OF THE VOUCHER, MS. POWELL, AN IMPREST FUND CASHIER AT THE PARKERSBURG IRS OFFICE WAS REQUIRED TO REIMBURSE THE IMPREST FUND IN THE AMOUNT OF $217.50. MS. POWELL'S INDEPENDENT REQUEST FOR REIMBURSEMENT OF THOSE FUNDS IS DISCUSSED BELOW.) AN IRS INVESTIGATION RESULTED IN A FINDING THAT PREVIOUS PAYMENTS BY FIVE CERTIFYING OFFICERS TOTALLING $4,003.15 HAD VIOLATED REGULATIONS AND PROCEDURES CONCERNING THE USE OF THE SMALL PURCHASE IMPREST FUNDS. IRS HAS REQUESTED RELIEF FROM LIABILITY ON BEHALF OF THOSE CERTIFYING OFFICERS UNDER 31 U.S.C. SEC. 3528(B) (1982).

FINDINGS

AS MENTIONED ABOVE, WE CONCUR WITH IRS THAT THE CASUAL LABORERS' SERVICES CONSTITUTED PERSONAL SERVICES. THE IRS IMPREST FUND HANDBOOK (IRM 1724) EXPRESSLY LIMITS THE USE OF THE SMALL PURCHASES IMPREST FUND TO MAKE CASH PAYMENTS FOR NON-PERSONAL SERVICES ONLY. IN ADDITION, IRS OFFICIALS FAILED TO FOLLOW PROPER PROCUREMENT PRACTICES. THE ACQUISITION OF PERSONAL SERVICES WITHOUT REGARD TO THE HIRING REQUIREMENTS OF TITLE 5 OF THE U.S.C. IS NOT AUTHORIZED EXCEPT WHEN THE EXISTENCE OF AN EMERGENCY IS PROPERLY DOCUMENTED. WHILE THE IRS COULD, OF COURSE, HAVE OBTAINED MOVING SERVICES BY AWARDING A NON-PERSONAL SERVICES CONTRACT, THE PROPER CONTRACTING PROCEDURES, SUCH AS PUBLISHING ANNOUNCEMENTS OR RECEIVING BIDS, WERE NOT FOLLOWED.

NOTWITHSTANDING THE IMPROPRIETIES IN THE PROCUREMENT OF THE MOVING SERVICES IN QUESTION, UNDER GAO'S EQUITABLE CLAIMS SETTLEMENT AUTHORITY, 31 U.S.C. SEC. 3702 (1982), THE COMPTROLLER GENERAL MAY AUTHORIZE THE REIMBURSEMENT OF A PARTY WHO HAS PERFORMED A SERVICE FOR THE GOVERNMENT, IN SPITE OF THE FAILURE TO FOLLOW PROPER CONTRACTING PROCEDURES. WHERE THE PERFORMANCE BY ONE PARTY HAS BENEFITTED ANOTHER, EVEN IN THE ABSENCE OF AN ENFORCEABLE CONTRACT BETWEEN THEM, EQUITY REQUIRES THAT THE PARTY RECEIVING THE BENEFIT SHOULD NOT GAIN A WINDFALL AT THE EXPENSE OF THE PERFORMING PARTY. THE LAW THUS IMPLIES A PROMISE TO PAY BY THE RECEIVING PARTY WHATEVER THE GOODS OR SERVICES ARE REASONABLY WORTH. SEE, E.G., BOUTERIE V. CARRE, 6 SO.2D 218, 220 (LA. APP. 1942); KINTZ V. READ, 626 P.2D 52, 55 (WASH, APP. 1981); B-212256, SEPTEMBER 18, 1984.

THIS OFFICE, ACCORDINGLY, MAY AUTHORIZE PAYMENT UNDER A THEORY OF QUANTUM MERUIT WHEN CERTAIN CONDITIONS ARE MET. WE MUST MAKE A THRESHOLD DETERMINATION THAT THE SERVICES WOULD HAVE BEEN A PERMISSIBLE PROCUREMENT HAD THE PROPER PROCEDURES BEEN FOLLOWED. WE MUST THEN FIND THAT (1) THE GOVERNMENT RECEIVED AND ACCEPTED A BENEFIT; (2) THE CONTRACTOR ACTED IN GOOD FAITH; AND (3) THE AMOUNT CLAIMED REPRESENTS A REASONABLE VALUE FOR THE BENEFIT RECEIVED. 64 COMP.GEN. 395, 405 (1985); 63 COMP.GEN. 579, 584 (1984).

WE CONCLUDE THAT ALL OF THE ELEMENTS NECESSARY FOR PAYMENT OF THE CASUAL LABOR EXPENSES IN QUESTION ON THE BASIS OF QUANTUM MERUIT ARE PRESENT IN THE CASE AT HAND. HAD WE BEEN ASKED AFTER THE SERVICES WERE PERFORMED BUT BEFORE PAYMENT WAS MADE, WE WOULD HAVE AUTHORIZED THE PAYMENTS. WE HAVE NO REASON TO QUESTION THAT THE PROCUREMENT OF THE MOVING SERVICES BY THE IRS WOULD HAVE BEEN PERMISSIBLE HAD PROPER CONTRACTING PROCEDURES BEEN FOLLOWED. THE IRS DOES HAVE AUTHORITY TO CONTRACT FOR MOVING SERVICES, ALTHOUGH POSSIBLY NOT ON A PERSONAL SERVICES BASIS. IRS POINTS OUT THAT IT HAS A SPECIFIC ACCOUNTING CODE TO RECORD THE COST OF LABORER EXPENSES INVOLVED IN MOVING FURNITURE AND EQUIPMENT. ADDITIONALLY, IT IS CLEAR HERE THAT THE GOVERNMENT RECEIVED AND ACCEPTED A BENEFIT. AN IRS INTERNAL AUDIT UNCOVERED NO EVIDENCE THAT THE WORK WAS NOT COMPLETED SATISFACTORILY. FURTHER, THERE IS NO INDICATION THAT THE LABORERS IN QUESTION DID NOT ACT IN GOOD FAITH. FINALLY, THE IRS AUDIT DID NOT FIND ANY INDICATION THAT EXCESSIVE RATES WERE CHARGED BY THE MOVERS. ACCORDINGLY, WE CONCLUDE THAT THE LABORERS' INVOICES CONSTITUTE THE REASONABLE VALUE OF THE SERVICES PERFORMED AND ARE PAYABLE UNDER A THEORY OF QUANTUM MERUIT.

IRS, ACCORDINGLY, IS AUTHORIZED TO MAKE AN ACCOUNTING ADJUSTMENT, DEBITING THE APPROPRIATE ACCOUNT FROM WHICH THE LABORERS' INVOICES PROPERLY MAY BE PAID, AND CREDITING THE APPROPRIATE ACCOUNTS OF THE CERTIFYING OFFICERS IN QUESTION.

THIS WILL CURE THE DEFICIENCY IN THE ACCOUNTS OF THE FIVE CERTIFYING OFFICERS, MAKING RELIEF FROM LIABILITY UNNECESSARY. WE ASSUME THAT SUFFICIENT FUNDS REMAIN AVAILABLE IN THE APPROPRIATE ACCOUNT (OR "M"ACCOUNT) TO ACCOMPLISH THIS ACCOUNTING TRANSACTION.

REIMBURSEMENT OF MS. GARNET POWELL

WE HAVE RECEIVED A LETTER FROM MS. POWELL, AN IMPREST FUND CASHIER AT THE PARKERSBURG IRS OFFICE. MS. POWELL WAS REQUIRED BY IRS TO REIMBURSE HER IMPREST FUND IN THE AMOUNT OF $217.50 AS A CONSEQUENCE OF THE REFUSAL OF THE BRANCH CHIEF TO AUTHORIZE PAYMENT OF AN INVOICE FOR MOVING SERVICES IN THAT AMOUNT. MS. POWELL REQUESTS REPAYMENT OF THOSE FUNDS.

ALTHOUGH IRS CORRECTLY DETERMINED THAT THE $217.50 PAYMENT MADE BY MS. POWELL WAS IMPROPER, WE CONCLUDE THAT, FOR REASONS IDENTICAL TO THOSE PUT FORTH ABOVE IN THE DISCUSSION OF THE LIABILITY OF THE FIVE CERTIFYING OFFICERS, THE DEFICIENCY IN MS. POWELL'S ACCOUNT SHOULD BE CURED BY DEBITING THE APPROPRIATE ACCOUNT FROM WHICH THE LABORER'S INVOICE IN QUESTION CAN BE PAID, AND CREDITING MS. POWELL'S ACCOUNT. MS. POWELL MAY THEN BE REIMBURSED IN THE AMOUNT OF $217.50.