B-242405, Mar 15, 1991

B-242405: Mar 15, 1991

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APPROPRIATIONS/FINANCIAL MANAGEMENT - Claims Against Government - Unauthorized contracts - Quantum meruit/valebant doctrine PROCUREMENT - Payment/Discharge - Unauthorized contracts - Quantum meruit/valebant doctrine DIGEST Company that provided unauthorized track inspection services to the government in the belief that they were covered by an option clause of a term contract. May be paid on quantum meruit basis because obtaining the services by contract would have been a permissible procurement. We conclude that the Ensco is entitled to recover the amount claimed on a quantum meruit basis. FRA has indicated that the services in question were performed by Ensco in the belief that they were covered under an option contained in FRA contract No.

B-242405, Mar 15, 1991

APPROPRIATIONS/FINANCIAL MANAGEMENT - Claims Against Government - Unauthorized contracts - Quantum meruit/valebant doctrine PROCUREMENT - Payment/Discharge - Unauthorized contracts - Quantum meruit/valebant doctrine

DIGEST

Federal Railroad Administration -- Payment for Track Inspection Services:

The Federal Railroad Administration (FRA) has asked whether it may pay Ensco, Inc. (Ensco) $77,132.13 for track inspection services provided to the government from April 2 through April 27, 1988, after a prior contract for inspection services had expired. We conclude that the Ensco is entitled to recover the amount claimed on a quantum meruit basis.

FRA has indicated that the services in question were performed by Ensco in the belief that they were covered under an option contained in FRA contract No. DTFR53-85-C-00019. Article II ("Period of Performance and Option to Renew") of the contract provided that "the period of performance for this contract is for thirty six (36) months, commencing on the effective date of the contract." The effective date of the contract was April 2, 1985. Paragraph B of Article II gave the government the right to exercise a 12-month option, but through an administrative oversight, the option was not exercised in a timely fashion, and the contract, along with the option, expired on April 1, 1988.

Ensco had relied on informal indications from FRA employees that the option would be exercised, but had never received formal notification that the government was exercising the option. Ensco continued to provide services until April 27, when it learned that the government in fact had not exercised the option.

Because the work done for the FRA by Ensco between April 2 and April 27 was not performed under a valid written contract, and because the FRA has concluded that ratification may not be used to support payment in this case, the agency has suggested that we authorize payment to Ensco on a quantum meruit basis, based on the value of the services actually provided to the government.

Under this Office's claims settlement authority, 31 U.S.C. Sec. 3702 (1988), the Comptroller General may authorize reimbursement to a contractor on a quantum meruit basis when certain conditions are met. Comp.Gen. 727 (1985). First, there must be a threshold determination that obtaining the goods or services for which payment is sought would have been a permissible procurement had the proper procedures been followed. Second, the government must have received and accepted a benefit. Third, the firm must have acted in good faith. And fourth, the amount to be paid must not exceed the reasonable value of the benefit received. Mohawk Data Science Corp., 69 Comp.Gen. 13 (1989).

That the procurement would have been permissible had the proper procedures been followed is established by the fact that FRA contracted with Ensco for the type of services involved both prior to, and following, the period in question. The FRA does not dispute the benefit of the services provided by Ensco, and has indicated that Ensco acted in good faith based on informal assurances from FRA employees that the agency would exercise the option. Finally, because the claim is based on the payment rates contained in the prior, competitively awarded contract, FRA has concluded that the amount of the claim is reasonable.

Because all of the elements for a quantum meruit payment exist, we authorize payment of $77,132.13 to Ensco, Inc.