B-244504, Nov 25, 1991

B-244504: Nov 25, 1991

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Obtaining the storage space by lease would have been a permissible procurement. We hold that RJB-II is entitled to recover the amounts claimed on a quantum meruit basis. The monthly rent was $3. The storage space was to be used to store and maintain personal property immediately after seizure operations. The lease was amended for USMS to rent an additional 12. National Asset Seizure and Forfeiture (NASAF) funds were used to pay the rent due under the lease. The Marshals Service reports that the GSA- supplied storage space was inadequate as to size. USMS states that a cost analysis of the value of the warehouse storage space leased from RJB-II showed that it was more cost effective than the storage space furnished by GSA.

B-244504, Nov 25, 1991

DIGEST: Partnership provided warehouse storage space to the government in the belief that the agency had the authority to lease it and had properly executed the lease. However, the agency did not obtain the required delegation of authority from GSA and did not engage in the formal bidding process in selecting the lessor. Upon review, the arrearage of monthly rent and the monthly rent becoming due and payable until GSA has provided the storage space needed by the agency may be paid on a quantum meruit basis. Obtaining the storage space by lease would have been a permissible procurement, the government accepted and used the storage space, the partnership acted in good faith, and the amounts claimed represent the reasonable value of the storage space used.

RJB-II Limited Partnership - Payment for Warehouse Storage Space - Quantum Meruit

The United States Marshals Service (Marshals Service or USMS), United States Department of Justice, requests authorization to pay the claimant, RJB-II Limited Partnership (RJB-II), the accrued rent due for the rental of warehouse storage space for the months of February, March and April 1991, plus continuing monthly rent until the General Services Administration (GSA) provides the storage space needed by the agency. /1/ For the reasons stated in this decision, we hold that RJB-II is entitled to recover the amounts claimed on a quantum meruit basis.

BACKGROUND

On December 16, 1987, the Marshals Service, Northern District of Illinois, entered into a lease with RJB-II for the rental of 12,500 square feet of storage space at a warehouse in Chicago for the period January 1, 1988, through December 31, 1993. The monthly rent was $3,250. The storage space was to be used to store and maintain personal property immediately after seizure operations. On June 20, 1988, the lease was amended for USMS to rent an additional 12,500 square feet of storage space at a cost of $3.25 per square foot per year commencing on July 1, 1988. National Asset Seizure and Forfeiture (NASAF) funds were used to pay the rent due under the lease. The Marshals Service reports that the GSA- supplied storage space was inadequate as to size, security, lighting, heating, and access availability. In addition, USMS states that a cost analysis of the value of the warehouse storage space leased from RJB-II showed that it was more cost effective than the storage space furnished by GSA.

Recently, USMS discovered that the lease constituted an unauthorized commitment. The USMS Regional NASAF Manager had verbally approved the lease and the USMS regional office, which executed the lease, had been delegated the authority to execute leases for periods of 1 year or less and of $25,000 or less. Officials of the Northern Illinois District believed that normal procedures had been followed after receiving the approval of the NASAF Manager to lease the warehouse space, and, since payment for the storage space was to be made out of NASAF funds, District officials believed that NASAF was the final approving authority.

The USMS is continuing to utilize the subject warehouse space and GSA is in the process of procuring suitable storage space under a long term lease agreement. However, until such storage space is acquired, the rent due RJB-II is $7,175.42 monthly for May 1991 and continuing, with $21,526.26 owed for the months of February, March, and April 1991.

The USMS is precluded from ratifying the lease by the provisions of section 1.602-3(c)(2) of the Federal Acquisition Regulation (FAR), 1990, in that the USMS regional office officials did not and do not have the authority to enter into the lease agreement.

We have been informally advised by GSA officials that had the Marshals Service requested a delegation of authority to lease the warehouse space in question, such delegation of authority would have been granted.

The USMS asserts that the lease was entered into in good faith by both parties, that funding is available to pay the amounts owed to the lessor, and that the claim meets all the conditions to allow payment under the equitable principles of quantum meruit.

OPINION

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. /2/ 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. /3/

With respect to the threshold issue, i.e., whether the obtaining of the warehouse space constituted a permissible procurement, the procurement of the lease by the Marshals Service was procedurally defective since proper delegation of authority was not obtained from GSA and proper competitive bidding procedures were not used. However, GSA officials have advised that, under the circumstances then existing, had USMS requested a delegation of authority from GSA to enter into the lease, such request would have been approved. Further, we have held that failure by an agency to complete formal contracting procedures in obtaining emergency security guard services does not preclude the procurement from constituting a permissible procurement. Therefore, the procurement by the Marshals Service would have been permissible had the agency followed proper procedures. For these reasons, we conclude that the threshold test for equitable relief has been met. /4/

Our review of the record convinces us that all of the remaining three elements necessary for payment on a quantum meruit basis are present. The Marshals Service agrees that the agency received and accepted the storage space and used it to store and maintain seized property. Further, USMS has determined that RJB-II acted in good faith. And finally, based upon its cost effectiveness study, the Marshals Service has concluded that the monthly rental of $7,175.42 charged by RJB-II for the use of the warehouse space is fair and reasonable.

Accordingly, we authorize payment by the Marshals Service of the sum of $21,526.26 to RJB-II Limited Partnership for the months of February, March and April 1991, and of the monthly rent of $7,175.42 for May 1991, and continuing, until GSA negotiates a lease which will provide the storage space needed by the agency.

To: Director, Claims Group - GGD

From: Comptroller General

Subject: RJB-II Limited Partnership, B-244504-O.M.

We are returning your file, Z-2867190, along with a copy of our decision of today, B-244504, in which we have determined that, since all of the elements necessary for payment on a quantum meruit basis are present, the U.S. Marshals Service may pay the sum of $21,526.26 may be made to RJB-II Limited Partnership for rent past due, and pay the monthly rent of $7,175.42 for May 1991, and continuing, until the General Services Administration negotiates a lease which will provide the storage space needed by the agency.

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