Propriety of Proposed Settlement With Fee Limitations

B-158792: Feb 12, 1980

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The Department of the Interior requested an advance decision on the propriety of a proposed settlement with a firm which performed work on the National Visitors Center. The construction project, which began as a simple arrangement, evolved into a complex, multiparty financial and management arrangement with Interior becoming directly involved in the funding and construction of the facilities. Interior applied Federal procurement regulations to arrive at a settlement amount which it felt was reasonable under a quantum meruit basis. In calculating the settlement amount, Interior considered the firm's work on the entire project as a whole, rather than as a collection of separate contracts. Had it been calculated as separate contracts, the fee for portions of the work would have exceeded the 10 percent allowed. The firm agreed with Interior's settlement. GAO held that Federal procurement regulations were applicable because Federal funds were expended. Based on the information furnished by the firm and Interior, GAO held that it was reasonable and consistent with the parties' interpretation of their arrangement to view the firm's work as participation in the entire project and to view the fee arrangement as a whole, rather than to segment the work and calculate fees for each segment. No basis for objection to the arrangement was found.