Settlement of Claims Arising from Irregular Procurements

• Author: Major Percival D Park
• Pages: 05

In this orttele MUJOT

Park reviews various methods of

settling eontr~etor claims against the government basad upon unauthorized procurenients He focuses on one type of elaz,n, the no-doubt e102

receives benefits icithaut p,r

hound to pay for them

.Major Park urges caution rn the use of the no-doubt claims theory as c basis for p a p ~ g claims. He then ,eUWLS the history of the no-doubt clams euaerpt. its re- lationship taiith rattficatzon. and posstble standards for

m e of the eoiierpt

Mupr Park eondudes that the no-doubt claim 1s lor-ful. bat suggests that iwc legislaiton would be desirable to settle the pueation He urges. at a niinimum. that reg-ulatory procisions be developed for the guidance of procurement andfimnee personnel and their legd admors Major Park closes by iepeatzng that care should be ezer-eiaed tn USUCQ the theor#

1. INTRODUCTION

   The Armed Services Procurement Regulation (ASPR), which 1s

   being renamed the Defense Acquisition Regulatian (DAR), and its suppiements eatabliah procedures for buying supplies which in-

   quasl.co,itractllal transactrons

   ernmental agenig**JAGC. U S Army Editor. Ydirard La/ Rrr eu The Judge Adi,oiare Gen erah School Charlotteivllle. Virginis. 1917 to preaenf Formerly aaaigned 10 the Procurement Lsu Dlviblan Offlee of the Judge Adiocafe Headquarters. Umted State3 Arm) Europe and Seventh Army.st Heidelberg German), 1972-76 and :o the United Staler Army Pioevrement Agency Vietnam, 1810-71 and 1972 B A 1966 Allegheni College; B 5 1976, Unhueriif) of Maryland, M A 1975 Boston Unnersir?. J D , 1969. Harvard Cnirersay, LL M candidate. 1816 to preaeit Unlverslri ai Virginia Member of the Bars of Penni>luania the Distncf ai Cal-

   . .

   eludes construction, and services within the Department of Defense. One of the least complicated provisions states that contracting officers are authorized to enter into contracts on behalf of the gavernment.' Additionally, in the Army, a provision of the Standards of Conduct prohibits those who are not contracting officers, or their authorized representatives,P from creating obligations or entering cantracts.3 Yet Contracting officers are often presented invoices from commercial contractors who have performed work or furnished goods in response to orders from government personnel who were

   umbia the United States Arm Coun of Military Revieu the United Stater Court bf Military Appeals. the dnited States Tar Court the tnlted States Court of Appeals for the Third Circuit. the United Stares dowt of Claims, and the United States Supreme Courr.'Armed Sewices Procurement Reg. 8 1402 (1 Oet. 1916) [hereinafter cited as ASPRI, which atator 'Cantractmg affmrs at purehasing offlees . . . me BY-thorized to enter into contim8 for mppiies 01 services on behalf of the Govern-ment. and in the name of rhe Cniled Stafee of Amenas. byformni sdrertiong, by negotiation, or by coordinated or inlerdeparimenId pmauremeni

   The ineiuSlan of emstrueliOO within the roneept of Supplies 18 based upon ASPR5 1-201 19, which states: 'Supplrrs means ail property except land or intereat ~nland Ir includes public works. bwidmgs. and facilities " Thls prov~alon ~ m - piementa lo U.S C. 2303 (b) (18761. whleh etares: ''This chapter does not cover landIt covsrs Pi1 ather property mluding- (11 public worka: (2) bulldmgs: (3) facliilles "

   Note thnf'the name "Armed Services Procvrement Regulation'' IS king replaced by the name "Defense Acquisition Regviation However, the older name vi11 be used fhmughauf this article SI? Monroe An And?oi of ASPR Seetion XY by

   ,Aim? Reg. Xo 600-10. Standards of Canduer for Department ai the Arm) Pereonnel. pala. 2-11 (20 Oet. 1911). rhleh stares:

   ''

   cost Pmnelpie. eo MIL L REV 148 note 1(19i8)

   not contracting officers Such transactions are irregular procurements

   The circumstances surrounding irregular procurements are infinitely variable. They may be roughly divided berween situations in which the government has in some manner manifested its consent to be bound, and those in which no consent has been given

   Most irregular procurements in government procurement law practice are based on consensual transactions which yield implied-in-fact ~ontraets.~

   In accordance with ASPR, many irregular pro-

   same intent to be bound. but the) have not expressed if ~n words Irstead their intent muit be inferred iron nonrerbal fact. or oireumiraneer There II no differ-ence ~n legal effect betueen an e~presi cantraer and one Implied I" fact In contm~f B contract 1mp1i.d ~n Ian. also called a con~frurfive confrset or qusri-contract. IS not B true tonfrs~t

   81 all. beeauie the ~ ~ r t i e i have not aereed 10 be

   wood than in the pasf Plaintiff had no emtract with the government but sub

   mifled ~ f b idea a& an vnsalieiied /slue engireenng proposal (8s the plsirriif and

   the trial judge daw ~ r l or B suggestion (ab the Court of Claims sav it)

   The 11is1 judge dircviied at length fhe la% of implied eontiact and 1x5 apphca-Ilon in this ease 22 C C F at 81 301-01 HI.!

   eonode summary of chat lax ~b useful

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   19781 SETIZEMEhT OF CLAIMS

   curements may be dealt with under the changes clause5 by application of the constructive changes doctrine,6 or may be adjustable under the disputes e l s u ~ e ~ or through formalization of an informal Ratification by a contracting officers or a higher offi-

   e ~ a l ' ~

   1s sometimes possible. The contractor can also initiate a suit against the United States under the Tucker Act." In the course of pursuing these remedies, the contractor may be able to rely upon various legal and equitable theories, including eatoppel in its various forms;'* waiver;13 accord and or compromise or settlement.'S

   With so many potential remedies available, meritorious claims should seldom go unpaid. However, at times these remedies are unavailable or impractical because of deficiencies in the supporting facts. One fact is the presence or absence of government consent. If consent is lacking, the remedies and underlying theories listed above are generally not available for use. What can be done in such a case?

   xoAlr Fame hSPR Supplement S 1452 5 C C H S 41. 612 10 (27 July 1971)

   '>The doctrine oi equitable eitoppel ha8 been applied against the gorernmenf ~n contract me^ as well as other types of htig8um uifh increasing irequency ~n known among procurement ~ l f o m e y ~ and has

   fing. See e g Saltman, E8foppef Agoinst The n8 Rorindrd the C o n e r g of fhr Agent's Au'hor-lty Problem n Fedma/ Procu7emmrs? 45 FORDHAM L REV 497 (1976) Yet the daerrine libelf id ~ 0 0 ~ 1 ) understood. as shown b) inaccurate use of the term "ss. fappel " various fact immoni which merit other labels me lumped together under the rubric of estoppel. while genuine estoppel eases are mmeumeb obscured m belng called by different names As a result ai such misapplleafion. the felm "equitable emppeP has been rendered less vieful than if could orherwise he.

   Estoppel i s a rord of medieval French derivation uhieh rigm mall? meant lifer-all? B stopping up 01 elaaing up, as uilh a bung or plug WEBSTER'S TW~RD

   NE*

   INTERNATIOXAL DICTCOSARI

   OF THE EFCLISH LANGUACE

   [hereinafter cited 8s I F 1

   "28 u s.c 1846 (2) (1970),

   Angla.American Legal tradition It haa been aaid that a psrson'a OW" action or BC- eepfance stops 01 e l m a hla mouth to allege OT plead the truth. when such truth 18 inconslatent with hi8 pnnr assertion 01 p~blfmn. 31 C J S Estapprl I 1 (1964) Estoppel IS thus not B remedy, like appeal fa a board of emiract appenls or suit I"a court of la%, but a lhne of argument or B tactic. and powbl) a iacrual iifumon which has ohieetiTe exiitence recardleas of whether it 13 reaamized and armed bi

   . .

   she parries

   The doctrine ai estoppel is not merel) a rule ai evidence or procedure It 13 part oithe subatantwe law determining and ~egulatmgpnmar) rlghrs ai properly and eontiact Thia 13 true alike of 811 tipea of estoppel As Pomero) has snld "An estoppel determines the rights ahieh B person may enforce by zcfion or rely on indeimse. and not the mere mode and means by rhnh those whtb may be p m e d ' 3 POUERUI.

   Eqcl~I

   28 u s c. 1491 i m o & supp

   I' 187:)

   875 (19661 Within the

   JURISPRUDLI.CE 4 801 (Symona ed 1941) Of CDYIJB. m its

   p~miesleffect during tnsl. estoppel operates as B rule oi evrdenee.

   Hnforreally. rhe common Isu ha6 reeogniied two iypei oi legal or technical eb-foppel and one kind ai equitable esioppsl The legal fypee of estappel am emppel by deed I e , b) sgnature afthe party to be eafopped on B sealed document and estoppel bi record or estoppel by judgment, ~n which the subject matter ai the estoppel 13 iaund ~r the records of B COY^ of Is* mmhr to our madern c~llsferal

   As a last resort, the contracting officer and his legal advisor may want to explore the possibility that the no-doubt elaims theory may fit their ease. This theory, though controversial, has been used suc-cessfully in a number of procurement offices. At the same time, it must be noted that some government officials consider that the theory is contrary to law and regulation or, more simply, that there is no such theory.

   Views are far from uniform. The Department of Defense and the Department of the Army have not established or recognized no-doubt claims procedures, nor have they otherwise given explicit approval for use af the theory. Opinions differ as ta whether they could grant approval without specific statutory authority or at least General Accounting Office eoncurrenee. Yet, 88 noted above, some offices have settled claims under the no-doubt theory without repercussions

   This writer is of the opinion that settlement of procurement claims under a no-doubt theory is lawful at the present time, without need for enactment of a new statute, though Some definitive regulatory guidance would be highly desirable.

   estoppel 41 forms of estoppel. there are n m obialeto...