Government Couldn’t Find Documents to Prove Existence of Government Obligation, But ASBCA Finds Course of Dealing May Have Created Implied Contract; Appeal of Interaction Research Institute, Inc., ASBCA No. 61505

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Government’s motion for summary on a contractor claim for unpaid invoices is denied. The government alleged that it could not locate documentation for the disputed invoices. Thus, the government argued whatever government official ordered services from the contractor must have lacked authority, so the government was not obligated to pay the invoices. The board rejected this argument reasoning that the parties could have had an implied contract. The lack of documentation was not necessarily evidence that the government officials involved lacked authority to bind the government. In fact, the board reasoned, the parties’ course of dealing indicated that government officials had implied actual authority to bind the government.

In 2009 and 2010, the Marines hired Interaction Research Institutes (IRI) to conduct several training sessions for troops. The hiring process was informal. Typically, a Marine officer would call IRI a couple of days ahead of time and make verbal request for training. After performing the training session, IRI would submit invoices. The Marines would typically ratify the invoices by issuing a Standard Form 182 (SF-182) and then pay with a government credit card.

But the Marines did not pay for all of IRI trainings. In 2012, the Marines reviewed the unpaid invoices from IRI. It agreed to ratify several of them. The Marines, however, were unable to locate SF-182s for several courses and concluded it could not ratify those sessions. IRI submitted a claim for the unratified unpaid invoices. The Marines denied the claim. IRI appealed to the ASBCA.

The Marines moved for summary judgment, arguing that because it could not locate SF-182s for the disputed invoices, the approval for those training sessions must have been done without actual authority. Thus, the Marines argued, there was no valid contract for those training sessions, so the government had no obligated to pay them.

But the board reasoned that the parties could have formed an implied-in-fact contract. An implied-in-fact contract arises when there is (1) mutuality of intent, (2) consideration, (3) offer and acceptance, and (4) actual authority on the part of the government’s representative to bind the government.

The board reasoned that the government did not argue that none of the staff involved in ordering the training lacked authority; rather, it contended that there were no SF-182s documenting the proper approval of training. But while an SF-182 may be used to show implied authority to bind the government, it is not the only way to do so. As a matter of fact, the board continued, it is possible to have an implied-in-fact contract without any express contract.

In this case, the board noted that the government’s course of dealing demonstrated that the employees involved likely had authority to bind the government. The government already admitted that it ordered and paid for several trainings.

In order for the government to prevail on a motion for summary judgment, the board had to find that the persons who ordered the disputed training lacked authority to do so. Using the SF-182s was part of the standard operating procedure at the time the courses were ordered. But the fact that no SF-182s could be located for the disputed invoices did not necessarily mean that the trainings were unauthorized. Indeed, the board reasoned, the missing documents could easily point to a record-keeping problem. The court could not grant summary judgment based on an inferential leap, particularly when the parties’ course of dealing suggested that the government officials involved had authority to bind the government.

IRI is represented by Barba B. Affourtit. The government is represented by Craig D. Jensen, John Torresala, Erin L. Hernandez, and Lieutenant Colonel Russel R. Henry.

ASBCA - Interaction Research Institute