Payment of an unauthorized vendor invoice
Today's obscure question for the group, with some initial background.
My client municipality is a Board of Trustees form of government. Last fall, it employed a supervisor for its combined city business office and its PWA. Because the manager was younger than the employees he would be supervising, they titled him the City Manager. He was not given the range of responsibilities of a City Manager in statutory Council-Manager Form of Government. He was responsible for presenting issues to the Trustees and obtaining their approval for policy decisions and for purchase authority. After roughly six months on the job, he quit without notice. One of the projects he had been handling required the Town was to obtain rental equipment to solve a sewage bypass problem outlined in a DEQ consent order. He was authorized to seek bids for the project; however, there are no records or comments in the minutes of the meetings of his having obtained approval to enter into a contract with the vendor to rent the equipment. The Trustees were never presented with a contract and neither he nor a representative of the Trustees signed a contract for services. No purchase order was issued for rental of the equipment.
The equipment was delivered and installed. The bypass was cured. There is no question that the municipality received value from the provision of the equipment.
The cost of the equipment, upon review by the Trustees after the employee's departure, was more than double that of the other bid received. The total is in excess of $25,000.00. The file does not include a non-collusion affidavit, although it is not entirely clear that the pump and associated piping fall under the definition of construction materials.
The vendor now seeks payment on the proposed contract, which they admit was not signed. They have also asked for payment on a separate contract, also not signed, for some associated equipment. [Upon being asked for a copy of a signed document, the vendor says they "changed [their] process during COVID" and do not have signed contracts with any of their customers.] We have no documentation, including no email correspondence, between the vendor and the former employee concerning the proposed rental agreement.
The municipal Treasurer is not comfortable with paying an invoice that was 1) never approved by the Trustees; and, 2) not signed by anyone on behalf of the municipality. There is no question that the municipality received and used the pump, although the price involved is seriously out of line with what other vendors charge for similar equipment.
Chapter 62 O.S. seems to indicate that the invoices for this vendor are not appropriate for payment. Do any of you have any advice or recommendations on how to deal with this issue?
Sharla
Sharla J. Frost, Attorney at Law
City Attorney, Town of Fort Towson, Oklahoma
P.O. Box 35
Fort Towson, OK 74735
cityattorney@forttowson.us
713-882-9053
I think there is no contract or, at most, any contract is voidable by the Town because the applicable law was not followed. The law is part of every contract. The vendor may be able to recover in quantum meruit, but they will have to sue. I don't think it would be a fee case because no contract, no account, etc. The better course is to tell the vendor you will pay the low bid amount, if comparable and if approved by the Town Board. Otherwise, you will spend a lot of time and money trying to prove what was reasonable, etc. I think the fair thing and in the Town's interest is to work it out without a lawsuit.
Good luck!
Mark H. Ramsey
For the Firm
Taylor, Foster, Mallett,
Downs, Ramsey & Russell, P.C.
P.O. Box 309
Claremore, OK 74018
918-343-4100
918-343-4900 fax
mramsey@soonerlaw.commailto:apixley@soonerlaw.com
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From: Sharla Frost cityattorney@forttowson.us
Sent: Tuesday, June 28, 2022 6:14 PM
To: oama@lists.imla.org
Subject: [Oama] Payment of an unauthorized vendor invoice
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Today's obscure question for the group, with some initial background.
My client municipality is a Board of Trustees form of government. Last fall, it employed a supervisor for its combined city business office and its PWA. Because the manager was younger than the employees he would be supervising, they titled him the City Manager. He was not given the range of responsibilities of a City Manager in statutory Council-Manager Form of Government. He was responsible for presenting issues to the Trustees and obtaining their approval for policy decisions and for purchase authority. After roughly six months on the job, he quit without notice. One of the projects he had been handling required the Town was to obtain rental equipment to solve a sewage bypass problem outlined in a DEQ consent order. He was authorized to seek bids for the project; however, there are no records or comments in the minutes of the meetings of his having obtained approval to enter into a contract with the vendor to rent the equipment. The Trustees were never presented with a contract and neither he nor a representative of the Trustees signed a contract for services. No purchase order was issued for rental of the equipment.
The equipment was delivered and installed. The bypass was cured. There is no question that the municipality received value from the provision of the equipment.
The cost of the equipment, upon review by the Trustees after the employee's departure, was more than double that of the other bid received. The total is in excess of $25,000.00. The file does not include a non-collusion affidavit, although it is not entirely clear that the pump and associated piping fall under the definition of construction materials.
The vendor now seeks payment on the proposed contract, which they admit was not signed. They have also asked for payment on a separate contract, also not signed, for some associated equipment. [Upon being asked for a copy of a signed document, the vendor says they "changed [their] process during COVID" and do not have signed contracts with any of their customers.] We have no documentation, including no email correspondence, between the vendor and the former employee concerning the proposed rental agreement.
The municipal Treasurer is not comfortable with paying an invoice that was 1) never approved by the Trustees; and, 2) not signed by anyone on behalf of the municipality. There is no question that the municipality received and used the pump, although the price involved is seriously out of line with what other vendors charge for similar equipment.
Chapter 62 O.S. seems to indicate that the invoices for this vendor are not appropriate for payment. Do any of you have any advice or recommendations on how to deal with this issue?
Sharla
Sharla J. Frost, Attorney at Law
City Attorney, Town of Fort Towson, Oklahoma
P.O. Box 35
Fort Towson, OK 74735
cityattorney@forttowson.usmailto:cityattorney@forttowson.us
713-882-9053