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B-212130 1 (1984-08-20)

handle is hein.gao/gaobadlvx0001 and id is 1 raw text is: TmE COMPTROLLER S mNENAL ONECIION OP THE UNITED TATES WASHIN0TON, 0.0. 20546 PILE: B-212130 DATE: August 20, 1984 MATTER OF: Army Request for Advance Decision DIQEST: Where the unpaid balance due under a govern- ment contract is claimed by the contractor's bank as assignee, the payment bond surety, and the Internal Revenue Service (IRS), pay- ment should be made to the IRS because the surety's claim is superior to that of the bank and the government may set off its claim for taxes owed by the contractor against an amount that otherwise would be due the surety. The Finance and Accounting Officer at Fort Devens, Massachusetts, requests an advance decision as to whom the final payment under contract No. DAKF31-80-D-0244 should be made. For the reasons stated below, we conclude that the funds should be paid to the Internal Revenue Service (IRS). On September 30, 1980, the Army awarded a fixed- price contract to Diamond Construction, Inc. to install insulation and siding and to paint windows on 38 build- ings at Fort Devens. As required under the Miller Act, 40 U.S.C. SS 270a-270d (1982), Diamond executed payment and performance bonds on which the Aetna Casualty and Surety Company agreed to act as surety. Also on Septem- ber 30, Diamond assigned all payments that would become due under the contract to the Pelham Bank and Trust Company. The bank notified the contracting officer of the assignment, as the Assignment of Claims Act, 31 U.S.C. S 3727 (1982), requires; the record does not show that the bank complied with the Act's requirement that it also give notice to the surety and to the disbursing officer. After an increase in the contract price for additional work, and a decrease for work that the con- tractor did not complete, the total due under the oa~q

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