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B-190144 1 (1977-12-28)

handle is hein.gao/gaobadfnk0001 and id is 1 raw text is: 2 TH CDMiITPRJLLERl fl3E2AL~ DEMC I SIC IN 04KO THE UN1 fT E10 STATEMS FILE: B-190144 DATE: December 2R, 1977 MVATTFR OF: Naval Facilities Engineering Command DIGEST: 1. Even if Government negligently fails to insure that Miller Act bonds are filed with construction cortract, unpaid supplier's :emedy lies against prime cor.tractor and not the Govarnment. 2. Where Government completes contract work after default of prime contractor, unpaid supplier of defaulted contrac- tor is not entitled to contract balance remaining in hands of Government for work which GCvernment rather than defaulted contractor completed. However, unpaid sap- plier may have equitable claim to contract money earned by defaulted contractor but which has been retained by Governm ent. The Department of the Navy has requcsted our opinion as to whether payment may be made to an unpai oi'Lpplier of a defaulted Government contractor for material supplied to the contractor where, because the performance and payment bonds furnished by the contractor to the Navy were invalid, there is no surety from which the supplier may recover. The record shows that on September 0, 1975, Walker Cement and Ferguson Exavating (Walker & Ferguson), a joint venture, was awarded contract N62472--75-C-6395 ffr repair work at the Naval Weapons Support Center, Crane, Indiana. Pursuant to the Miller Act, 40 U. S. C. § 270(a) (1970), bonds were submittecd by Walker & Ferguson naming the Highlands Insurance Company (Highlands) as surety for Walker & Ferguson. By letter of May 26, 1976, Highlands advised tha Navy that the bonds had been signed by an attorney-in-fact who had not been authorized to bind the surety. The Navy reports thai. subsequent invesi i- gation has validated that the bonds were not authorized. On November 9, 1976, Walker & Ferguson notified the Navy that it was financially unable to complete the contract, and on December 30, 1976, the contract was terminated for default. -1- J.

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