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B-167886,B-174985 1 (1978-06-01)

handle is hein.gao/gaobadgcg0001 and id is 1 raw text is: I THE CONMPTROLLER GENERAL C.ECISIOl OF THE UNITED STATES WALJHINGTOld. D.C. 205419 FILE: 8-167886, B-1749P5 DATE: June 1, 1978 MATTER OF: Federal Contractors DIGEST: Setoff of payments retained under contract against debts owedGovernment by performance bond surety that completed contract is proper even though surety is being liquidated in State court proceeding, since debts and-credits being set off accrued before commencement of liquidation proceeding. The Indiana Department of Insurance (Indiana) has alpealed the settlement of our Claims Division in the case of Federal Contractors, Inc. (Federal), B-16788C, B-174985, April 9, 1976. Federal was awarded contract No. DABFl5-70-C-0097 by the Department of the Army (Army). When Federal defaulted, the surety under the performance bond, United Bonding Tnsurance Company (UBIC), completed the contract irork. Contract payments in the amount of $22,116.06 were retained by the Government. The Army assessed, under the contract, liquidated damages of $4,060, damages for inspection costs of $272.24 and damages of $25 for cleaning the work area. This amount was set off against the $22,116.06, leaving $17,758.82 still owed under the contract. While UBIC did not assert a claim for the retained funds, ics right to them as a completing surety under a performance bond was recognized. Trinity Universal Coman v. United States, 382 F.2d 317 (1967). Our Claims Divisfoin 4etermined that the retained funds were proper fo: setaff against debts owed the United States by UBIC under other contracts. Since UBIC's debts exceeded the amount retained, the entire amount was set off. - 11 LK-

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