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B-203658 1 (1982-12-20)

handle is hein.gao/gaobadkuh0001 and id is 1 raw text is: ~'0 THE COMPTROLLER GENERAL DECISION {..J ).o F THE UNITED STATES 1WASHINGTON. D. C. 20549 VN~jITlI0 FILE: B-203658 DATE: December 20, 1982 MATTER OF: Mary Helen Coal Company, Inc4 DIGEST: A subcontractor under a Government contract has no legally enforceable right against the Government for funds erroneously paid to the assignor prime contractor instead of assignee bank, since there is no privity of contract between the subcontractor and the Government. Mary Helen Coal Company, Inc. claims payment of $64,661.20 for coal supplied under contract No. DLA 600- 79-D-1683 between Mitchell Energy Corporation, a coal broker, and the Defense Fuel Supply Center (DFSC). Mary Helen was the coal supplier, and the contract was to supply coal to a number of Government facilities, most of which are operated by the General Services Administration (GSA). We deny the claim. After award of the contract, Mitchell assigned its right to funds due under the contract to United Virginia Bank, pursuant to the Assignment of Claims Act, 31 U.S.C. S 3727, as codified by Pub. L. No. 97-258 (formerly 31 U.S.C. § 203), and 41 U.S.C. § 15 (1976) (the Act). There- after, Mitchell, the bank, and Mary Helen entered into an agreement whereby the bank would deposit in escrow all pay- ments to Mitchell received from DFSC and distribute them to Mary Helen. Mary Helen made a number of shipments of coal for which DFSC forwarded payment directly to Mitchell instead of the bank. Mary Helen's coal failed to meet the contract specifi- cations. GSA nonetheless accepted some shipments, but even- tually refused to accept any more nonconforming coal. When Mitchell failed to purchase coal elsewhere, the Government terminated the contract for default and reprocured coal at a higher price. Mary Helen is suing Mitchell in Federal dis- trict court for payment of the coal supplied for Mitchell. Mitchell, however, is insolvent, and the claim before our Office represents Mary Helen's attempt to collect from the United States the money that DFSC paid directly to Mitchell despite the assignment.

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