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B-214985 1 (1984-05-22)

handle is hein.gao/gaobadlsg0001 and id is 1 raw text is: tTHE COMPTROLLER UENENAL DECIION .'OP THE UNITED STATE8 WAUHINGTON. 0.C. 2054U PILE: B-214985 DATE: May 22, 1984 MATTER OF: Cotton States Mutual Insurance Company DIGEST: Where a Miller Act payment bond surety and the contractor had notified the agency of the surety's right to any contract retainages, but where the agency had erroneously made final payment to the contractor and a federal tax lien had attached to the final payment before the contractor could for- ward the final payment to the surety, the agency is not liable to the surety since a tax claim has priority over the claim of a payment bond surety. The Department of the Navy, Naval Weapons Station, Yorktown, Virginia (Navy), has requested a decision as to whether the claim of a payment bond surety should be paid. Cotton States Mutual Insurance Company (Cotton States) has filed a claim for $55,000 under Navy contract No. N62470- 78-C-2762 for railroad repair at the Naval Weapons Station. Cotton States was the surety under Miller Act (40 U.S.C. SS 270a-270f (1976 & Supp. II 1978)) performance and payment bonds provided by the prime contractor, Georgia-Carolina Railroad Contractors, Inc. (Georgia-Carolina). On May 30, 1979, both Cotton States and Georgia-Carolina advised the Navy that, since Georgia- Carolina had received financial assistance from Cotton States under its Miller Act bond, all further payments due the contractor under the contract should be sent to the surety. The Navy subsequently mailed several progress payments to the surety. The contractor ultimately completed performance and submitted a claim associated with certain change orders under the contract. A settlement agreement was eventually reached- entitling the contractor to a final payment of $119,192.00. On August 4, 1983, Georgia-Carolina's president hand-carried the final invoice for the contract to the Naval Weapons Station Disbursing office for payment. The dis- bursing officer issued a check in the amount of $119,192.00 to Georgia-Carolina's president instead of sending payment to the surety according to instructions.

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