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B-214273 1 (1984-06-21)

handle is hein.gao/gaobadlth0001 and id is 1 raw text is: OECIU FILE: B-2 MATTER 0 DIGEST: 3NJ 14273 THE COMPTROLLER MENERAL 'OP THE UNITEO STATUE WASHINGTON. 0.C. 20548 DATE: June 21, 1984 F: Home State Bank--Payment under Assignment of Claims Act 1. Army is authorized to make payment to a contractor's assignee for amounts that were erroneously paid to the contractor after the Army had received valid notice that the contractor had assigned its rights in accordance with the Assignment of Claims Act, 31 U.S.C. S 3727, 41 U.S.C. § 15 (1982). Assignee is entitled to payment even though Army has not yet recovered the erroneous payments from the contractor. 2. Prompt Payment Act does not provide basis for payment of interest since implementing regulations of Otfice of Management and Budget provide that interest shall apply only with respect to contracts issued on or after October 1, 1982, and contract in this case was issued in 1981. The Army made payments to a contractor which had assigned its rights under the contract to a bank. Those payments were improper because the Army had received valid notice of the assignment before the payments were made. we have been asked to render an advance decision on the propriety of making payment to the bank for amounts that were paid by the Army to the contractor, despite the Army's prior receipt of the notice of assignment. For the reasons given below, we conclude that payment should be made to the bank, even though the erroneous payment to the contractor has not yet been recovered. As is also explained below, the bank is not entitled to receive interest under the Prompt Payment Act, 31 U.S.C. § 3901 (1982). According to the submission, on December 30, 1981, the Army received a notice of assignment by JESCO Resources Inc., to the home State Bank of the proceeds to be earned under JESCO's contract (no. DAKFI9-81-D-0091) with the United States Army. Finding the notice and assignment to be proper and in accoraance with the Assignment of Claims Act, 31 U.S.C. § 3727, 41 U.S.C. § 15 (1982), the Army made monthly payments under the contract tO Home State Bank

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