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B-216209 1 (1984-09-24)

handle is hein.gao/gaobadlxp0001 and id is 1 raw text is: ITHE COMPYRNOLLEN SENERAL DECISION . OP THE UNITED STATES WAGHINGTON. 0.C. 2054U FILE: B-216209 DATE: September 24, 1984 MATTER OF: Department of Army--Request for Advance Decision DIGEST: 1. Payment of withheld contract funds that are claimed by the contractor's payment bond surety, which, pursuant to its obligation, paid an amount to subcontractors in excess of the amount remaining to be paid under the contract, may be made to the surety. Con- tractor's debts to its subcontractors on a different contract do not impact on this result because subcontractors do not have privity with the government. 2. Payment of withheld contract funds should not be made except pursuant to an agreement by the parties or pursuant to an order by a court of competent jurisdiction where con- tracting officer failed to insure that a valid Miller Act payment bond was furnished by the contractor, the contractor has not fully paid its subcontractors, and where the relative rights of the parties competing for the (limited) funds remain unclear. By letter dated August 22, 1984, the Chief, Finance and Accounting Division, Directorate of Resource Management, Army Corps of Engineers (Army), requested a decision of our Office in regard to the disbursement of funds withheld under two contracts, DACA65-82-C-0081 (contract 81) and DACA65-82-C-0154 (contract 154), between Eastern Building Services, Inc. (Eastern), and the Army. Contract 81 Funds Work under contract 81 was substantially completed, but Eastern failed to pay all of its creditor-subcontractors. The Wausau Insurance Company (Wausau) has claimed the balance to be paid under this contract, $16,188, because pursuant to its obligations as Eastern's payment bond surety, it paid out over $30,000 to Eastern's subcon- tractors. Citing United Electric Corporation v. United States, 647 F.2d 1082 (Ct. Cl. 1981), cert. denied 454 O o ILA

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