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B-225115 1 (1987-02-20)

handle is hein.gao/gaobadmpf0001 and id is 1 raw text is: iThe Comptroller General of the United States Washington, D.C. 20548 Decision Priority to Remaining Proceeds of Contract Between Veterans Administration and Kathy's Kranes Matterof. Corporation. File: B-225115 Date: February 20, 1987 DIGEST The performance bond surety under a Veterans Administration contract has priority over the United States Army Corps of Engineers to remaining contract proceeds but only to the extent of the surety's actual costs and expenses in completing the contract. A direction in a takeover agreement between the surety and the Government that the surety be paid amounts that become progressively due in the same fashion and at the same times as sums otherwise would have been paid to the contractor does not alter applicable law that the surety not recover more than the actual costs and expenses it iff-curs in completing the contract. Furthermore, since the takeover agreement does not delineate what rights the surety and Government would have should there be conflicting claims to the remaining contract proceeds, it should not be construed as altering the general rules governing priority. DECISION The Veterans Administration (VA) asks about proper distribu- tion of proceeds under contract no. V101C-1169 between the VA and the Small Business Administration (SBA) and subcontract No. 58320716 between the SBA and Kathy's Kranes Corporation. For the reasons given below, we find that the performance bond surety, St. Paul Fire and Marine Insurance Co., has priority to amounts equal to its costs and expenses in com- pleting work on the contract. The remaining amounts should be paid to the Army Corps of Engineers (Corps) in full or partial setoff of a $29,729.79 debt Kathy's Kranes owes the Corps on another contract. 3103

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