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B-229235.2 1 (1989-02-27)

handle is hein.gao/gaobadnjx0001 and id is 1 raw text is: The ComptroUer General of the Unted States Waagngtoa, D.C. M48 Decision Priority of Payment under Small Business Matter of: Administration 8(a) Subcontract File: B-229235.2 Date: February 27, 1989 DIGESTS 1. Order of priority for remaining contract funds held by the contracting agencies and Small Business Administration (SBA) is to the Army for any liquidated damages under its contract, the Surety on its performance bonds, the SBA and Internal Revenue Service (IRS) for debts owed by the contractor, and the Surety on its payment bonds. 2. In making advance payments to subcontractors, SBA's status is that of a government agency and not a contractor's assignee. Therefore, because the United States' right of set-off extends to debts owed as a result of loans by SBA to 8(a) subcontractors, SBA's claim to remaining contract proceeds is superior to that of a payment bond surety. DECISION We have been asked to determine the order of priority of payment among several claimants to the remaining proceeds of two Small Business Administration (SBA) subcontracts and other contract funds held by SBA. The requestors are: SBA, St. Paul Insurance Company (Surety), as surety on performance and payment bonds on two SBA subcontracts, and Wallace L. Bodlt, General Contractor, Inc., the Surety's guarantor. The contracts were entered into between the SBA and the Department of the Army (Contract No. DACA63-86-C-0018), and between the SBA and the Department of the Navy (Contract No. N62467-81-C-0807). SBA subcontracted both contracts under its 8(a) program to Cal-Tom Construction Co., Inc. (Cal- Tom). Among the claimants, SBA claims priority to any remaining funds for the unliquated balance of advance payments made to Cal-Tom by SBA under both subcontracts; the Surety claims an equitable lien against remaining funds in favor of subcontractors, materialmen and suppliers under both subcontracts; and the Internal Revenue Service (IRS)

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