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B-230902 1 (1988-07-01)

handle is hein.gao/gaobadndj0001 and id is 1 raw text is: The Comptroller General of the United States Washlngton, D.C. 20M48 Decision Matterof: Corps of Engineers -- Priority of Payment File: B-230902 Date: July 1, 1988 DIGEST An assignee bank receives priority of payment over an IRS tax levy against the contractor under an Army Corps of Engineers Contract. A valid assignment under a government contract gives the assignee priority over government claims against the assignor arising after perfection of the assignment. DECISION A disbursing officer in the U.S. Army Corps of Engineers requests our decision on whether the Internal Revenue Service (IRS) or an assignee has priority to receive payments under a government contract. For the reasons indicated below, we conclude that the order of payment should be first to the assignee and then to the IRS. BACKGROUND On August 20, 1985 the Corps entered into a contract with the Small Business Administration (SBA) for a flood control and river maintenance project in Minnesota. The SBA in turn awarded the contract to Walter Ervin and his business, Minnesota Drillers. The Corps administered both contracts and made direct payments to the contractor. The contract work was commenced on August 26, 1985. On August 27, 1985 the contractor executed an assignment to the Tri-County State Bank under the Assignment of Claims Act, 31 U.S.C. § 3727 (1982). The assignment was acknowl- edged by the Corps on September 3, 1985 and is considered by the Corps to be a proper assignment under the Act. The bank stated that the assignment was made for the purposes of financing the contract. We have held that assignments are valid if made to secure a loan which the assignee has made to the assignor to finance the assignor's performance of the contract, provided all the other provisions of the Act have been met. B-221717, May 5, 1986; B-201164, Sept. 29, 1983. The assignment thus appears to be a valid assignment. O4-- '0cq /13(z

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