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B-238695 1 (1991-09-13)

handle is hein.gao/gaobadnzu0001 and id is 1 raw text is: Comptroller General AV5-3 of the United States Weuhtugton, 0,20548 Decision Matter of: Priority of Payment Between Payment Bond Surety and Contractor File: B-238695 Date: September 13, 1991 DIGEST Where contractor and payment bond surety both claim entitlement to final contract payment, the payment should be held by the government pursuant to Federal Acquisition Regulation section 28.106-7(b) until there is an agreement between the parties or a judicial determination of their rights. DECISION The Army Corps of Engineers requests an advance decision as to whether a contractor or its payment bond surety has priority toafunds due under a contract. We conclude that under Federal Acquisition Regulation (FAR) § 28,106-7(b), the Corps is authorized to pay either party only upon an agreement between the parties or a judicial determination of their rights. BACKGROUND On September 2, 1983, the Army Corps of Engineers, Omaca District, awarded contract No, DACW45-83-C-0360 to Associated Industrial Contracting, Inc. for the rehabilitation of a water storage tank at Garrison Dam, Riverdale, North Dakota. The contract price was $147,741. Consistent with requirements of the Miller Act, 40 U.S.C. §§ 270a-270d (1988), Associated provided performance and payment bonds issued by The Travelers Indemnity Co., its surety. The contractor completed the project on September 21, 1984. Because the required completion date was September 1, however, the Corps withheld $2,800 as liquidated damages for 20 days late performance. On June 10, 1986, Associated submitted a claim for $89,410.86 to the Corps on behalf of Universal Applicators, Inc., one of its subcontractors under the contract, for increased costs allegedly resulting from a constructive suspensior. of the contract by the government. The amount claimed included the

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