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Payment of Contract Balance to Payment Bond Surety

B-182983 Feb 04, 1975
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Highlights

The agency requested an advance decision as to whether the balance due under a contract could properly be paid to the payment bond surety. The payment bond surety who paid claims for labor and material under a contract when the contractor was unable to pay debts had a greater right to the unpaid contract balance held by the government than the contractor's assignee bank. However, in order to protect the government against future claims from the assignee, an indemnification agreement should be obtained from the surety prior to payment of the contract balance.

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