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Request for Advance Decision Under the Assignment of the Claims Act

B-194945 Jun 19, 1979
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Highlights

The General Services Administration (GSA) requested an advance decision concerning the proper payee under a contract. A bank in New York claimed that it should be the payee for services performed by a firm, by virtue of an agreement in which the firm allegedly assigned the proceeds from this government contract to the bank. GSA had previously informed the bank that it was unable to honor the request for payment because the assignment was not in compliance with the Assignment of Claims Act, particularly since the agreement did not refer to any specific government contract, was not a certified copy, and was entered into approximately 2 years prior to the date of the contract in question. Subsequently, the bank renewed its request to GSA that the assignment be recognized. As additional support for its position, the bank submitted a copy of a corporate resolution of the firm which authorized the execution of the assignment, as well as a transcript of a court hearing in which a firm official testified that the contract account receivable had been assigned to the bank. GAO held that in such circumstances, it was enough that the government ensured itself of the assignment's authenticity and its applicability to the contract right involved. It appeared from the documents subsequently submitted, that during the period of performance of the contract, the firm assigned all accounts receivable to the bank, as evidenced by a secured note. It was believed that the note should be recognized as an assignment, assuming that GSA concluded that the note was an authentic document. Nevertheless, because of the controversy in this matter, the bank should be required to indemnify the government from any claims that might be made by the contractor. The bank may be paid upon satisfaction of these requirements.

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