B-114634, MAY 27, 1953

B-114634, MAY 27, 1953

PRECIS-UNAVAILABLE

THE SECRETARY OF THE AIR FORCE:

REFERENCE IS MADE TO LETTER OF MARCH 5, 1953, AND ITS ENCLOSURES, FROM THE AIR FORCE FINANCE CENTER, SETTLEMENTS DIVISION, DENVER, COLORADO (FILE SEDB-22 159 DUNKIN JERNIGAN, CONTRACTOR), RELATIVE TO THE REQUEST OF THE UNITED STATES FIDELITY AND GUARANTY COMPANY, AS SURETY ON CERTAIN BONDS OF DUNCAN JERNIGAN, THAT IT BE GIVEN ASSURANCE THAT IF IT COMPLETES THE CONTRACT WORK INVOLVED THE BALANCE OF THE MONEY OWING BY THE GOVERNMENT ON THE CONTRACTS WILL BE PAID TO THE SAID COMPANY AS COMPLETING SURETY.

THE FILE INDICATES THAT DUNCAN JERNIGAN, MONTGOMERY, ALABAMA, ENTERED INTO EIGHT CONTRACTS FOR THE CONSTRUCTION OF BUILDINGS AT MAXWELL AIR FORCE BASE AND GUNTER AIR FORCE BASE; THAT ON JANUARY 23, 1953, A PETITION IN BANKRUPTCY WAS FILED AND GRANTED IN THE DISTRICT COURT OF THE UNITED STATES FOR THE MIDDLE DISTRICT OF ALABAMA IN THE MATTER OF DUNCAN JERNIGAN, GENERAL CONTRACTOR (IN BANKRUPTCY, NO. 2129 N), AND THAT OF THE SAID CONTRACTS THREE REMAIN INCOMPLETED, VIZ. NO. AF01(600)-221, NO. AF01(600)-226, AND NO. AF01(600)-281, RELATIVE TO BUILDINGS NO. 500, 861 AND 752-756, RESPECTIVELY, AT MAXWELL AIR FORCE BASE. IT IS REPORTED THAT OF THE TOTAL CONTRACT PRICES UNDER THE SAID INCOMPLETED CONTRACTS THERE REMAIN UNPAID BALANCES OF $2,052.92, $3,765.53 AND $3,836.56, RESPECTIVELY.

IT APPEARS FURTHER THAT THE UNITED STATES FIDELITY AND GUARANTY COMPANY IS SURETY ON THE PERFORMANCE BONDS AND THE PAYMENT BONDS PERTAINING TO EACH OF THE EIGHT CONTRACTS REFERRED TO AND THAT THE SAID SURETY IS WILLING TO COMPLETE THE INCOMPLETED CONTRACTS IF ASSURED THAT THE BALANCE OF THE MONEY OWING BY THE GOVERNMENT ON THE CONTRACTS WILL BE PAID TO IT AS COMPLETING SURETY.

BY AN ORDER DATED FEBRUARY 10, 1953, THE REFEREE IN BANKRUPTCY IN THE REFERRED-TO BANKRUPTCY PROCEEDINGS PURPORTED TO AUTHORIZE THE SAID SURETY TO COMPLETE THE INCOMPLETED CONTRACTS AND ORDERED THAT "UNPAID BALANCES DUE UNDER THE TERMS OF SAID CONTRACTS BY THE UNITED STATES AIR FORCE BE PAID DIRECTLY TO UNITED STATES FIDELITY AND GUARANTY COMPANY AS SURETY UNDER ITS AFORESAID BONDS AND THE ATTENDANT CONTRACTS," ANY AMOUNTS RECEIVED BY THE SURETY IN EXCESS OF AMOUNTS EXPENDED BY IT TO BE DELIVERED TO THE TRUSTEE IN BANKRUPTCY. IN THE ORDER IT IS STATED, ALSO, THAT "SAID CONTRACTS UNDER THE CIRCUMSTANCES AS DESCRIBED BY SECTION A-3 OF BANKRUPT'S STATEMENT OF AFFAIRS AND TESTIMONY OF WITNESSES PRESENT DO NOT CONSTITUTE ASSETS OF BANKRUPT ESTATE" AND THAT "THE ENTRY OF THIS ORDER SHALL BE DEEMED TO CONSTITUTE AN ABANDONMENT OF SAID PROPERTY BY THE HONORABLE DONALD MCKAY, TRUSTEE."

THIS OFFICE IS NOT AUTHORIZED TO GIVE SUCH ASSURANCE AS THAT REQUESTED BY THE SURETY IN THIS MATTER. HOWEVER, NO OBJECTION WOULD BE OFFERED BY THIS OFFICE TO THE EXECUTION OF A SUPPLEMENTAL CONTRACT OR CONTRACTS BY AND BETWEEN THE UNITED STATES, REPRESENTED BY THE CONTRACTING OFFICER, AND THE SURETY, WHEREBY IT WOULD BE AGREED, IN SUBSTANCE, THAT AS THE SAME SHALL BECOME PROGRESSIVELY PAYABLE IN ACCORDANCE WITH THE PAYMENT PROVISIONS OF THE SAID ORIGINAL CONTRACTS AS MODIFIED BY THE SUPPLEMENTAL AGREEMENTS, THE GOVERNMENT WILL PAY TO THE SURETY ALL AMOUNTS REMAINING DUE UNDER THE CONTRACTS, NOT EXCEEDING THE AMOUNTS EXPENDED BY THE SURETY IN COMPLETING THE CONTRACTS, EXCLUDING ANY AMOUNTS PAID BY THE SURETY FOR LABOR AND MATERIAL USED IN THE CONTRACT WORK BY THE CONTRACTOR, WITHOUT REDUCTION OR SET-OFF FOR ANY LIABILITY OF ANY NATURE OF THE CONTRACTOR TO THE GOVERNMENT ARISING INDEPENDENTLY OF THE CONTRACT INVOLVED. SEE 31 COMP. GEN. 103. AFTER PAYMENT SHALL HAVE BEEN MADE TO THE COMPLETING SURETY IN ACCORDANCE WITH SUCH SUPPLEMENTAL AGREEMENT, ANY REMAINING BALANCE OWING BY THE GOVERNMENT UNDER THE CONTRACTS SHOULD BE REFERRED TO THE CLAIMS DIVISION, GENERAL ACCOUNTING OFFICE, FOR APPROPRIATE DISPOSITION.