B-124031, JUN. 28, 1955

B-124031, JUN. 28, 1955

TO THE HONORABLE SECRETARY OF THE INTERIOR:

REFERENCE IS MADE TO YOUR LETTER OF MAY 18, 1955, AND ENCLOSURES, RELATIVE TO A PROPOSED PROCEDURE FOR COLLECTING AMOUNTS DUE THE GOVERNMENT FROM CONTRACTORS UNDER BUREAU OF RECLAMATION CONTRACTS,REPRESENTING THE DIFFERENCE BETWEEN AMOUNTS INCLUDED IN THEIR BIDS TO COVER DUTIES ON FOREIGN MATERIALS AND SMALLER AMOUNTS ACTUALLY PAID AS SUCH DUTIES.

IT IS PROPOSED TO REQUIRE BIDDERS AND CONTRACTORS TO EXECUTE A "POWER OF ATTORNEY" APPOINTING THE COMMISSIONER OF RECLAMATION AS THEIR ATTORNEY TO COLLECT FROM THE BUREAU OF CUSTOMS REFUNDS OF EXCESS DUTIES FOUND DUE THE CONTRACTORS WITH RESPECT TO IMPORT ENTRIES ON PROPERTY IMPORTED FOR USE IN CONNECTION WITH SPECIFIED CONTRACTS AND ASSIGNING THE AMOUNTS OF THE EXCESS DUTIES TO THE UNITED STATES. IT IS STATED THAT THE AMOUNT OF DUTY PAID AT THE TIME OF ENTRY OF PROPERTY INTO THE UNITED STATES IS TENTATIVE AND SUBJECT TO FINAL DETERMINATION BY THE BUREAU OF CUSTOMS. THE PROPOSED PROCEDURE IS INTENDED TO INSURE THE COLLECTION OF THE AMOUNTS OF EXCESS DUTIES BY THE BUREAU OF RECLAMATION WHILE ENABLING THE BUREAU TO MAKE FINAL PAYMENT ON ITS CONTRACTS PROMPTLY AND IN ACCORDANCE WITH THE TERMS OF THE CONTRACTS WITHOUT AWAITING FINAL DETERMINATION BY THE BUREAU OF CUSTOMS AS TO THE PROPER AMOUNT OF DUTY PAYABLE. THE MAIN QUESTION PRESENTED IS WHETHER SUCH PROPOSED ASSIGNMENTS WOULD VIOLATE THE PROVISIONS OF THE ASSIGNMENT OF CLAIMS ACT (31 U.S.C. 203; 41 U.S.C. 15).

THE ASSIGNMENT OF CLAIMS ACT GENERALLY PROHIBITS THE ASSIGNMENT OF ANY CLAIM AGAINST THE UNITED STATES UNLESS THE CLAIM HAS BEEN ALLOWED, THE AMOUNT DUE ASCERTAINED AND A WARRANT OF PAYMENT ISSUED. HOWEVER, CERTAIN EXCEPTIONS TO THE STRICT LETTER OF THE STATUTE HAVE BEEN RECOGNIZED BY THE COURTS, AS SHOWN BY THE AUTHORITIES REFERRED TO IN YOUR LETTER. IT IS WELL ESTABLISHED THAT THE STATUTE IS FOR THE PROTECTION OF THE UNITED STATES AND THAT THE UNITED STATES MAY RECOGNIZE AND GIVE EFFECT TO AN ASSIGNMENT PROHIBITED BY THE STATUTE. BANK OF CALIFORNIA V. COMMISSIONER OF INTERNAL REVENUE, 133 F. (2D) 428 AND AUTHORITIES THEREIN CITED.

IN THE INSTANT MATTER, IT IS CONTEMPLATED THAT CLAIMS AGAINST ONE AGENCY OF THE GOVERNMENT SHALL BE ASSIGNED TO ANOTHER AGENCY OF THE GOVERNMENT FOR THE PURPOSE OF INSURING COLLECTIONS BY THE ASSIGNEE AGENCY. IN OTHER WORDS, THE ASSIGNMENT IS FOR THE BENEFIT OF THE UNITED STATES. MOREOVER, THE PROPOSED PROCEDURE DOES NOT INVOLVE ANY TRANSFER OF FUNDS BETWEEN AGENCIES IN THE SENSE THAT THE APPROPRIATIONS OF THE ASSIGNEE AGENCY WOULD BE IMPROPERLY AUGMENTED. ACCORDINGLY, THERE IS NOT PERCEIVED ANY OBJECTION TO THE PROCEDURE PROPOSED. SEE 11 COMP. GEN. 278.

SEE 11 COMP. GEN. 278.

IT WOULD APPEAR THAT THE QUESTION AS TO WHETHER THE PROPOSED POWER OF ATTORNEY AND ASSIGNMENT WOULD BE VALID AS AGAINST A PRIOR ASSIGNEE WHO HAD COMPLIED WITH THE REQUIREMENTS OF THE ASSIGNMENT OF CLAIMS ACT WOULD NOT ORDINARILY ARISE IN CONNECTION WITH A CONTRACT MADE AFTER THE PROPOSED PROCEDURE BECOMES EFFECTIVE, AS THE POWER OF ATTORNEY AND ASSIGNMENT TO THE UNITED STATES PRESUMABLY WOULD BE PRIOR TO ANY OTHER ASSIGNMENT. MOREOVER, EVEN IN CASES WHERE OTHER VALID ASSIGNMENTS ARE PRIOR TO THOSE MADE TO THE UNITED STATES, IT IS BELIEVED THAT THE ASSIGNMENTS TO THE UNITED STATES WOULD PREVAIL SINCE THE ASSIGNED CLAIMS WOULD ARISE IN CONNECTION WITH THE ..END :