B-153621, MAR. 10, 1964

B-153621: Mar 10, 1964

Additional Materials:

Contact:

Edda Emmanuelli Perez
(202) 512-2853
EmmanuelliPerezE@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

A "NO SETOFF" CLAUSE IN A CONTRACT UNDER WHICH PAYMENTS FOR TRANSPORTATION SERVICES ARE ASSIGNABLE LIMITS THE RIGHT OF SETOFF EXPRESSLY RESERVED TO THE UNITED STATES IN SECTION 322 OF THE TRANSPORTATION ACT OF 1940. IN TRANSPORTATION CONTRACTS MADE THE SUBJECT OF ASSIGNMENT UNDERMINES THE INTENT OF SECTION 322 AND IS DETRIMENTAL TO THE PROTECTION OF THE GOVERNMENT'S BEST INTERESTS SINCE IT COMPLICATES AND. IT MAY BE NOTED THAT THE RELIEF AFFORDED CERTIFYING AND DISBURSING OFFICERS FROM LIABILITY FOR OVERPAYMENTS FOR TRANSPORTATION SERVICES UNDER THE PROVISIONS OF 31 U.S.C. 82C AND 82G IS NOT INTENDED TO BE AVAILABLE IN THE CASE OF OVERPAYMENTS TO ASSIGNEES. WE ARE BRINGING THIS MATTER TO YOUR ATTENTION TO URGE THAT GOVERNMENT OFFICIALS RESPONSIBLE FOR THE NEGOTIATION.

B-153621, MAR. 10, 1964

TO THE HEADS OF DEPARTMENTS, INDEPENDENT ESTABLISHMENTS AND OTHERS CONCERNED:

PAYMENTS DUE FOR TRANSPORTATION SERVICES MAY BE ASSIGNED UNDER THE ASSIGNMENT OF CLAIMS ACT OF 1940, AS AMENDED, 54 STAT. 1029, 65 STAT 51 (31 U.S.C. 203 AND 41 U.S.C. 15), PROVIDED THE APPLICABLE CHARGE FOR THE SERVICE, WHETHER PERFORMED UNDER A SINGLE BILL OF LADING, TRANSPORTATION REQUEST, OR A SO-CALLED "MASTER" CONTRACT, AMOUNTS TO AT LEAST $1,000. SEE 21 COMP. GEN. 265; 23 ID. 989. THE ACT, AS AMENDED, FURTHER PROVIDES THAT ANY ASSIGNED CONTRACT OVER $1,000 OF THE DEPARTMENT OF DEFENSE (AND OTHER SPECIFIED AGENCIES OR OTHERS DESIGNATED BY THE PRESIDENT) MAY, IN TIME OF WAR OR NATIONAL EMERGENCY, PROVIDE THAT PAYMENTS THEREUNDER SHALL NOT BE SUBJECT TO REDUCTION OR SETOFF FOR ANY LIABILITY OF THE ASSIGNOR ARISING INDEPENDENTLY OF THE ASSIGNED CONTRACT.

A "NO SETOFF" CLAUSE IN A CONTRACT UNDER WHICH PAYMENTS FOR TRANSPORTATION SERVICES ARE ASSIGNABLE LIMITS THE RIGHT OF SETOFF EXPRESSLY RESERVED TO THE UNITED STATES IN SECTION 322 OF THE TRANSPORTATION ACT OF 1940, AS AMENDED, 54 STAT. 955, 72 STAT. 860, 49 U.S.C. 66. THE INCLUSION OF SUCH CLAUSE, THEREFORE, IN TRANSPORTATION CONTRACTS MADE THE SUBJECT OF ASSIGNMENT UNDERMINES THE INTENT OF SECTION 322 AND IS DETRIMENTAL TO THE PROTECTION OF THE GOVERNMENT'S BEST INTERESTS SINCE IT COMPLICATES AND, IN SOME INSTANCES, FRUSTRATES THE ADJUSTMENT AND COLLECTION OF OVERCHARGES. IT MAY BE NOTED THAT THE RELIEF AFFORDED CERTIFYING AND DISBURSING OFFICERS FROM LIABILITY FOR OVERPAYMENTS FOR TRANSPORTATION SERVICES UNDER THE PROVISIONS OF 31 U.S.C. 82C AND 82G IS NOT INTENDED TO BE AVAILABLE IN THE CASE OF OVERPAYMENTS TO ASSIGNEES.

WE ARE BRINGING THIS MATTER TO YOUR ATTENTION TO URGE THAT GOVERNMENT OFFICIALS RESPONSIBLE FOR THE NEGOTIATION, FORMULATION, AND AWARD OF TRANSPORTATION CONTRACTS TAKEN APPROPRIATE STEPS TO EXCLUDE FROM SUCH CONTRACTS CLAUSES WHICH LIMIT THE GOVERNMENT FROM EXERCISING ITS RIGHT TO SETOFF.