B-154264, JUN. 16, 1964

B-154264: Jun 16, 1964

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BUREAU OF LAND MANAGEMENT: FURTHER REFERENCE IS MADE TO YOUR LETTER OF APRIL 30. THE WORK UNDER THE CONTRACT WAS SATISFACTORILY COMPLETED MARCH 11. THERE WERE 21 CALENDAR DAYS DELAY FOR WHICH THE CONTRACTOR IS SUBJECT TO LIQUIDATED DAMAGES AT THE RATE OF $50 PER DAY. 077.14 HAVE BEEN MADE AND THE FINAL PAYMENT NOW DUE AMOUNTS TO $6. IT IS ENTITLED TO BE PAID THE AMOUNT DUE THEREUNDER. THIS HOLDING IS BASED UPON THE PREMISE THAT THERE IS NO OBLIGATION ON THE PART OF THE GOVERNMENT TO PROTECT THE SURETY. IS TO RELIEVE THE GOVERNMENT OF ANY DUTY OR RESPONSIBILITY WITH RESPECT TO MUCH CLAIMS. YOUR ATTENTION IS INVITED TO THE PROVISIONS OF SECTION 3477. GANGWISH TO HOME INDEMNITY OF SUMS PAYABLE UNDER THE CONTRACT WOULD BE INVALID INSOFAR AS THE UNITED STATES IS CONCERNED.

B-154264, JUN. 16, 1964

TO MR. LEO W. COOK, AUTHORIZED CERTIFYING OFFICER, BUREAU OF LAND MANAGEMENT:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF APRIL 30, 1964, 1370 (3.21), REQUESTING A DECISION AS TO THE PROPRIETY OF PAYMENT OF THE CLAIM OF MR. WAYNE H. GANGWISH, CONTRACTOR, UNDER CONTRACT NO. 14-11 0008-1233, DATED MAY 27, 1963, FOR PLOWING AND SEEDING APPROXIMATELY 15,100 ACRES NEAR GROVADA AND MCDERMITT, NEVADA.

THE WORK UNDER THE CONTRACT WAS SATISFACTORILY COMPLETED MARCH 11, 1964, WITH A TOTAL OF 14,020 ACRES PLOWED AND 14,220 ACRES SEEDED. THE VALUE OF THE WORK PERFORMED AMOUNTED TO $60,337.80, HOWEVER, THERE WERE 21 CALENDAR DAYS DELAY FOR WHICH THE CONTRACTOR IS SUBJECT TO LIQUIDATED DAMAGES AT THE RATE OF $50 PER DAY, REDUCING THE FINAL AWARD BY $1,050. PARTIAL PAYMENTS TOTALING $53,077.14 HAVE BEEN MADE AND THE FINAL PAYMENT NOW DUE AMOUNTS TO $6,210.66. THE CONTRACTOR SIGNED AND DELIVERED A RELEASE BUT BEFORE FINAL PAYMENT COULD BE MADE, WELLER, FRIEDRICH AND HICKISCH, ATTORNEYS FOR THE HOME INDEMNITY COMPANY, SURETY ON THE CONTRACT, CALLED ATTENTION TO UNPAID BILLS FOR MATERIALS AND CLAIMED THE BALANCE DUE UNDER THE CONTRACT FOR THE SURETY. AS CONTENDED BY THE ATTORNEYS, THE BOND APPLICATION AND THE INDEMNITY AGREEMENT SIGNED BY THE CONTRACTOR CONTAIN AN ASSIGNMENT OF THE BALANCE OF THE CONTRACT FUNDS IN THE EVENT OF DEFAULT OR CLAIMS ON THE BOND.

IT APPEARS THAT PURSUANT TO THE ACT OF AUGUST 24, 1935, 49 STAT. 793, WAYNE H. GANGWISH, AS PRINCIPAL, AND HOME INDEMNITY AS SURETY, EXECUTED A PERFORMANCE BOND TO GUARANTEE THE FAITHFUL PERFORMANCE OF THE CONTRACT HERE INVOLVED, AND A PAYMENT BOND FOR THE PROTECTION OF LABORERS AND MATERIAL MEN. IT HAS CONSISTENTLY BEEN HELD BY THIS OFFICE THAT WHERE A CONTRACTOR DOES NOT DEFAULT, BUT COMPLETES THE WORK UNDER THE CONTRACT, AS IN THIS CASE, IT IS ENTITLED TO BE PAID THE AMOUNT DUE THEREUNDER, REGARDLESS OF THE FACT THAT THERE MAY BE OUTSTANDING CLAIMS FOR MATERIAL AND LABOR. THIS HOLDING IS BASED UPON THE PREMISE THAT THERE IS NO OBLIGATION ON THE PART OF THE GOVERNMENT TO PROTECT THE SURETY, SINCE ONE OF THE PURPOSES OF THE ACT OF AUGUST 24, 1935, GIVING PERSONS FURNISHING LABOR AND MATERIALS THE RIGHT TO SUE IN THE NAME OF THE UNITED STATES ON THE PAYMENT BOND OF THE CONTRACTOR, IS TO RELIEVE THE GOVERNMENT OF ANY DUTY OR RESPONSIBILITY WITH RESPECT TO MUCH CLAIMS. SEE FLEISHER ENGINEERING AND CONSTRUCTION COMPANY ET AL. V. UNITED STATES, ET CETERA, 311 U.S. 15.

IN CONNECTION WITH THE ASSIGNMENT CONTAINED IN THE BOND, YOUR ATTENTION IS INVITED TO THE PROVISIONS OF SECTION 3477, REVISED STATUTES, AS AMENDED, 31 U.S.C. 203, AND TO THE CASES OF MARTIN V. NATIONAL SURETY CO., 300 U.S. 588 AND UNITED STATES V. MUNSEY TRUST COMPANY, 32 U.S. 234. VIEW OF THE PROHIBITION AGAINST THE ASSIGNMENT OF CLAIMS AGAINST THE UNITED STATES CONTAINED IN SECTION 3477, REVISED STATUTES, AS AMENDED, IT APPEARS THAT ANY ASSIGNMENT BY WAYNE H. GANGWISH TO HOME INDEMNITY OF SUMS PAYABLE UNDER THE CONTRACT WOULD BE INVALID INSOFAR AS THE UNITED STATES IS CONCERNED.

ACCORDINGLY, THE CLAIM OF WAYNE H. GANGWISH, CONTRACTOR, MAY BE CERTIFIED FOR PAYMENT IF OTHERWISE CORRECT. THE FILE WHICH ACCOMPANIED YOUR LETTER IS RETURNED.