B-166577, MAY 1, 1969

B-166577, MAY 1, 1969

TO MAJOR ADAMS:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 28, 1969, WITH ENCLOSURES, FORWARDED BY THE OFFICE OF THE COMPTROLLER, DEFENSE SUPPLY AGENCY, REQUESTING AN ADVANCE DECISION AS TO THE PROPRIETY OF PAYING THE ENCLOSED VOUCHER STATED IN FAVOR OF COLEMAN FINANCIAL CORPORATION, ASSIGNEE OF MERCURY CHEMICAL COMPANY, INCORPORATED, UNDER CONTRACT NO. DSA-4-064488.

THE CONTRACT WAS AWARDED TO MERCURY ON AUGUST 2, 1965. PAYMENTS TO MERCURY UNDER THE CONTRACT WERE MADE IN AUGUST AND SEPTEMBER 1966, AND FINAL PAYMENT TO MERCURY WAS MADE ON OCTOBER 12, 1966, IN THE AMOUNT OF $2,611.31. IT IS REPORTED THAT ON OCTOBER 19, 1966, A NOTICE OF ASSIGNMENT DATED OCTOBER 12, 1966, ADDRESSED TO CONTRACTING OFFICER, DEFENSE SUPPLY CENTER, RICHMOND, VIRGINIA, WAS RECEIVED. A TRUE COPY OF THE ASSIGNMENT DATED JULY 15, 1966, WAS ATTACHED. THESE DOCUMENTS WERE FORWARDED BY THE CONTRACTING OFFICER TO THE DISBURSING OFFICE, WHICH NOTIFIED MR. LEON C. BAKER, PRESIDENT OF THE ASSIGNEE, THAT SINCE NOTICE OF THE ASSIGNMENT HAD NOT BEEN RECEIVED PRIOR TO THE DATE OF FINAL PAYMENT HIS REQUEST FOR PAYMENT COULD NOT BE HONORED.

BY LETTER DATED OCTOBER 23, 1967, MR. BAKER AGAIN DEMANDED PAYMENT OF $2,611.31, PLUS INTEREST FROM OCTOBER 12, 1966. IN THIS LETTER HE STATED THAT MERCURY HAD GIVEN NOTICE OF THE ASSIGNMENT ON AUGUST 12 AND 15, 1966, BY MARKING ITS INVOICES NO. 1338 AND NO. 1340. IN YOUR LETTER OF OCTOBER 26, 1967, YOU AGAIN ADVISED MR. BAKER THAT NOTICE OF THE ASSIGNMENT HAD NOT BEEN RECEIVED BEFORE THE FINAL PAYMENT ON OCTOBER 12, 1966, AND FURNISHED HIM COPIES OF THE REFERENCED INVOICES WHICH CONTAIN NO MENTION OF THE ASSIGNMENT.

APPARENTLY NOTHING FURTHER WAS HEARD FROM MR. BAKER UNTIL FEBRUARY 17, 1969, WHEN HE WROTE CALLING ATTENTION TO A DECISION OF THE ARMED SERVICES BOARD OF CONTRACT APPEALS (ASBCA NO. 12468, FEBRUARY 7, 1969). ACCORDING TO MR. BAKER THAT DECISION INVOLVED A RELATED CONTRACT WHICH MERCURY HAD ASSIGNED TO HIS FIRM. THERE THE GOVERNMENT, ON OCTOBER 14, 1966, MADE A SET OFF AGAINST MONIES DUE UNDER CONTRACT NO. DSA-4-085986 PS 419 AND CLAIMED THAT THE ASSIGNMENT WAS NOT PERFECTED UNTIL NOTICE WAS RECEIVED BY THE DISBURSING OFFICE IN RICHMOND ON OCTOBER 19, 1966. HOWEVER, THE BOARD HELD THAT THE ASSIGNMENT WAS PERFECTED ON JULY 15, 1966, WHEN THE CONTRACTING OFFICER IN NEW YORK ACKNOWLEDGED RECEIPT OF NOTICES OF ASSIGNMENT OF THREE CONTRACTS, INCLUDING THE ONE UNDER CONSIDERATION IN THAT CASE. THE BOARD POINTED OUT THAT THE ACKNOWLEDGING OFFICE IN NEW YORK WAS THE OFFICE OF THE DISBURSING OFFICER LISTED IN THE CONTRACT AND NOWHERE IN THE CONTRACT OR IN CORRESPONDENCE HAD THE RICHMOND OFFICE BEEN DESIGNATED. MR. BAKER STATES THAT SINCE THE NOTICE OF THE ASSIGNMENT OF THE SUBJECT CONTRACT WAS FILED AT THE SAME TIME AS THE NOTICES IN THE ASBCA CASE, THE FACTS ARE IDENTICAL AND HE IS ENTITLED TO PAYMENT.

IN ADDITION TO PERMITTING THE ASSIGNMENT OF MONIES DUE OR TO BECOME DUE UNDER A CONTRACT TO A BANK OR OTHER FINANCING INSTITUTION, THE ASSIGNMENT OF CLAIMS ACT OF 1940, AS AMENDED, 31 U.S.C. 203, 41 U.S.C. 15, PROVIDES THAT THE ASSIGNEE SHALL FILE WRITTEN NOTICE OF THE ASSIGNMENT TOGETHER WITH A TRUE COPY OF THE INSTRUMENT OF ASSIGNMENT WITH THE CONTRACTING OFFICER AND THE DISBURSING OFFICER DESIGNATED IN THE CONTRACT TO MAKE PAYMENT. IN THE INSTANT CASE, THE INVITATION WAS ISSUED AND THE CONTRACT AWARDED BY THE DEFENSE GENERAL SUPPLY CENTER, RICHMOND, VIRGINIA, AND THE CONTRACT PROVIDED THAT INVOICES SHOULD BE MAILED TO AND PAYMENT WILL BE MADE BY THE FINANCE AND ACCOUNTING OFFICER AT THAT CENTER. IT IS REPORTED THAT THE NOTICE OF ASSIGNMENT WAS NOT RECEIVED IN THE CENTER UNTIL OCTOBER 19, 1966, ONE WEEK AFTER FINAL PAYMENT.

THE ONLY EVIDENCE FURNISHED BY BAKER THAT THERE WAS TIMELY NOTICE IS THE MARKING OF TWO OF THE CONTRACTOR'S INVOICES AND THE ASBCA DECISION. NOTED ABOVE, THERE IS NO MENTION OF THE ASSIGNMENT ON THE INVOICES. THE LETTER ACKNOWLEDGING RECEIPT OF THE NOTICES OF THE ASSIGNEMENT REFERRED TO IN THE ASBCA'S DECISION LISTS THE CONTRACTS INVOLVED AND THE SUBJECT CONTRACT IS NOT AMONG THEM. FURTHERMORE, THE BOARD HELD THAT NOTICE OF THE ASSIGNMENT THERE UNDER CONSIDERATION WAS SUFFICIENT BECAUSE IT HAD BEEN RECEIVED BY THE OFFICE DESIGNATED IN THE CONTRACT. SINCE THE SUBJECT CONTRACT DESIGNATED RICHMOND AS THE PAYMENT OFFICE, FILING OF THE NOTICE IN NEW YORK WOULD NOT BE SUFFICIENT.

IN THESE CIRCUMSTANCES, WE FIND NO EVIDENCE THAT THE STATUTORY NOTICE REQUIREMENTS WERE COMPLIED WITH PRIOR TO FINAL PAYMENT TO THE CONTRACTOR. THEREFORE, THE VOUCHER STATED IN FAVOR OF THE ASSIGNEE MAY NOT BE CERTIFIED FOR PAYMENT.