B-171868, AUG 20, 1971

B-171868: Aug 20, 1971

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SETTLEMENT IS AUTHORIZED ONLY FOR THOSE CONTRACTS ON WHICH THE GOVERNMENT HAD AGREED TO ASSUME FINANCING. INC.: REFERENCE IS MADE TO YOUR LETTER OF JANUARY 25. THE BASIS FOR THE SETTLEMENT IS THAT SUCH SUPPLIES WERE FURNISHED TO KIMBALL ON ASSURANCES FROM THE ADMINISTRATIVE CONTRACTING OFFICER (ACO) THAT THE GOVERNMENT HAD ASSUMED THE FINANCING OF THE SUBJECT CONTRACTS AND WOULD TAKE STEPS TO SEE THAT PAYMENT WOULD BE MADE UPON RECEIPT OF THE SUPPLIES. A SPECIAL BANK ACCOUNT FROM WHICH THE ACO COULD MAKE PAYMENT WAS ESTABLISHED. OBLIGATIONS TO SUBCONTRACTORS UNDER FEDERAL CONTRACTS ARE DENIED BECAUSE THERE IS NO PRIVITY OF CONTRACT BETWEEN SUCH SUBCONTRACTORS AND THE UNITED STATES. 455.37 FOR ITEMS DELIVERED UNDER CONTRACT 3269 AS THE ACO'S ASSUMPTION OF LIABILITY FOR PAYMENT BY THE GOVERNMENT WAS SPECIFICALLY LIMITED TO CONTRACTS -3033.

B-171868, AUG 20, 1971

CONTRACTOR - SUBCONTRACTOR - PAYMENT BY GOVERNMENT DECISION TO GULTON INDUSTRIES, INC., ALLOWING PARTIAL SETTLEMENT OF A CLAIM RESULTING FROM DELIVERY OF SUPPLIES TO KIMBALL COIL COMPANY, A PRIME CONTRACTOR ON A CONTRACT ADMINISTERED BY THE DEFENSE SUPPLY AGENCY. SETTLEMENT IS AUTHORIZED ONLY FOR THOSE CONTRACTS ON WHICH THE GOVERNMENT HAD AGREED TO ASSUME FINANCING, AND HAD GIVEN THE SUBCONTRACTORS ASSURANCES OF PAYMENT.

TO GULTON INDUSTRIES, INC.:

REFERENCE IS MADE TO YOUR LETTER OF JANUARY 25, 1971, WITH ENCLOSURES, CONCERNING YOUR CLAIM IN THE AMOUNT OF $5,086.76 FOR CAPACITORS FURNISHED TO THE KIMBALL COIL COMPANY, A GOVERNMENT PRIME CONTRACTOR UNDER CONTRACTS NOS. DAAB05-69-C-3033, DAAB05-69-C-3152 AND DAAB05-69-C-3296, ADMINISTERED BY THE DEFENSE SUPPLY AGENCY, DEFENSE CONTRACT ADMINISTRATION SERVICES REGION, CHICAGO, ILLINOIS.

OUR CLAIMS DIVISION HAS BEEN INSTRUCTED TODAY TO ISSUE A SETTLEMENT TO YOUR COMPANY IN THE AMOUNT OF $3,631.39 FOR THE SUPPLIES YOU FURNISHED KIMBALL UNDER CONTRACTS -3033 AND -3152. THE BASIS FOR THE SETTLEMENT IS THAT SUCH SUPPLIES WERE FURNISHED TO KIMBALL ON ASSURANCES FROM THE ADMINISTRATIVE CONTRACTING OFFICER (ACO) THAT THE GOVERNMENT HAD ASSUMED THE FINANCING OF THE SUBJECT CONTRACTS AND WOULD TAKE STEPS TO SEE THAT PAYMENT WOULD BE MADE UPON RECEIPT OF THE SUPPLIES. TO ACHIEVE THIS END, A SPECIAL BANK ACCOUNT FROM WHICH THE ACO COULD MAKE PAYMENT WAS ESTABLISHED. ORDINARILY, OBLIGATIONS TO SUBCONTRACTORS UNDER FEDERAL CONTRACTS ARE DENIED BECAUSE THERE IS NO PRIVITY OF CONTRACT BETWEEN SUCH SUBCONTRACTORS AND THE UNITED STATES. SEE KELLOGG V UNITED STATES, 7 WALL. 361. THE CIRCUMSTANCES WITH RESPECT TO CONTRACTS -3033 AND -3152 ESTABLISH THE NECESSARY PRIVITY AND THE PAYMENT HAS THEREFORE BEEN AUTHORIZED.

HOWEVER, OUR CLAIMS DIVISION HAS BEEN INSTRUCTED TO DISALLOW YOUR CLAIM IN THE AMOUNT OF $1,455.37 FOR ITEMS DELIVERED UNDER CONTRACT 3269 AS THE ACO'S ASSUMPTION OF LIABILITY FOR PAYMENT BY THE GOVERNMENT WAS SPECIFICALLY LIMITED TO CONTRACTS -3033, -3152 AND -3307 AND NO SPECIAL BANK ACCOUNT WAS ESTABLISHED FOR CONTRACT -3296. THE NECESSARY PRIVITY OF CONTRACT IS THEREFORE ABSENT.