B-172278, APR 13, 1971

B-172278: Apr 13, 1971

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THE MILLER ACT PAYMENT BOND (40 U.S.C. 270) IS THE ONLY PROTECTION PROVIDED BY THE GOVERNMENT FOR UNPAID SUBCONTRACTORS AND MATERIALMEN AND THE SETTLEMENT OF SUCH A CLAIM IS OUTSIDE THE JURISDICTION OF GAO. SMITH & CUTLER: REFERENCE IS MADE TO YOUR LETTER OF MARCH 17. ADVISING THAT YOUR CLIENT CARBOLINE COMPANY WAS SUPPLIER TO JOE PAYNE & SONS. THE JUDGMENT IS SAID TO HAVE BEEN ENTERED PURSUANT TO 40 U.S.C. 270. IN VIEW THEREOF YOU INQUIRE WHETHER THERE IS ANY OTHER METHOD UNDER PERTINENT LAW OR REGULATION BY WHICH YOUR CLIENT CAN OBTAIN RELIEF. THE MILLER ACT PAYMENT BOND IS THE ONLY PROTECTION PROVIDED BY THE GOVERNMENT FOR UNPAID SUBCONTRACTORS AND MATERIALMEN. WE HAVE HELD THAT OTHER THAN THE REMEDY PROVIDED BY THAT STATUTE.

B-172278, APR 13, 1971

MILLER ACT PAYMENT BOND - SURETY IN RECEIVERSHIP ADVISING THAT GAO HAS NO AUTHORITY TO SETTLE CLAIM OF SUBCONTRACTOR AND MATERIALMEN AGAINST THE CONTRACTOR'S (JOE PAYNE & SONS, INC.) SURETY UNITED BONDING INSURANCE CO., NOW IN PROCEEDINGS FOR LIQUIDATION OR RECEIVERSHIP. THE MILLER ACT PAYMENT BOND (40 U.S.C. 270) IS THE ONLY PROTECTION PROVIDED BY THE GOVERNMENT FOR UNPAID SUBCONTRACTORS AND MATERIALMEN AND THE SETTLEMENT OF SUCH A CLAIM IS OUTSIDE THE JURISDICTION OF GAO, THERE BEING NO PRIVITY OF CONTRACT BETWEEN SUBCONTRACTORS AND THE UNITED STATES.

TO CARLTON, FIELDS, WARD, EMMANUEL, SMITH & CUTLER:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 17, 1971, ADVISING THAT YOUR CLIENT CARBOLINE COMPANY WAS SUPPLIER TO JOE PAYNE & SONS, INC., IN THE PERFORMANCE OF CONTRACT NO. DACA 1869 C 9046. YOU STATE THAT THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF FLORIDA HAS ENTERED A JUDGMENT ON MARCH 15, 1971, IN FAVOR OF YOUR CLIENT AND AGAINST THE SURETY, UNITED BONDING INSURANCE CO., ON THE PAYMENT BOND FURNISHED ON THE CONTRACT. THE JUDGMENT IS SAID TO HAVE BEEN ENTERED PURSUANT TO 40 U.S.C. 270, COMMONLY KNOWN AS THE MILLER ACT.

YOU STATE FURTHER THAT THE INSURANCE DEPARTMENT OF THE STATE OF INDIANA HAS PLACED UNITED BONDING INSURANCE CO., IN PROCEEDINGS FOR LIQUIDATION OR RECEIVERSHIP. IN VIEW THEREOF YOU INQUIRE WHETHER THERE IS ANY OTHER METHOD UNDER PERTINENT LAW OR REGULATION BY WHICH YOUR CLIENT CAN OBTAIN RELIEF, SINCE THE PROTECTION REQUIRED UNDER THE MILLER ACT PAYMENT BOND HAS NOW DISAPPEARED.

THE MILLER ACT PAYMENT BOND IS THE ONLY PROTECTION PROVIDED BY THE GOVERNMENT FOR UNPAID SUBCONTRACTORS AND MATERIALMEN. WE HAVE HELD THAT OTHER THAN THE REMEDY PROVIDED BY THAT STATUTE, THE SETTLEMENT OF OBLIGATIONS BETWEEN CONTRACTORS AND THOSE FURNISHING LABOR AND MATERIALS IS A MATTER OUTSIDE THE JURISDICTION OF OUR OFFICE, THERE BEING NO PRIVITY OF CONTRACT BETWEEN THE SUBCONTRACTOR OR MATERIALMAN AND THE UNITED STATES. B-169093, MARCH 17, 1970, CITING KELLOGG V UNITED STATES, 7 WALL. 361 (1868); WARRIOR CONSTRUCTORS, INC. V HARDERS, INC., 387 F. 2D 727 (1967); UNITED STATES V CLEVELAND ELECTRIC COMPANY OF SOUTH CAROLINA, 373 F. 2D 585 (1967).

IN THE CIRCUMSTANCES, THERE IS NO AUTHORITY FOR SETTLEMENT OF YOUR CLIENT'S CLAIM BY OUR OFFICE, AND WE HAVE NO KNOWLEDGE OF ANY RELIEF OBTAINABLE THROUGH LEGAL ACTION OTHER THAN THROUGH THE APPOINTED LIQUIDATOR FOR THE SURETY, BASED UPON THE JUDGMENT RENDERED IN FAVOR OF YOUR CLIENT.