B-175670, MAY 25, 1972

B-175670: May 25, 1972

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IS NOT AUTHORIZED TO SETTLE EQUITABLE CLAIMS AGAINST THE UNITED STATES. AN ASSIGNMENT HAS NO LEGAL VALIDITY AGAINST THE GOVERNMENT WHERE THERE IS NO LOAN BY THE ASSIGNEE TO THE ASSIGNOR OF FUNDS TO BE USED IN PERFORMANCE OF THE CONTRACT. THE PROTEST IS DENIED. CONTRACT DSA 700-69-C-9465 WAS AWARDED ON FEBRUARY 18. COPIES OF THE NOTICE OF ASSIGNMENT WERE RECEIVED BY THE ADMINISTRATIVE CONTRACTING OFFICER ON JULY 8. THE NOTICE WAS ACKNOWLEDGED BY THE DISBURSING OFFICER ON OCTOBER 28. SINCE THE NOTICE OF ASSIGNMENT WAS EITHER LOST OR MISHANDLED. ALL CONTRACT PAYMENTS WERE MADE DIRECTLY TO HARRIS BETWEEN MARCH 26. YOU ADVISE THAT THE CONTRACT PAYMENTS ASSIGNED TO THE FIRST NATIONAL BANK OF WASHINGTON WERE INTENDED TO ESTABLISH AN ESCROW ACCOUNT WHEREUNDER THE BANK WAS AUTHORIZED TO DISBURSE $16.

B-175670, MAY 25, 1972

PROCUREMENT LAW - ASSIGNMENT - NEGLIGENT DIRECT PAYMENT - DEMAND FOR EQUITABLE RELIEF DECISION DENYING THE CLAIM OF WILLIAMS NOVELTY CO., INC., FOR AN AMOUNT PAID DIRECTLY TO HARRIS INDUSTRIES, INC., BY THE DEFENSE SUPPLY AGENCY IN DISREGARD OF AN ASSIGNMENT CONTRACT BETWEEN HARRIS AND THE FIRST NATIONAL BANK OF WASHINGTON. THE COMP. GEN. IS NOT AUTHORIZED TO SETTLE EQUITABLE CLAIMS AGAINST THE UNITED STATES. FURTHER, AN ASSIGNMENT HAS NO LEGAL VALIDITY AGAINST THE GOVERNMENT WHERE THERE IS NO LOAN BY THE ASSIGNEE TO THE ASSIGNOR OF FUNDS TO BE USED IN PERFORMANCE OF THE CONTRACT. CHATTANOOGA WHEELBARROW CO. V UNITED STATES, CIVIL NO. 4755 (1967). FOR THE FOREGOING REASONS, THE PROTEST IS DENIED.

TO WILLIAMS NOVELTY COMPANY, INC.:

THE DEFENSE SUPPLY AGENCY (DSA) HAS FORWARDED, AT YOUR REQUEST, YOUR CLAIM IN THE AMOUNT OF $9,101.01 FOR OUR CONSIDERATION ON EQUITABLE GROUNDS.

CONTRACT DSA 700-69-C-9465 WAS AWARDED ON FEBRUARY 18, 1969, TO HARRIS INDUSTRIES, INC., FOR 149 TABLES. THEREAFTER, ON JULY 7, 1969, HARRIS ASSIGNED ALL PAYMENTS DUE UNDER THE CONTRACT TO THE FIRST NATIONAL BANK OF WASHINGTON. COPIES OF THE NOTICE OF ASSIGNMENT WERE RECEIVED BY THE ADMINISTRATIVE CONTRACTING OFFICER ON JULY 8, 1969, AND THE NOTICE WAS ACKNOWLEDGED BY THE DISBURSING OFFICER ON OCTOBER 28, 1969. HOWEVER, SINCE THE NOTICE OF ASSIGNMENT WAS EITHER LOST OR MISHANDLED, ALL CONTRACT PAYMENTS WERE MADE DIRECTLY TO HARRIS BETWEEN MARCH 26, 1971, AND JUNE 22, 1971.

YOU ADVISE THAT THE CONTRACT PAYMENTS ASSIGNED TO THE FIRST NATIONAL BANK OF WASHINGTON WERE INTENDED TO ESTABLISH AN ESCROW ACCOUNT WHEREUNDER THE BANK WAS AUTHORIZED TO DISBURSE $16,500 TO YOUR FIRM IN REPAYMENT OF A LOAN ADVANCED BY YOU TO HARRIS TO FINANCE THE CONTRACT WORK. IN VIEW OF THIS, IT IS YOUR POSITION THAT THE UNITED STATES IS LIABLE TO YOU IN THE AMOUNT OF $9,101.01 WHICH YOU WERE UNABLE TO RECOUP FROM HARRIS BECAUSE OF THE NEGLIGENCE OF THE GOVERNMENT IN PAYING THE CONTRACT PROCEEDS DIRECTLY TO HARRIS WITHOUT REGARD TO THE ASSIGNMENT.

WE HAVE REVIEWED THE FILE FURNISHED BY DSA IN CONNECTION WITH YOUR REQUEST FOR RELIEF AND WE AGREE THAT NO LEGAL BASIS EXISTS FOR THE PAYMENT OF THE SUM HERETOFORE PAID DIRECTLY TO THE CONTRACTOR UNDER ITS CONTRACT. THIS IS THE IMPORT OF THE DSA LETTER OF MARCH 21, 1972, TO YOU. ADDITION TO WHAT WAS STATED IN PARAGRAPH 3 THEREOF, THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TENNESSEE, SOUTHERN DIVISION, IN CHATTANOOGA WHEELBARROW CO. V UNITED STATES, CIVIL NO. 4755 (1967) HELD THAT AN ASSIGNMENT HAD NO VALIDITY AGAINST THE UNITED STATES WHERE THERE WAS NO LOAN BY THE ASSIGNEE TO THE ASSIGNOR TO BE USED IN PERFORMANCE OF THE CONTRACT WITH THE DEFENSE SUPPLY AGENCY. SEE 49 COMP. GEN. 44, 46 (1969).

FURTHER, WE MAY NOT CONSIDER YOUR CLAIM ON EQUITABLE GROUNDS SINCE OUR OFFICE IS AUTHORIZED ONLY TO SETTLE CLAIMS BASED ON APPLICABLE LEGAL PRINCIPLES, AND WE MAY NOT SETTLE A CLAIM ON THE BASIS OF MORAL OR EQUITABLE OBLIGATIONS OF THE GOVERNMENT.