B-176791, SEP 8, 1972

B-176791: Sep 8, 1972

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WHERE A PERSON IS BOTH A DEBTOR AND CREDITOR TO THE GOVERNMENT IN ANY FORM. THE ACCOUNTING OFFICERS ARE REQUIRED BY LAW TO CONSIDER BOTH THE DEBTS AND CREDITS AND TO SET OFF ONE INDEBTEDNESS AGAINST THE OTHER. THERE IS NO BASIS FOR GAO TO OBJECT AT THIS TIME TO THE ACTIONS OF BLM. WRIGHT: WE ARE IN RECEIPT OF YOUR LETTER DATED AUGUST 4. WHERE A PERSON IS BOTH A DEBTOR AND CREDITOR TO THE GOVERNMENT IN ANY FORM. THE ACCOUNTING OFFICERS ARE REQUIRED BY LAW TO CONSIDER BOTH THE DEBTS AND CREDITS AND TO SET OFF ONE INDEBTEDNESS AGAINST THE OTHER. PAYMENT OF AMOUNTS DUE UNDER SUCH CONTRACTS AND COLLECTION OF AMOUNTS OWING A FEDERAL AGENCY ARE INITIALLY MATTERS WHICH ARE THE RESPONSIBILITY OF THE ADMINISTRATIVE OFFICES CONCERNED.

B-176791, SEP 8, 1972

CONTRACTS - WITHHELD FUNDS - INDEBTEDNESS TO GOVERNMENT DECISION REGARDING A PROTEST ON BEHALF OF GARRET W. WRIGHT AGAINST THE WITHHOLDING OF AMOUNTS OTHERWISE DUE UNDER A CONTRACT WITH THE BUREAU OF LAND MANAGEMENT (BLM), TO COVER AN UNDETERMINED AMOUNT CLAIMED TO BE DUE THE U.S. FOREST SERVICE UNDER ANOTHER CONTRACT. WHERE A PERSON IS BOTH A DEBTOR AND CREDITOR TO THE GOVERNMENT IN ANY FORM, THE ACCOUNTING OFFICERS ARE REQUIRED BY LAW TO CONSIDER BOTH THE DEBTS AND CREDITS AND TO SET OFF ONE INDEBTEDNESS AGAINST THE OTHER, AND CERTIFY ONLY THE BALANCE. TAGGERT V. UNITED STATES, 17 CT. CL. 322 (1881). FURTHERMORE, THE GOVERNMENT'S RIGHT TO SET OFF A CONTRACTOR'S DEBTS AGAINST CONTRACT PROCEEDS EXTENDS TO DEBTS OWED BY THE CONTRACTOR AS A RESULT OF SEPARATE AND INDEPENDENT TRANSACTIONS. ACCORDINGLY, THERE IS NO BASIS FOR GAO TO OBJECT AT THIS TIME TO THE ACTIONS OF BLM.

TO GESFORD P. WRIGHT:

WE ARE IN RECEIPT OF YOUR LETTER DATED AUGUST 4, 1972, WITH ENCLOSURES, PROTESTING ON BEHALF OF GARRET W. WRIGHT AGAINST THE WITHHOLDING OF AMOUNTS OTHERWISE DUE MR. WRIGHT UNDER A CONTRACT HE HELD WITH THE BUREAU OF LAND MANAGEMENT, UNITED STATES DEPARTMENT OF THE INTERIOR, TO COVER AN UNDETERMINED AMOUNT CLAIMED TO BE DUE THE FOREST SERVICE UNDER A TIMBER CONTRACT MR. WRIGHT HELD WITH THE LATTER AGENCY.

SINCE YOU ASSERT THAT THE CLAIM OF THE FOREST SERVICE HAS NOT BEEN FINALIZED, YOU SEEK OUR ADVICE AS TO WHETHER THIS TYPE OF ADMINISTRATIVE ACTION HAS BEEN UPHELD IN COURT DECISIONS, AND REQUEST THAT THE MONIES DUE MR. WRIGHT FROM THE BUREAU OF LAND MANAGEMENT BE RELEASED AND PAID.

THE RIGHT OF SETOFF HAS BEEN HELD TO BE INHERENT IN THE UNITED STATES AND TO BE GROUNDED IN THE COMMON LAW RIGHT OF EVERY CREDITOR TO APPLY THE MONIES OF HIS DEBTOR IN HIS HANDS TO THE EXTINGUISHMENT OF THE AMOUNTS DUE HIM FROM THE DEBTOR. GRATIOT V. UNITED STATES, 40 U.S. 336 (1841); MCKNIGHT V. UNITED STATES, 98 U.S. 176 (1878); BARRY V. UNITED STATES, 229 U.S. 47 (1913). THUS, WHERE A PERSON IS BOTH A DEBTOR AND CREDITOR TO THE GOVERNMENT IN ANY FORM, THE ACCOUNTING OFFICERS ARE REQUIRED BY LAW TO CONSIDER BOTH THE DEBTS AND CREDITS AND TO SET OFF ONE INDEBTEDNESS AGAINST THE OTHER, AND CERTIFY ONLY THE BALANCE. TAGGERT V. UNITED STATES, 17 CT. CL. 322 (1881). FURTHERMORE, THE GOVERNMENT'S RIGHT TO SET OFF A CONTRACTOR'S DEBTS AGAINST CONTRACT PROCEEDS EXTENDS TO DEBTS OWED BY THE CONTRACTOR AS A RESULT OF SEPARATE AND INDEPENDENT TRANSACTIONS. UNITED STATES V. MUNSEY TRUST CO., 332 U.S. 234 (1947). ADDITIONALLY, WHERE THE AMOUNT DUE THE GOVERNMENT HAD NOT BEEN FINALIZED UNDER THE PROCEDURES PROVIDED BY THE CONTRACT, WE SANCTIONED THE UNILATERAL DEDUCTION OF THE AMOUNT ESTIMATED BY THE GOVERNMENT TO BE DUE. B-163625, MARCH 14, 1968.

WE MUST ALSO ADVISE THAT THE ADMINISTRATION OF CONTRACTS, PAYMENT OF AMOUNTS DUE UNDER SUCH CONTRACTS AND COLLECTION OF AMOUNTS OWING A FEDERAL AGENCY ARE INITIALLY MATTERS WHICH ARE THE RESPONSIBILITY OF THE ADMINISTRATIVE OFFICES CONCERNED. ACCORDINGLY, WE PERCEIVE NO PROPER BASIS, FROM THE FACTS PRESENTED, UPON WHICH THIS OFFICE WOULD BE WARRANTED IN OBJECTING AT THIS TIME TO THE WITHHOLDING OF THOSE FUNDS DUE YOU BY THE BUREAU OF LAND MANAGEMENT WHICH ARE DEEMED NECESSARY TO COVER THAT AMOUNT REASONABLY BELIEVED TO BE DUE THE FOREST SERVICE.