Review of Action Deducting Monies From Carrier

Astro International Freight Forwarders, Inc., a transportation firm, requested a review of action taken by the General Services Administration (GSA) in which about $80,000 was deducted from other monies due the carrier to satisfy debts owed the Government by the predecessor of International, Astro Van Pak, Inc. GSA reported that Van Pak was indebted to the United States for overcharges in transportation furnished the Government during the years 1973, 1974, and 1975. Van Pak did not respond to requests for refund of the overpayments and ceased operations in December 1975. Deduction action was then initiated against International. In September 1977, the deduction action was stopped to investigate allegations by International that it was a separate corporation and not responsible for the debts of Van Pak. At meetings, with GSA, the owner of Van Pak accepted liability for the debts of Van Pak and orally agreed to submit a written proposal for orderly repayment. However, the proposal submitted was unsatisfactory for settlement of the debt. GSA reported the debt to the Department of Justice, recommended court action to effect collection, and enclosed a suggested complaint that indicated that details of the indebtedness would be furnished upon a determination of appropriate court action. Rather than resorting to litigation the U.S. Attorney advised GSA that it should withhold any funds owed to the successor. Although International alleged that International and Van Pak are unrelated corporations, no evidence has been presented by International in support of this allegation. In fact the evidence supports the contrary conclusion. On the basis of the facts presented in the present record and the past history of business relations and dealings among Van Pak and International, GAO held that the dealings of the several parties are interrelated and the obligations interchangeable. Therefore, funds due International were properly setoff for the debts of Van Pak. Additionally, when the former owner acknowledged the indebtedness and promised payment, he removed the bar of the statue of limitations. The setoff action was then taken by GSA on the new promise under the Government's common law right. This action has not been shown to be barred. Accordingly, the audit action of GSA was sustained.