B-226171, JUN 2, 1987, OFFICE OF GENERAL COUNSEL

B-226171, JUN 2, 1987, OFFICE OF GENERAL COUNSEL

PROCUREMENT - PAYMENT/DISCHARGE - PAYMENT WITHHOLDING - OVERDEDUCTIONS - INTEREST DIGEST: CONTRACTOR WHOSE FUNDS HAVE BEEN WITHHELD PENDING AN INVESTIGATION OF ALLEGED DAVIS-BACON ACT VIOLATIONS REQUESTS THAT INTEREST BE PAID ON THE AMOUNT WITHHELD IN EXCESS OF THE PAYMENTS TO BE DISBURSED TO THE WAGE CLAIMANTS. THERE IS NO SPECIFIC PROVISION OF THE DAVIS-BACON ACT AUTHORIZING THE PAYMENT OF INTEREST ON MONEY REFUNDED TO THE CONTRACTOR FROM WITHHELD FUNDS AFTER PAYMENT TO THE WAGE CLAIMANTS IS MADE. ACCORDINGLY, ABSENT A PROVISION IN THE CONTRACTS TO THE CONTRARY, THERE IS NO AUTHORITY TO PAY INTEREST ON THE EXCESS FUNDS WITHHELD IN THIS CASE.

ROY MCGINNIS & COMPANY, INC. CONTRACTS NO. DACA63-81-C-0203 AND DACA63-81-C-0209 DOL FILE NO. TEX-83-239:

THIS IS IN RESPONSE TO YOUR LETTER OF APRIL 17, 1987, REQUESTING INFORMATION CONCERNING THE DISPOSITION OF THE ABOVE-REFERENCED ACTION INVOLVING ALLEGED VIOLATIONS OF THE DAVIS-BACON ACT, 40 U.S.C. SECS. 276A TO 276A-5 (1982). SPECIFICALLY, YOU INQUIRE ABOUT THE STATUS OF THE FUNDS WITHHELD FROM YOU IN CONNECTION WITH THIS MATTER, AND WHEN YOU MIGHT RECEIVE THE REFUND CHECK FOR THE AMOUNT IN EXCESS OF THE PAYMENT OF THE BACK WAGES IN ACCORDANCE WITH THE MAY 21, 1986 DECISION AND ORDER OF THE ADMINISTRATIVE LAW JUDGE. NEXT, YOU INQUIRE ON THE WHEREABOUTS OF $580 OF LIQUIDATED DAMAGES YOUR LETTER INDICATES WAS WITHHELD BY THE U.S. ARMY CORPS OF ENGINEERS FOR OVERTIME VIOLATIONS. FINALLY, YOU CLAIM INTEREST YOU FEEL YOU ARE ENTITLED TO ON THE EXCESS FUNDS WITHHELD THROUGHOUT THE COURSE OF THIS INVESTIGATION.

OUR RECORDS INDICATE THAT WE ARE CURRENTLY HOLDING $36,783.46 ON DEPOSIT, $18,148.93 OF WHICH WILL BE DISBURSED TO THE WAGE CLAIMANTS IN ACCORDANCE WITH THE DECISION AND ORDER. THE REMAINING FUNDS WILL BE REFUNDED TO THE ORDER OF ROY MCGINNIS & COMPANY, INC., AFTER THE EMPLOYEES HAVE BEEN PAID. OUR CLAIMS GROUP, WHICH MAKES THE PAYMENTS IN ACCORDANCE WITH AN ESTABLISHED PROCEDURE, IS CURRENTLY IN THE PROCESS OF PAYING THE EMPLOYEES. WHILE IT IS DIFFICULT TO ESTIMATE HOW LONG THIS PROCESS MAY TAKE, IT IS POSSIBLE YOUR COMPANY WILL RECEIVE THE REFUND CHECK IN JULY.

REGARDING THE WHEREABOUTS OF THE $580 OF LIQUIDATED DAMAGES, OUR RECORDS CONTAIN A DEPARTMENT OF THE ARMY VOUCHER AND SCHEDULE OF PAYMENTS, NO. 700357 (COPY ENCLOSED), SHOWING THAT A CHECK IN THE AMOUNT OF $580 WAS DRAWN TO THE ORDER OF "F&A OFFICER, USAED, FORT WORTH." WE HAVE NO RECORD OF THIS AMOUNT BEING FORWARDED TO OUR OFFICE. ACCORDINGLY, WE SUGGEST THAT YOU CONTINUE TO PURSUE THIS MATTER WITH THE U.S. ARMY ENGINEER DISTRICT, FORT WORTH, TEXAS.

FINALLY, CONCERNING THE PAYMENT OF INTEREST ON THE EXCESS FUNDS WITHHELD, IT IS A WELL-SETTLED RULE THAT INTEREST IS NOT RECOVERABLE AGAINST THE UNITED STATES UNLESS IT IS EXPRESSLY AUTHORIZED IN THE RELEVANT STATUTE OR CONTRACT. THIS RULE IS AN APPLICATION OF THE DOCTRINE OF SOVEREIGN IMMUNITY. RESTATED, THE GOVERNMENT IS NOT LIABLE FOR INTEREST EITHER BY THE ENACTMENT OF LEGISLATION OR BY CONTRACTUAL AGREEMENT. IN OUR DECISION, B-201328, OCTOBER 28, 1981, WE HELD THAT THE PAYMENT OF INTEREST IS NOT REQUIRED TO BE MADE ON AMOUNTS WITHHELD BY CONTRACTING AGENCIES, AT THE DIRECTION OF THE DEPARTMENT OF LABOR, IN EXCESS OF THE AMOUNT NEEDED TO REIMBURSE WORKERS UNDERPAID BY A CONTRACTOR IN VIOLATION OF THE SERVICE CONTRACT ACT, 41 U.S.C. SEC. 351 ET SEQ. (1976), SINCE NEITHER THE LAW NOR THE CONTRACT PROVIDED FOR THE PAYMENT OF INTEREST. SEE ALSO, FIRST INTERSTATE BANK OF CALIFORNIA AS ASSIGNEE OF DEFENSE LOGISTICS AGENCY CONTRACT, 65 COMP.GEN. 598 (1986); BUREAU OF INDIAN AFFAIRS QUESTIONS ON PAYMENTS TO INDIANS, 65 COMP.GEN. 533 (1986), AND CASES CITED.

THE INTEREST PROHIBITION HAS BEEN RECOGNIZED FREQUENTLY AND CONSISTENTLY NOT ONLY IN DECISIONS OF THE COMPTROLLER GENERAL, BUT ALSO BY THE COURTS. SEE, E.G., UNITED STATES V. LOUISIANA, 446 U.S. 253 (1980); FITZGERALD V. STAATS, 578 F.2D 435 (D.C. CIR. 1978), CERT. DENIED, 439 U.S. 1004 (1978). SEE ALSO, 28 U.S.C. SEC. 2516 (1982). THE RULE DOES NOT PERMIT THE PAYMENT OF INTEREST ON EQUITABLE GROUNDS AND APPLIES EVEN WHERE THE GOVERNMENT HAS UNREASONABLY DELAYED PAYMENT. E.G., MUENICH V. UNITED STATES, 410 F.SUPP. 944, 947 (N.D. IND. 1976); GREY V. DUKEDOM BANK, 216 F.2D 108, 110 (6TH CIR. 1954).

IN THIS CASE, THERE IS NO SPECIFIC PROVISION OF THE DAVIS-BACON ACT AUTHORIZING THE PAYMENT OF INTEREST ON MONEY REFUNDED TO THE CONTRACTOR FROM WITHHELD FUNDS AFTER PAYMENT TO THE WAGE-CLAIMANTS IS MADE. SEE, 40 U.S.C. SECS. 276A TO 276A-5 (1982). ALTHOUGH WE WERE NOT FURNISHED COPIES OF THE ACTUAL CONTRACTS INVOLVED IN THIS MATTER, THE REGULATIONS PERTAINING TO CONTRACT PROVISIONS REQUIRED TO BE INSERTED INTO CONTRACTS OF THIS NATURE ALSO DO NOT INCLUDE ANY PROVISION FOR THE PAYMENT OF INTEREST ON EXCESS WITHHELD FUNDS. SEE 29 C.F.R. SEC. 5.5 (1986). ACCORDINGLY, ABSENT A PROVISION IN THE CONTRACTS TO THE CONTRARY, THERE IS NO AUTHORITY TO PAY INTEREST ON THE EXCESS FUNDS WITHHELD IN THIS CASE.

WE TRUST THAT THIS INFORMATION IS HELPFUL TO YOU.