B-79413, JULY 22, 1949, 29 COMP. GEN. 40

B-79413: Jul 22, 1949

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THERE IS NO AUTHORITY FOR PERMITTING WITHDRAWAL OF THE BID WHICH. CONTAINED NOTHING ON ITS FACE TO PLACE THE CONTRACTING OFFICER ON NOTICE THAT AN ERROR MIGHT HAVE BEEN MADE. WHERE SUMS TO BECOME DUE UNDER A CONTRACT WITH THE UNITED STATES WERE ASSIGNED BY THE CONTRACTOR PURSUANT TO THE PROVISIONS OF THE ASSIGNMENT OF CLAIMS ACT OF 1940 AT THE TIME THE CONTRACT WAS MADE. THE WRITTEN NOTICE OF ASSIGNMENT REQUIRED BY SUCH ACT WAS NOT GIVEN UNTIL AFTER THE CONTRACTOR HAD BECOME LIABLE TO THE UNITED STATES FOR DAMAGES RESULTING FROM ITS DEFAULT UNDER ANOTHER CONTRACT AND FOR UNPAID FEDERAL TAXES. THE RIGHTS OF THE ASSIGNEE ARE SUBORDINATE TO THE GOVERNMENT'S RIGHT TO SET OFF THE CONTRACTOR'S LIABILITIES AGAINST THE AMOUNT DUE UNDER THE ASSIGNED CONTRACT.

B-79413, JULY 22, 1949, 29 COMP. GEN. 40

BIDS - MISTAKES; CONTRACTS - DEFAULT - SET-OFF RIGHTS WHERE BIDDER, AFTER AWARD, ALLEGED ERROR IN BID IN THAT ITS EMPLOYEE TRANSCRIBED BID FIGURES INCORRECTLY, THERE IS NO AUTHORITY FOR PERMITTING WITHDRAWAL OF THE BID WHICH, WHEN RECEIVED, CONTAINED NOTHING ON ITS FACE TO PLACE THE CONTRACTING OFFICER ON NOTICE THAT AN ERROR MIGHT HAVE BEEN MADE, THE UNILATERAL ERROR AS MADE NOT BEING SO GROSS AS TO RENDER THE RESULTING CONTRACT UNCONSCIONABLE. WHERE SUMS TO BECOME DUE UNDER A CONTRACT WITH THE UNITED STATES WERE ASSIGNED BY THE CONTRACTOR PURSUANT TO THE PROVISIONS OF THE ASSIGNMENT OF CLAIMS ACT OF 1940 AT THE TIME THE CONTRACT WAS MADE, BUT THE WRITTEN NOTICE OF ASSIGNMENT REQUIRED BY SUCH ACT WAS NOT GIVEN UNTIL AFTER THE CONTRACTOR HAD BECOME LIABLE TO THE UNITED STATES FOR DAMAGES RESULTING FROM ITS DEFAULT UNDER ANOTHER CONTRACT AND FOR UNPAID FEDERAL TAXES, THE RIGHTS OF THE ASSIGNEE ARE SUBORDINATE TO THE GOVERNMENT'S RIGHT TO SET OFF THE CONTRACTOR'S LIABILITIES AGAINST THE AMOUNT DUE UNDER THE ASSIGNED CONTRACT. IN THE ABSENCE OF AN EXPRESS CONTRACT PROVISION FOR ADJUSTMENT OF CHANGES IN LABOR COSTS, A CONTRACTOR UNDER A CONTRACT SPECIFYING A MAXIMUM AND MINIMUM WAGE SCALE TO BE PAID BY IT IS NOT ENTITLED TO BE REIMBURSED FOR ADDITIONAL LABOR COSTS OCCASIONED BY AN INCREASE IN THE ESTABLISHED BASIC WAGE RATES DURING A PERIOD OF POSTPONEMENT OF PERFORMANCE WHICH WAS AGREED TO BETWEEN THE CONTRACTOR AND THE GOVERNMENT PURSUANT TO CONDITIONS OF THE CONTRACT, EVEN THOUGH THE WORD MAXIMUM" ERRONEOUSLY WAS INCLUDED IN THE WAGE RATE SPECIFICATIONS.

ACTING COMPTROLLER GENERAL YATES TO JOHN HILDER, NATIONAL CAPITAL HOUSING AUTHORITY, JULY 22, 1949:

REFERENCE IS MADE TO YOUR LETTER OF MARCH 21, 1949, WITH ENCLOSURES, REQUESTING RECONSIDERATION OF OFFICE DECISION TO YOU DATED AUGUST 26, 1948, B-79413, RELATIVE TO AN ALLEGED ERROR IN A BID SUBMITTED BY THE DEWEY CONTRACTING COMPANY, INC., FOR REPAINTING THE CALVERT HOUSES AT RIVERDALE, MARYLAND. YOU ALSO REQUEST THAT THERE BE CONSIDERED CERTAIN DEVELOPMENTS WHICH HAVE TAKEN PLACE SINCE THE SAID DECISION AND WHICH RAISE QUESTIONS CONCERNING THE APPLICATION OF RETENTIONS IN THE AMOUNT OF $6,522.93 UNDER CONTRACT NO. AD/H/-4276 WITH THE DEWEY CONTRACTING COMPANY FOR THE EXTERIOR REPAINTING OF THE BARRY FARMS DWELLINGS, WASHINGTON, D.C., IN LIQUIDATION OF DAMAGES DUE THE GOVERNMENT IN THE EVENT THE DECISION IS SUSTAINED, NAMELY, AN ASSIGNMENT OF MONEYS DUE UNDER SAID CONTRACT TO THE BUREAU OF INTERNAL REVENUE ON ACCOUNT OF THE COMPANY'S INDEBTEDNESS FOR FEDERAL TAXES; AN ASSIGNMENT TO A BANK FOR LOANS MADE TO THE CONTRACTOR; AND A CLAIM BY THE SURETY ON THE PERFORMANCE AND PAYMENT BONDS ON ACCOUNT OF MATERIAL FURNISHED THE CONTRACTOR. ALSO, YOUR REQUEST THAT CONSIDERATION BE GIVEN A CLAIM BY THE DEWEY CONTRACTING COMPANY FOR ADDITIONAL COMPENSATION UNDER CONTRACT NO. AD (H/-4276 FOR INCREASED LABOR COSTS, AND SUBMIT THE FOLLOWING SPECIFIC QUESTIONS FOR DECISION:

1. WHETHER THE ADDITIONAL EVIDENCE AS SET FORTH IN AFFIDAVIT FROM THE DEWEY COMPANY WARRANTS A MODIFICATION OF THE DECISION OF AUGUST 26, 1948.

2. THE APPLICATION OF THE CONTRACT RETENTIONS UNDER CONTRACT AD/H/ 4276 BETWEEN THE DEWEY COMPANY AND THE AUTHORITY FOR THE EXTERIOR PAINTING OF THE BARRY FARMS DWELLINGS, AND THE RIGHTS THEREUNDER OF THE VARIOUS CLAIMANTS.

3. WHETHER THE DEWEY COMPANY IS ENTITLED TO INCREASED COMPENSATION UNDER CONTRACT AD/H/-4276 BECAUSE OF AN INCREASE IN WAGE RATES.

WITH RESPECT TO YOUR FIRST QUESTION THERE IS EVIDENCE TO THE EFFECT THAT AFTER THE BID REFERRED TO WAS DULY ACCEPTED BY THE CONTRACTING OFFICER ON JULY 6, 1948, THE BIDDER ALLEGED THAT AN ERROR HAD BEEN MADE IN THAT "THE FIGURES SUBMITTED ON SAID BID WERE TRANSCRIBED INCORRECTLY BY OUR OFFICE GIRL WHO SOMEHOW PUT A 1 INSTEAD OF A 3 MAKING A BID OF $16,500 INSTEAD OF A BID OF $36,500.00.' ACCOMPANYING YOUR LETTER OF MARCH 21, 1949, ARE AFFIDAVITS BY HARRY BLOOM, PRESIDENT OF THE COMPANY, AND OF HARRY TROPPER, AND LILLIAN LEVENTHAL WILSON, WHO WERE EMPLOYED BY THE COMPANY AS ESTIMATOR AND BOOKKEEPER, RESPECTIVELY, AT THE TIME THE BID IN QUESTION WAS SUBMITTED.

IN THE DECISION OF AUGUST 26, 1948, YOU WERE ADVISED THAT INASMUCH AS THE BIDDER HAD ADMITTED THE ALLEGED ERROR WAS DUE SOLELY TO ITS OWN NEGLIGENCE OR CARELESSNESS AND HAD REFUSED OR FAILED TO FURNISH EVIDENCE ESTABLISHING SUCH ERROR--- THERE BEING NOTHING ON THE FACE OF THE BID, WHEN RECEIVED, TO PUT THE CONTRACTING OFFICER ON NOTICE THAT AN ERROR MIGHT HAVE BEEN MADE--- AND SINCE THE ERROR ALLEGED WAS NOT SO GROSS AS TO RENDER THE RESULTING CONTRACT UNCONSCIONABLE, THERE WAS NO AUTHORITY FOR PERMITTING WITHDRAWAL OF THE BID. YOU WERE ADVISED, ALSO, THAT THE APPLICABLE BID BOND SHOULD BE REGARDED AS FORFEITED AND PROPER STEPS SHOULD BE TAKEN TO EFFECT COLLECTION OF THE DAMAGES SUFFERED BY THE GOVERNMENT BY REASON OF THE BIDDER'S REFUSAL TO PERFORM THE CONTRACT.

AS A GENERAL RULE NO RELIEF WILL BE GRANTED TO A PARTY TO AN EXECUTORY CONTRACT IN THE CASE OF A UNILATERAL MISTAKE. WHEN A BID HAS BEEN ACCEPTED IN SUCH A CASE, THE BIDDER WHO HAS MADE A MISTAKE ORDINARILY WILL BE BOUND AND MUST BEAR THE CONSEQUENCES THEREOF. SALIGMAN V. UNITED STATES, 56 F.1SUPP. 505, 507, AND THE CASES THERE CITED. THE AFFIDAVITS SUBMITTED BY THE CONTRACTOR IN SUPPORT OF ITS CONTENTIONS, CONSIDERED WITH THE OTHER EVIDENCE OF RECORD, DO NOT WARRANT THE RELIEF CLAIMED. THE CONTRACTOR ALLEGED THAT A MISTAKE WAS MADE BY AN EMPLOYEE IN TYPING THE BID, AND THE AFFIDAVITS ARE TO THE SAME EFFECT. HOWEVER, AS INDICATED IN THE DECISION OF AUGUST 26, 1948, EXAMINATION OF THE ORIGINAL BID SHOWS THAT THE QUOTATION OF $16,500, WAS WRITTEN IN LONG HAND; THAT THE BID BOND AND THE BID WERE SIGNED BY THE PRESIDENT OF THE COMPANY; AND THAT HE HAD AMPLE OPPORTUNITY TO NOTE THE BID PRICE WHICH CLEARLY APPEARED ON THE SAME PAGE AS HIS SIGNATURE. MOREOVER, IN VIEW OF THE AMOUNTS OF THE BIDS RECEIVED--- $16,500, $21,635, $23,760, $24,200, $24,290, $24,888, $25,393, $29,975, $48,700, AND $51,439--- IT IS EVIDENT THAT IF THE LOW BID OF $16,500 SHOULD BE INCREASED TO $36,500, AS REQUESTED BY THE BIDDER, SAID BID WOULD BE HIGHER THAN 7 OF THE OTHER BIDS RECEIVED. MANIFESTLY, THE FACTS AND CIRCUMSTANCES HERE PRESENT AFFORD NO JUSTIFICATION FOR A MODIFICATION OF THE DECISION OF AUGUST 26, 1948, AND THE CONCLUSION THERE REACHED IS SUSTAINED.

WITH RESPECT TO YOUR SECOND QUESTION, WHICH CONCERNS THE DISPOSITION OF THE RETENTIONS UNDER CONTRACT NO. AD (H/-4276, IT APPEARS THAT A FORMAL CONTRACT WAS PREPARED PURSUANT TO THE DEWEY COMPANY'S BID FOR THE PAINTING OF THE CALVERT HOUSES FOR $16,500 AND TRANSMITTED TO THE COMPANY, ACCOMPANIED BY A COPY OF THE DECISION OF AUGUST 26, 1948, WITH THE REQUEST THAT THE CONTRACT BE SIGNED AND RETURNED NOT LATER THAN SEPTEMBER 7, 1948. HOWEVER, NO RESPONSE, ORAL OR WRITTEN, WAS RECEIVED FROM THE COMPANY. ON SEPTEMBER 9, 1948, THE DEWEY COMPANY WAS DECLARED IN DEFAULT AND ANOTHER CONTRACT FOR REPAINTING THE CALVERT HOUSES WAS AWARDED TO THE NEXT LOW BIDDER--- THE CAR LANE DECORATING COMPANY--- AT ITS BID PRICE OF $21,635, THEREBY FIXING AS OF THAT DATE THE SUM OF $5,135 AS THE AMOUNT OF DAMAGES SUFFERED BY THE GOVERNMENT BECAUSE OF THE DEFAULT. IT APPEARS ALSO THAT THE AMOUNT OF THE DAMAGES WAS COLLECTED BY SET-OFF AGAINST THE SUM OF $6,522.93 RETAINED BY THE AUTHORITY UNDER CONTRACT NO. AD/H/-4276 WITH THE DEWEY COMPANY FOR PAINTING THE BARRY FARMS BUILDINGS, WASHINGTON, D.C.--- THE PRESIDENT OF THE COMPANY HAVING BEEN ADVISED PERSONALLY AT A CONFERENCE IN WASHINGTON DURING THE WEEK ENDING SEPTEMBER 18, 1948, THAT SUCH ACTION WAS REQUIRED IN ACCORDANCE WITH THE DECISION OF AUGUST 26, 1948--- LEAVING A NET BALANCE OF $1,387.93 APPARENTLY DUE THE COMPANY UNDER THE LATTER CONTRACT. IT APPEARS FURTHER THAT A VOUCHER IN THE AMOUNT OF $6,522.93, COVERING FINAL PAYMENT UNDER CONTRACT NO. AD (H/- 4276, AND A CLAIM FOR INCREASED LABOR COSTS IN THE AMOUNT OF $1,455.35 WERE SUBMITTED BY THE COMPANY, WITH A LETTER DATED AUGUST 26, 1948. THEREAFTER BY LETTER DATED SEPTEMBER 29, 1948, THE COMPANY INFORMED THE AUTHORITY THAT THE LAFAYETTE NATIONAL BANK OF BROOKLYN IN NEW YORK HAD REQUESTED THE COMPANY TO MAKE INQUIRY AS TO THE EXPECTED DATE OF FINAL PAYMENT, STATING THAT THE BANK HAD FINANCED THE PAYROLLS UNDER THE CONTRACT PURSUANT TO AN ASSIGNMENT ALLEGEDLY EXECUTED ON APRIL 14, 1948. IN SAID LETTER, THE AUTHORITY WAS INVITED TO COMMUNICATE DIRECTLY WITH THE BANK REGARDING THE MATTER. IN RESPONSE TO THE LETTERS OF AUGUST 26 AND SEPTEMBER 29, 1948, THE AUTHORITY INFORMED THE COMPANY BY LETTER OF OCTOBER 20, 1948, THAT THE FINAL PAYMENT OF $6,522.93 UNDER CONTRACT NO. AD/H/-4276 WAS SUBJECT TO SET-OFF OF $5,135, REPRESENTING THE DAMAGES DUE THE GOVERNMENT BY REASON OF THE COMPANY'S DEFAULT UNDER THE CALVERT CONTRACT; THAT STEPS WERE BEING TAKEN TO EFFECT PAYMENT OF THE BALANCE OF $1,387.93 UNDER CONTRACT NO. AD (H/-4276; AND THAT A FINDING ON THE CLAIM FOR ADDITIONAL LABOR COSTS WOULD BE MADE BY THE AUTHORITY AND THE COMPANY WOULD BE NOTIFIED OF THE DECISION THEREON.

IN A LETTER DATED OCTOBER 28, 1948, THE DEPUTY COMMISSIONER, BUREAU OF INTERNAL REVENUE, TREASURY DEPARTMENT, ADVISED THE AUTHORITY THAT THE DEWEY CONTRACTING COMPANY WAS INDEBTED TO THE UNITED STATES "FOR TAXES ASSESSED UNDER THE FEDERAL INSURANCE CONTRIBUTION ACT IN THE AMOUNT OF $3,614.40, AND WITHHOLDING TAXES IN THE SUM OF $4,868.55, MAKING A TOTAL OF $8,482.95, PLUS ACCRUED INTEREST; " THAT THE COMPANY HAD SUBMITTED AN ASSIGNMENT IN FAVOR OF THE COLLECTOR OF INTERNAL REVENUE, BROOKLYN, NEW YORK, DATED SEPTEMBER 27, 1948, OF MONEYS APPROXIMATING $7,000, ALLEGED TO BE DUE UNDER A COMPLETED NATIONAL CAPITAL HOUSING AUTHORITY CONTRACT--- APPARENTLY CONTRACT NO. AD (H/ 4276--- AND SUGGESTED THAT A CHECK FOR THE AMOUNT DUE THE DEWEY COMPANY BE ISSUED TO THE ORDER OF THE TREASURER OF THE UNITED STATES FOR APPLICATION AGAINST SUCH TAX INDEBTEDNESS. THE COMMISSIONER OF INTERNAL REVENUE WAS ADVISED IN A LETTER DATED NOVEMBER 23, 1948, THAT IN VIEW OF THE FOREGOING FACTS AND CIRCUMSTANCES, THE AUTHORITY WAS OF THE OPINION THAT THE SUGGESTION TO TRANSFER THE CONTRACT RETENTIONS TO THE BUREAU OF INTERNAL REVENUE COULD NOT BE COMPLIED WITH, BUT ADVICE WOULD BE FURNISHED AS TO THE BALANCE FOUND DUE THE COMPANY AFTER FINAL SETTLEMENT OF THE CONTRACT.

IN A LETTER DATED DECEMBER 21, 1948, THE AUTHORITY WAS INFORMED BY THE ROYAL INDEMNITY COMPANY, SURETY ON THE PERFORMANCE AND PAYMENT BONDS UNDER CONTRACT NO. AD (H/-4276, THAT IT HAD BEEN NOTIFIED BY THE DEWEY CONTRACTING COMPANY THAT APPROXIMATELY $8,000 WAS DUE UNDER SAID CONTRACT; THAT NOTIFICATION HAD BEEN RECEIVED ALSO OF TWO CLAIMS TOTALING $1,877 FOR PAINT AND MATERIAL SUPPLIED FOR USE IN THE PERFORMANCE OF THE CONTRACT, AND REQUESTED THAT NO MONEYS BE PAID OUT TO THE DEWEY COMPANY UNDER THE CONTRACT WITHOUT THE SURETY'S KNOWLEDGE AND CONSENT. BY LETTER DATED DECEMBER 27, 1948, THE AUTHORITY ADVISED THE SURETY OF THE GOVERNMENT'S CLAIMS FOR DAMAGES RESULTING FROM THE DEFAULT UNDER THE CALVERT CONTRACT AND FOR UNPAID TAXES. THAT LETTER WAS ACKNOWLEDGED JANUARY 5, 1949, AND APPARENTLY NOTHING FURTHER HAS BEEN RECEIVED FROM THE SURETY.

UNDER THE DATE OF JANUARY 3, 1949, THE CONTRACTOR MADE AN ASSIGNMENT PURSUANT TO THE ASSIGNMENT OF CLAIMS ACT OF 1940, 54 STAT. 1029 (31 U.S.C. 203 AND 41 U.S.C. 15), TO THE LAFAYETTE NATIONAL BANK OF BROOKLYN IN NEW YORK OF THE BALANCE ALLEGED TO BE DUE UNDER CONTRACT NO. AD (H/-4276 IN THE AMOUNT OF $7,978.28 AND SAID BANK FORWARDED A NOTICE OF ASSIGNMENT OF THE SAME DATE TO THE AUTHORITY. RECEIPT THEREOF WAS ACKNOWLEDGED BY LETTER DATED JANUARY 13, 1949, WHEREIN THE BANK WAS ADVISED THAT THE AUTHORITY "CAN ONLY RECOGNIZE SAID ASSIGNMENT TO THE EXTENT WARRANTED, IF ANY, ON THE BASIS OF THE FACTS AND CIRCUMSTANCES IN CONNECTION WITH THE SUBJECT CONTRACT.' THE BANK WAS FURTHER ADVISED THAT AFTER DEDUCTION OF THE DAMAGES CLAIMED BY THE GOVERNMENT BECAUSE OF THE DEWEY COMPANY'S DEFAULT UNDER THE CALVERT CONTRACT THERE REMAINED A BALANCE OF $1,387.93 IN CONTRACT RETENTIONS UNDER CONTRACT NO. AD (H/-4276; THAT THE COMMISSIONER OF INTERNAL REVENUE HAD SUBMITTED COPY OF THE ABOVE-MENTIONED ASSIGNMENT; THAT THE SURETY HAD SERVED NOTICE OF CERTAIN CLAIMS AS INDICATED ABOVE, AND HAD REQUESTED THAT NO MONEY BE PAID ON THE CONTRACT WITHOUT ITS CONSENT, AND THAT THE RIGHTS OF THE SEVERAL CLAIMANTS HAD PRIORITY OVER THE BANK UNDER THE ASSIGNMENT OF JANUARY 3, 1949. THEREAFTER, THE BANK ENCLOSED WITH A LETTER DATED JANUARY 31, 1949, NOTICE OF ASSIGNMENT OF THE SAME DATE, TO WHICH WAS ATTACHED AN ASSIGNMENT IN FAVOR OF THE BANK OF THE ENTIRE AMOUNT DUE OR TO BECOME DUE UNDER CONTRACT NO. AD (H/-4276 IN THE SUM OF $21,457, DATED APRIL 13, 1949, FROM THE AUTHORITY HAD BEEN REFERRED TO ITS ATTORNEY WHO HAD ADVISED "THAT SINCE DEWEY CONTRACTING CO., INC., HAD ALREADY ON APRIL 14, 1948 EXECUTED AN ASSIGNMENT OF SAID MONEYS TO US AND AGAINST WHICH WE HAD MADE OUR ACTUAL LOANS, THAT SAID ASSIGNMENT OF APRIL 14, 1948 EXECUTED AN ASSIGNMENT OF SAID MONEYS TO US AND AGAINST WHICH WE HAD MADE OUR ACTUAL LOANS, THAT SAID ASSIGNMENT OF APRIL 14, 1948 TOGETHER WITH NOTICES OF ASSIGNMENT WAS THE PROPER ONE TO BE FILED.' THE BANK ALSO STATED THAT THE ASSIGNMENT OF JANUARY 3, 1949, WAS EXECUTED AND SIGNED "BECAUSE OF THE TIME LAPSE BETWEEN THE EXECUTION OF THE ORIGINAL ASSIGNMENT AND THE TIME OF INTENTION TO FILE," AND THAT THE ENCLOSED ,DUPLICATE ORIGINAL OF THE ASSIGNMENT MADE APRIL 14, 1948 TOGETHER WITH NOTICES OF ASSIGNMENT" WERE TO "SUPERSEDE THE FILING OF THE ASSIGNMENT DATED JANUARY 3, 1949.'

IT MAY BE STATED AS A GENERAL PROPOSITION THAT IN THE EVENT OF AN ASSIGNMENT, AN ASSIGNEE'S RIGHT AGAINST THE OBLIGOR IS SUBJECT TO ALL LIMITATIONS OF THE OBLIGEE'S RIGHT, TO ALL ABSOLUTE AND TEMPORARY DEFENSES THERETO, AND TO ALL SET-OFFS AND COUNTERCLAIMS OF THE OBLIGOR WHICH WOULD HAVE BEEN AVAILABLE AGAINST THE OBLIGEE HAD THERE BEEN NO ASSIGNMENT, PROVIDED THAT SUCH DEFENSES AND SET-OFFS ARE BASED ON FACTS EXISTING AT THE TIME OF THE ASSIGNMENT, OR ARE BASED ON FACTS ARISING THEREAFTER PRIOR TO THE KNOWLEDGE OF THE ASSIGNMENT BY THE OBLIGOR. SEE SECTION 167, RESTATEMENT OF THE LAW OF CONTRACTS. SECTION 3477, REVISED STATUTES, 31 U.S.C. 203, COMMONLY REFERRED TO AS THE ANTI ASSIGNMENT ACT, PROVIDES THAT ALL TRANSFERS AND ASSIGNMENTS OF ANY CLAIMS AGAINST THE UNITED STATES "SHALL BE ABSOLUTELY NULL AND VOID" UNLESS MADE WITH CERTAIN FORMALITIES "AFTER THE ALLOWANCE OF SUCH A CLAIM, THE ASCERTAINMENT OF THE AMOUNT DUE, AND THE ISSUANCE OF A WARRANT FOR THE PAYMENT THEREOF.' THIS ACT WAS AMENDED BY THE ASSIGNMENT OF CLAIMS ACT OF 1940, 54 STAT. 1029, SO AS TO PROVIDE FOR THE ASSIGNMENT OF MONEYS DUE FROM THE UNITED STATES UNDER CERTAIN CONTRACTS TO A BANK, TRUST COMPANY OR OTHER FINANCING INSTITUTION UPON COMPLIANCE WITH THE CONDITIONS AND REQUIREMENTS ENUMERATED IN THE AMENDMENT. THE APPLICATION OF THE PROVISIONS OF THE 1940 ACT, SUPRA, HAS BEEN THE SUBJECT OF A NUMBER OF DECISIONS BY THIS OFFICE AND THE COURTS. IN OFFICE DECISION, 20 COMP. GEN. 424, THERE WAS CONSIDERED THE QUESTION OF WHETHER THE FILING OF WRITTEN NOTICES WITH COPIES OF THE ASSIGNMENTS WAS ESSENTIAL TO THE VALIDITY OF THE ASSIGNMENTS, AND IT WAS HELD THAT AN ASSIGNEE WHO DOES NOT SUBSTANTIALLY COMPLY WITH SUCH REQUIREMENTS HAS NO ENFORCEABLE RIGHT AGAINST THE GOVERNMENT. THE RIGHT OF THE GOVERNMENT TO SET-OFF AGAINST AN ASSIGNEE AMOUNTS WHICH BECAME DUE THE GOVERNMENT PRIOR TO A VALID ASSIGNMENT OF CONTRACT PAYMENTS, INVOLVING SEPARATE AND INDEPENDENT TRANSACTIONS, WAS RECOGNIZED IN 20 COMP. GEN. 458, REFERENCE BEING MADE TO THE AUTHORITIES IN SUPPORT OF THE RULE THAT A DEBTOR CANNOT SET OFF RIGHTS ACQUIRED UNDER OTHER TRANSACTIONS SUBSEQUENT TO THE DATE OF RECEIPT OF NOTICE OF A VALID ASSIGNMENT. CF. 20 COMP. GEN. 295, AND 20 ID. 306. IN 22 COMP. GEN. 520, IT WAS HELD THAT A DELAY OF FIVE MONTHS ON THE PART OF AN ASSIGNEE BANK IN FILING WRITTEN NOTICE DID NOT SUBORDINATE THE RIGHTS OF THE ASSIGNEE TO THOSE OF THE SURETY AS TO FUTURE PAYMENTS UNDER THE CONTRACTS INVOLVED, WHERE PROPER NOTICES AND COPIES OF THE ASSIGNMENTS WERE FILED PRIOR TO THE DATE OF AN ASSIGNMENT TO THE SURETY. SEE COCONUT GROVE EXCHANGE BANK V. NEW AMSTERDAM CASUALTY COMPANY, 149 F.2D 73, WHERE THE PROVISIONS OF THE 1940 ACT WERE CONSIDERED AT LENGTH, AND THE PRIOR RULING OF THIS OFFICE WAS SUSTAINED. ALSO, SEE HARDIN V. UNITED STATES, 65 F.1SUPP. 1017, 1022. WITH PARTICULAR REFERENCE TO THE QUESTION OF WHETHER NOTICES REQUIRES UNDER THE 1940 ACT MIGHT BE GIVEN A RETROACTIVE EFFECT, THE COURT STATED IN MCKENZIE V. IRVING TRUST COMPANY, 55 N.E. 2D 192, AT PAGES 196, 197, THAT AN ASSIGNEE "ACQUIRED AN INCHOATE INTEREST IN THE FUND WHICH WOULD BECOME ENFORCIBLE WHEN HE COMPLIED WITH THE STATUTORY CONDITIONS," POINTING OUT, HOWEVER, THAT SUCH COMPLIANCE "WHICH GIVES VALIDITY TO AN ASSIGNMENT PREVIOUSLY EXECUTED, LIKE THE RATIFICATION OF A CONTRACT MADE WITHOUT PRIOR AUTHORIZATION, CANNOT WIPE OUT PROPERTY RIGHTS ACQUIRED BY THIRD PARTIES IN THE INTERVAL BETWEEN THE EXECUTION OF THE ASSIGNMENT AND THE CONSENT WITHOUT WHICH IT LACKS VALIDITY.'

WITH RESPECT TO THE RIGHT OF THE GOVERNMENT TO SET-OFF THE AMOUNT OF DAMAGES CAUSED BY THE CONTRACTOR'S DEFAULT UNDER THE CALVERT CONTRACT, THE EVIDENCE OF RECORD ESTABLISHES THAT ON SEPTEMBER 9, 1948, THE DATE ON WHICH THE CONTRACTOR WAS DECLARED IN DEFAULT AND PRIOR TO THE RECEIPT OF ANY INFORMATION OR NOTICE WHATEVER OF ANY ASSIGNMENT BY THE CONTRACTOR OF THE MONEYS DUE UNDER CONTRACT NO. AD (H/-4276, THE CONTRACTOR BECAME LIABLE FOR SUCH DAMAGES IN THE SUM OF $5,135. THE SUM OF $6,522.93 RETAINED UNDER CONTRACT NO. AD (H/-4276 WAS AVAILABLE FOR SET-OFF AGAINST THIS INDEBTEDNESS AND THE CONTRACTOR WAS DULY NOTIFIED THAT SUCH SET-OFF WOULD BE MADE. AS TO THE AUTHORITY OF THE GOVERNMENT TO EXERCISE THE RIGHT OF SET-OFF UNDER CIRCUMSTANCES SIMILAR TO THOSE HERE INVOLVED, SEE UNITED STATES V. MUNSEY TRUST COMPANY, 332 U.S. 234--- REVERSING THE DECISION OF THE COURT OF CLAIMS, 67 F.1SUPP. 976--- WHERE THE COURT REITERATED THE LONG-STANDING RULE THAT THE GOVERNMENT HAS THE SAME RIGHT "WHICH BELONGS TO EVERY CREDITOR, TO APPLY THE UNAPPROPRIATED MONEYS OF HIS DEBTOR, IN HIS HANDS, IN EXTINGUISHMENT OF THE DEBTS DUE TO HIM.' GRATIOT V. UNITED STATES, 15 PET. 336, 370; MCKNIGHT V. UNITED STATES, 98 U.S. 179, 186.

AS A RESULT OF THE SET-OFF TO COVER THE CONTRACTOR'S LIABILITY FOR THE DAMAGES, ONLY THE BALANCE OF THE CONTRACT RETENTIONS, AMOUNTING TO $1,387.93, REMAINS AVAILABLE FOR DISPOSITION IN CONNECTION WITH WHICH THERE IS FOR CONSIDERATION THE GOVERNMENT'S CLAIM FOR UNPAID TAXES. THE DATE ON WHICH SUCH TAXES BECAME DUE IS NOT INDICATED IN THE RECORD. HOWEVER, IT IS SEEN FROM THE FOREGOING THAT THE ASSIGNMENT OF MONEYS DUE UNDER CONTRACT NO. AD (H/-4276 MADE BY THE CONTRACTOR TO THE LAFAYETTE NATIONAL BANK ON APRIL 14, 1948, WAS NOT EXECUTED IN ACCORDANCE WITH THE STATUTORY REQUIREMENTS. CONSEQUENTLY, IT WAS OF NO EFFECT UNTIL IT WAS PERFECTED BY FILING THE REQUIRED NOTICE, DATED JANUARY 31, 1949. IN THE MEANTIME, HOWEVER, THE CONTRACTOR'S RIGHT TO THE MONEYS IN QUESTION HAD BECOME SUBJECT TO THE GOVERNMENT'S RIGHT TO COLLECT BY SET-OFF THE AMOUNT OF THE TAXES OWED BY THE CONTRACTOR. IN THESE CIRCUMSTANCES, THE BALANCE OF THE CONTRACT RETENTIONS, I.E., $1,387.93, PROPERLY IS FOR TRANSFER TO THE BUREAU OF INTERNAL REVENUE IN PARTIAL LIQUIDATION OF THE TAX INDEBTEDNESS.

FOR THE REASONS INDICATED ABOVE, THE ASSIGNMENT PERFECTED ON JANUARY 31, 1949, MAY NOT BE REGARDED AS PARAMOUNT TO THE RIGHT OF THE GOVERNMENT TO COLLECT THE DAMAGES AND TAXES OWED BY THE CONTRACTOR. IN VIEW THEREOF AND SINCE THERE IS NOTHING FURTHER DUE THE ASSIGNOR UNDER THE CONTRACT INVOLVED, THERE IS NOTHING FOR PAYMENT TO THE BANK UNDER THE ASSIGNMENT.

AS HEREINBEFORE INDICATED, THE SURETY APPARENTLY HAS MADE NO CLAIM AGAINST THE GOVERNMENT. IN THIS CONNECTION, SEE THE MUNSEY CASE, SUPRA, WHERE IT WAS HELD THAT THE RIGHT OF THE GOVERNMENT TO RETAIN PERCENTAGES UNDER A CONSTRUCTION CONTRACT DOES NOT DEVOLVE ON A SURETY WHO HAS PAID LABORERS AND MATERIALMEN SO AS TO PREVENT THE GOVERNMENT FROM APPLYING THE UNAPPROPRIATED SUM TO THE SATISFACTION OF ITS OWN CLAIM GROWING OUT OF A SEPARATE AND INDEPENDENT TRANSACTION.

WITH RESPECT TO THE CLAIM OF THE DEWEY COMPANY TO ADDITIONAL COMPENSATION UNDER CONTRACT NO. AD (H/-4276 BECAUSE OF AN INCREASE IN WAGE RATES, IT APPEARS THAT THE CONTRACT WAS ENTERED INTO ON DECEMBER 2, 1947, FOR EXTERIOR PAINTING OF THE BARRY FARMS DWELLINGS, WASHINGTON, D.C., TO BE COMPLETED WITHIN 120 CONSECUTIVE CALENDAR DAYS FROM THE DATE SET FORTH IN THE NOTICE TO PROCEED. ARTICLE 17 OF THE CONTRACT CONTAINS THE USUAL PROVISIONS PURSUANT TO THE BACON-DAVIS ACT, 49 STAT. 1011, AS AMENDED BY THE ACT OF JUNE 15, 1940, 54 STAT. 399 (40 U.S.C. 276A-276A-1), RELATIVE TO RATES OF WAGES OF LABORERS AND MECHANICS, REQUIRING PAYMENT "COMPUTED AT WAGE RATES NOT LESS THAN THOSE STATED IN THE SPECIFICATIONS.' PARAGRAPH 2 OF THE SPECIAL CONDITIONS CONTAINED IN THE SPECIFICATIONS SETS OUT THE PREVAILING "MINIMUM AND MAXIMUM WAGE RATES APPLICABLE TO THIS CONTRACT, REFERRED TO IN ARTICLE 17," AS DETERMINED BY THE SECRETARY OF LABOR, AS OF SEPTEMBER 22, 1947, SHOWING A RATE OF $1.95 AN HOUR FOR BRUSH PAINTERS. SAID SPECIAL CONDITIONS ALSO CONTAIN A PROVISION THAT THE CONTRACTOR SHALL APPLY "NO EXTERIOR PAINT IN DAMP, RAINY WEATHER, OR WHEN THE TEMPERATURE IS BELOW 40 DEGREES FAHRENHEIT. A WAGE ADJUSTMENT CLAUSE WAS NOT INCLUDED IN THE CONTRACT.

IN VIEW OF THE ADVERSE WEATHER CONDITIONS EXISTING AT THE TIME, A MEETING OF REPRESENTATIVES OF THE CONTRACTOR AND THE GOVERNMENT WAS HELD ON JANUARY 7, 1948, AND IT WAS AGREED THAT NOTICE TO PROCEED WOULD BE ISSUED ON OR ABOUT MARCH 15, 1948; THAT 120 CALENDAR DAYS WERE SUFFICIENT TIME FOR PERFORMANCE OF THE WORK; AND THAT THE DEFERRAL OF THE ORDER TO PROCEED WAS ENTIRELY SATISFACTORY, SINCE FAVORABLE WEATHER CONDITIONS WERE MOST IMPORTANT IN THE APPLICATION OF THE PAINT SPECIFIED.

BY LETTER DATED MAY 18, 1948, THE CONTRACTOR APPLIED FOR AN ADJUSTMENT IN THE CONTRACT PRICE ,BECAUSE OF A CHANGE IN CONDITIONS DUE TO THE LENGTH OF TIME BETWEEN THE AWARD OF SAID CONTRACT AND THE TIME THE "PROCEED ORDER" WAS FORWARDED TO THE CONTRACTOR.' THE CONTRACTOR ALLEGED THAT THE ORDER TO PROCEED WAS DATED MARCH 26, 1948, EFFECTIVE APRIL 5, 1948; THAT DURING THE INTERVAL A PAINTERS' STRIKE TOOK PLACE, RESULTING IN AN INCREASE IN BASIC WAGE RATES FROM $1.95 TO $2.18 PER HOUR; THAT THE CONTRACTOR'S BID WAS BASED ON THE ASSUMPTION THAT LABOR COSTS WOULD BE $1.95 AN OUR; AND THAT IF THE CONTRACT HAD BECOME EFFECTIVE AT THE TIME OF THE BID OR A REASONABLE TIME THEREAFTER THIS REQUEST WOULD NOT HAVE ARISEN, BUT THAT "DUE TO THE GOVERNMENT DELAY, AND TO THE NEW WAGE SCALE, FACTORS BEYOND OUR CONTROL, OUR CONTRACT STATUS HAS BEEN SERIOUSLY DISTURBED.' IN A LETTER DATED JUNE 14, 1948, THE CONTRACTOR ALLEGED THAT AS A RESULT OF THE WAGE INCREASE "WE HAVE HAD TO ALLOW OUR MEN TO WORK ON SATURDAY, AT TIME AND A HALF, AND WE HAVE ALSO BEEN UNABLE TO OBTAIN THE BEST AVAILABLE HELP BECAUSE ALL OTHER EMPLOYERS ARE PAYING $2.18 PER HOUR.' DURING AN INFORMAL CONFERENCE WITH MR. BLOOM, PRESIDENT OF THE COMPANY, IT WAS AGREED THAT (1) DECISION ON THE CLAIM WOULD BE WITHHELD UNTIL COMPLETION OF THE JOB TO AFFORD THE CONTRACTOR AN OPPORTUNITY TO SUBMIT A COMPLETE STATEMENT AND ITEMIZATION OF ITS CLAIM; (2) DELAY IN ISSUANCE OF THE ORDER TO PROCEED WAS NOT DUE TO EITHER PARTY BUT WAS DUE TO THE WEATHER; (3) THE STATEMENT IN THE SPECIFICATIONS THAT THE WAGES SPECIFIED WERE THE MINIMUM AND MAXIMUM THAT COULD BE PAID WAS AN ERROR IN THAT "THE SPECIFICATIONS SHOULD NOT HAVE STATED THAT THEY WERE THE MAXIMUM THAT COULD BE CHARGED; " AND (4) UPON RECEIVING THE STATEMENT AND ITEMIZED CLAIM, THE AUTHORITY WOULD MAKE A FINDING, SUBJECT TO THE CONTRACTOR'S RIGHT OF APPEAL. THE CONTRACTOR'S STATEMENT AND ITEMIZED CLAIM IN THE AMOUNT OF $1,455.35 WERE SUBMITTED AUGUST 26, 1948, AND THE PREVIOUS ALLEGATIONS WERE REITERATED. IT WAS ALLEGED FURTHER:

* * * BECAUSE WE WERE BOUND TO THE RATE OF $1.95 PER HOUR, WE ATTEMPTED TO PAY THE WASHINGTON HELP THE $1.95 SCALE AND AS A RESULT THE PRODUCTION SUFFERED TREMENDOUSLY. IN ORDER TO GIVE THE MEN AN INDUCEMENT TO INCREASE PRODUCTION WE EVEN AGREED TO LET THEM WORK ON SATURDAYS AT TIME AND HALF, BUT WE FOUND THIS TO BE OF NO SIGNIFICANT HELP. AS A LAST RESORT WE WERE FORCED TO PAY THEM $2.18 UP TO THE CONCLUSION OF THE JOB.

VARIOUS CLAIMS INVOLVING FACTS AND CIRCUMSTANCES SIMILAR TO THOSE HERE INVOLVED WERE REVIEWED BY THE COURT OF CLAIMS IN SUNSWICK CORPORATION V. UNITED STATES, 75 F.1SUPP. 221. THE ISSUE HERE, AS THERE, IS WHETHER THE GOVERNMENT IN ITS CAPACITY AS A CONTRACTING PARTY HAS IMPOSED UPON THE CONTRACTOR A BURDEN OF PERFORMANCE WHICH IT WAS NOT INTENDED BY THE CONTRACT SHOULD BE BORNE BY THE CONTRACTOR WITHOUT AN ADJUSTMENT OF THE CONTRACT PRICE. BUT, WHEREAS IN THAT CASE, THE CONTRACT PROVISION REQUIRING THE PAYMENT OF CERTAIN MINIMUM WAGES CONTAINED LANGUAGE INDICATING AN INTENT THAT INCREASED COSTS DUE TO SUBSEQUENT WAGE ORDERS SHOULD BE BORNE BY THE GOVERNMENT, NO SUCH INTENT IS EVIDENCED BY THE TERMS OF THE PRESENT CONTRACT.

REGARDING THE DELAY INVOLVED, OWING TO THE LIMITATION IN THE CONTRACT PROHIBITING PERFORMANCE DURING THE WEATHER CONDITIONS EXISTING AT THE TIME THE CONTRACT WAS EXECUTED, POSTPONEMENT WAS MUTUALLY AGREED TO BY BOTH THE CONTRACTOR AND THE GOVERNMENT, AND ANY INCREASED COST RESULTING DIRECTLY OR INDIRECTLY THEREFROM MAY BE ATTRIBUTED TO THE GOVERNMENT ONLY UNDER AN EXPRESS CONTRACT PROVISION. NOR DOES THE INCLUSION OF THE WORD "MAXIMUM" IN THE CONTRACT SPECIFICATIONS--- ADMITTEDLY AN ERROR OF WHICH THE CONTRACTOR MUST HAVE BEEN COGNIZANT--- AFFORD A BASIS FOR CONCLUDING THAT THE PARTIES INTENDED AN ADJUSTMENT IN THE CONTRACT PRICE UNDER THE FACTS AND CIRCUMSTANCES HERE INVOLVED. SEE THE SUNSWICK CASE, SUPRA, AT P. 230. ACCORDINGLY, THERE IS NO PROPER BASIS FOR ALLOWANCE OF THE ADDITIONAL LABOR COSTS CLAIMED.