Legality of Payment Under Contractor's Assignment to Bank

B-184665: Sep 25, 1975

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An advance decision was requested regarding the legality and propriety of making contractor payments to a bank where proper assignment requirements had not been fulfilled. The contractor's assignment to the bank of a lease contract is not binding upon the Government until the statutory notice requirements stated in the Assignment of Claims Act have been complied with. However, the Government may recognize an assignment as circumstances warrant. A novation agreement between the Government contractor, the bank, and the procuring activity may be recognized as valid if the bank's interest arises out of the transfer of, inter alia, all that part of the contractor's assets involved in the performance of the contract.

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