Retention of Funds Under Contract

B-182911: Feb 5, 1975

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An officer questioned the propriety of making final payment to a contractor who refused to pay money owed to a subcontractor until the Government pays it the amount retained under the contract. In spite of the surety's statement that it has no objection to release of the money, the funds should be retained pending agreement between parties or judicial determination of rights of parties since the Government is on notice of claims for which the surety is potentially liable.

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