[Claim for Payment by Subcontractor]

A firm claimed payment for coal supplied under a contract between the Defense Fuel Supply Center (DFSC) and a coal broker. The claimant was the coal supplier. After contract award, the broker assigned its right to funds due under the contract to a bank, and the claimant entered into an agreement whereby the bank would distribute to it all of the payments to the broker, which were to be held in escrow after receipt from DFSC. However, after accepting several shipments, DFSC forwarded payment directly to the broker. The contract was eventually terminated for default, because the claimant's coal did not meet specifications, and the broker failed to purchase coal from another supplier. The claimant sued the broker for payment for the coal supplied to DFSC, but the broker was insolvent. The claimant then presented its case to GAO in an attempt to collect from the United States the funds that DFSC paid directly to the broker, despite assignment. GAO stated that subcontractors generally do not have legally enforceable rights against the United States for money due them from Government prime contractors, because there is no privity of contract between the subcontractor and the United States, except in circumstances not present in this case. Accordingly, there was no legal basis to authorize payment of the firm's claim.