[Request for Relief From Liability for Overpayment to Contractor]

The National Institutes of Health (NIH) requested a decision as to whether a certifying officer may be relieved from liability for an overpayment to the general contractor on a contract with NIH. An advance decision was also requested as to whether a voucher for an amount submitted by a performance bond surety for completion of the contract may be certified for payment. The overpayment occurred when the contractor requested two progress payments, and the certifying officer erroneously added the first requested payment to a subtotal of the second requested payment. The overpayment was not discovered until about 4 months after the fact. Subsequently, NIH declared the contractor to be in default. A performance bond surety took over and fulfilled the contract obligations, was released by NIH from any liability on the overpayment, and submitted an invoice for the satisfactory performance of the contract. GAO stated that a surety firm is entitled to its completion costs, up to the unexpended balance of the amounts obligated for the contract, without setoff by the Government of the contractor's debts. In this case, GAO did not think that the negligence of a Government employee in making an overpayment to a defaulted contractor which depleted the unexpended contract balance affected the rights of the surety. Therefore, GAO found that the surety should not be made to suffer because of the debt owed by the contractor to the Government. GAO authority to settle the accounts of accountable officers is limited to a 3-year statute of limitations except when a loss is due to the fraud or criminality of the accountable officer. Since there was no indication of fraud or criminality by the certifying officer in this case and the 3-year statute of limitations had run out, GAO had no need to consider the granting of relief. However, GAO suggested that NIH should proceed with aggressive collection action to recover the overpayment from the contractor.