[Payment Under Assignment of Claims Act]

An Army finance and accounting officer requested an advance decision as to whether he could properly pay a contractor's assignee before the Army collected the amount from the contractor which had been paid erroneously. A second question concerned whether interest should be paid to the assignee. The contractor had assigned its payment rights to a bank and notified the Army. The Army made monthly payments to the assignee until it erroneously made payments directly to the contractor. The contractor refused to repay the Army because of a dispute between the contractor and the bank concerning their agreement. It is an established legal principle that once the United States has received valid notice of an assignment, it pays the assignor at its peril and, when such an error occurs, the United States remains liable to the assignee for the amount of the erroneous payment. Furthermore, any disputes between the assignor and the assignee are private matters to be settled between the parties. GAO held that, since the contractor had received Government funds to which he was not entitled, the Government should assert a claim for those funds. GAO concluded that the assignee was entitled to receive payment from the Army for those amounts erroneously paid to the contractor and that the Army should attempt to collect the payments from the contractor. GAO noted that payments of interest are covered by the Prompt Payment Act in accordance with regulations issued by the Office of Management and Budget. Since the implementing regulation applies to payments made under contracts issued on or after October 1, 1982, and, in this case, the contract was issued in 1981, the Prompt Payment Act did not provide a basis for the payment of interest. Accordingly, the voucher may by paid to the assignee if otherwise proper.