[Decision Concerning Priority of Payment Under SBA 8(a) Subcontract]
Highlights
The Small Business Administration (SBA) and several firms requested a decision concerning the priority of payment for remaining contract funds between SBA, the Internal Revenue Service (IRS), the Army, and the surety. GAO held that: (1) the Army was first entitled to receive payment, for liquidated damages under its contract; (2) the surety was second entitled to payment, for its performance bond payments to materialmen and suppliers; (3) SBA was next entitled to payment for the unliquidated balance of advance payments; (4) IRS was next entitled to payment for unpaid taxes; (5) the payment bond surety was last entitled to payment; (6) the surety failed to show that it was harmed by SBA withholding of contract funds; and (7) the surety was not entitled to reimbursement under the Equal Access to Justice Act. Accordingly, the Army was first entitled to payment.