B-150860, APR. 16, 1963

B-150860, APR. 16, 1963

TO DONALD F. KEEFE, ESQUIRE:

REFERENCE IS MADE TO YOUR LETTER OF JANUARY 31, 1963, RELATIVE TO THE CLAIM OF YOUR CLIENT, THE SECOND NATIONAL BANK OF NEW HAVEN, AS ASSIGNEE OF THE RUSSELL CONSTRUCTION COMPANY, INC., FOR THE BALANCE DUE UNDERCONTRACT NO. DA-19-016-ENG-5968. THE SEVERAL MATTERS RAISED IN YOUR LETTER WILL BE CONSIDERED IN THE ORDER PRESENTED.

YOU STATE THAT YOU WERE UNAWARE OF ANY CLAIM HAVING BEEN FILED AGAINST THOSE FUNDS BY THE COLUMBIA CASUALTY COMPANY. YOU FURTHER ALLEGE THAT IN A LETTER DATED DECEMBER 9, 1960, FROM THE SURETY TO THE CORPS OF ENGINEERS, A COPY OF WHICH YOU POSSESS, THERE IS CONFIRMATION THAT THE SAID SURETY "ALSO DEFAULTED AND INCURRED NO EXPENSE.' THE FILE BEFORE US FAILS TO CONTAIN A COPY OF THE REFERRED-TO LETTER; HOWEVER, WE HAVE RECEIVED DEMANDS FROM BOTH THE SURETY AND ITS ATTORNEY, BASED UPON ALLEGATIONS THAT UNDER ITS PERFORMANCE AND PAYMENT BONDS LOSSES AND EXPENSES--- NOT ENUMERATED OR ITEMIZED--- HAVE BEEN INCURRED IN EXCESS OF THE CONTRACT FUNDS IN QUESTION, AND THAT IT IS ENTITLED TO PRIORITY OVER THE ASSIGNEE. YOUR REQUEST FOR COPIES OF THE LETTERS RELATIVE TO THE SURETY'S CLAIM MUST BE DENIED SINCE IT IS OUR ESTABLISHED POLICY THAT DISCLOSURE OF SUCH COMMUNICATIONS TO THIRD PERSONS IS IMPROPER.

YOUR SECOND QUESTION CONCERNS THE BASIS FOR THE DISCREPANCY BETWEEN THE REPORTED CONTRACT BALANCE OF $7,237.22 AND THE AMOUNT OF $12,145.13 STATED IN LETTER OF APRIL 5, 1962, TO THE BANK FROM THE CONTRACTING OFFICER AS THE DIFFERENCE BETWEEN THE ADJUSTED CONTRACT PRICE OF $573,674.47 AND THE PROGRESS PAYMENTS MADE, TOTALING $561,529.34. THE DIFFERENCE, OR $4,907.91, REPRESENTS THE VALUE OF UNFINISHED WORK UNDER THE CONTRACT TERMS EQUAL TO $1,195, PLUS THE COST OF CORRECTIVE WORK AMOUNTING TO $2,095.82, AND EXCESS EXPENSES OF $1,617.09, INCURRED BY THE GOVERNMENT DUE TO THE DEFAULT, AS ITEMIZED IN THE 14TH AND FINAL PAYMENT ESTIMATE DATED APRIL 27, 1962.

THE THIRD QUESTION PRESENTED RELATES TO THE CASE OF THE SECOND NATIONAL BANK OF NEW HAVEN V. COLUMBIA CASUALTY COMPANY NOW PENDING IN THE UNITED STATES DISTRICT COURT IN NEW HAVEN. YOU REQUEST TO BE ADVISED WHETHER WE WOULD CONSIDER IMPLEADING BOTH PARTIES IN THE CITED ACTION IN THE EVENT PAYMENT TO THE BANK IS AGAIN REFUSED. THE ACCOUNTING OFFICERS OF THE GOVERNMENT HAVE REPEATEDLY REFUSED TO CONSIDER OR CERTIFY FOR PAYMENT ANY CLAIM WHICH IS THE SUBJECT MATTER OF PENDING LITIGATION BY ADVERSE CLAIMANTS, OR TO IMPLEAD IN SUCH ACTIONS. HOWEVER, IF THE JUDGMENT OR DECREE ENTERED IN THAT CASE CONSTITUTES AN ADJUDICATION OF THE RELATIVE PRIORITY OF THE PARTIES AS TO THE CONTRACT BALANCE WE WILL PAY IN ACCORDANCE THEREWITH UPON RECEIPT OF A COPY OF THE COURT'S JUDGMENT.

IN ANSWER TO YOUR LAST QUESTION, THE RECORDS HERE SHOW THAT THE TOTAL RETAINED PERCENTAGES ON THE DATE THE FINAL PAYMENT ESTIMATE WAS COMPUTED, OR APRIL 27, 1962, WAS $5,000. AS STATED HEREINBEFORE, THE COST AND RELATED EXPENSES TO THE UNITED STATES TO COMPLETE THE PROJECT WORK TOTALED $3,712.91, BUT THE DOCUMENTS AND SUPPORTING RECORDS RELATING TO THOSE COSTS, EXCEPT FOR THE FINAL PAYMENT ESTIMATE, WERE NOT FURNISHED TO US. A COPY OF THAT ESTIMATE IS ENCLOSED FOR YOUR INFORMATION, BUT FOR FORMAL PROOF OF ANY OF THE MATTERS REFERRED TO IN YOUR LETTER WE SUGGEST THAT YOU LOOK TO THE DIVISION ENGINEER, U.S. ARMY ENGINEER DIVISION, NEW ENGLAND, 424 ..END :