B-212599, SEP 5, 1984, 84-2 CPD 254

B-212599, SEP 5, 1984, 84-2 CPD 254

CONTRACTS - PROTESTS - GENERAL ACCOUNTING OFFICE PROCEDURES - RECONSIDERATION REQUESTS - ERROR OF FACT OR LAW - NOT ESTABLISHED DIGEST: PRIOR DECISION HOLDING THAT GOVERNMENT IS NOT LIABLE TO ASSIGNEE AFTER PAYMENT TO ASSIGNOR BECAUSE DISBURSING OFFICER HAD NOT BEEN GIVEN NOTICE OF ASSIGNMENT IS AFFIRMED SINCE NO ERRORS OF LAW OR FACT IN THE PRIOR DECISION HAVE BEEN DEMONSTRATED.

BANK LEUMI LE ISRAEL, B.M.-- RECONSIDERATION:

BANK LEUMI LE-ISRAEL, B.M. REQUESTS RECONSIDERATION OF OUR DECISION OF NOVEMBER 15, 1983, WHERE WE ADVISED THE AIR FORCE NOT TO PAY THE BANK'S CLAIM, AS AN ASSIGNEE, FOR $31,921.80 UNDER CONTRACT NO. F04609 82-C- 0025. WE FOUND THAT THE AIR FORCE HAD NOT ERRED IN PAYING THAT AMOUNT TO THE CONTRACTOR/ASSIGNOR BECAUSE THE BANK FAILED TO COMPLY WITH THE NOTICE REQUIREMENTS SET FORTH IN THE ASSIGNMENT OF CLAIMS ACT OF 1940, 31 U.S.C. SEC. 3727 (1982) AND 41 U.S.C. SEC. 15 (1982), AND THE IMPLEMENTING REGULATIONS AT DEFENSE ACQUISITION REGULATION SEC. 7 103.8 (1976 ED.), THAT THE ASSIGNEE INFORM THE CONTRACTING OFFICER AND THE DISBURSING OFFICER OF THE ASSIGNMENT. THE BANK NOTIFIED ONLY THE CONTRACTING OFFICER. WE CONCLUDED THAT THE DISBURSING OFFICER HAD NO REASON TO KNOW OF THE ASSIGNMENT AND THEREFORE DID NOT ACT IMPROPERLY IN PAYING THE CONTRACTOR INSTEAD OF THE ASSIGNEE.

WE AFFIRM THAT DECISION.

THE BANK CONTENDS THAT WE MISINTERPRETED THE LAW IN OUR PRIOR DECISION, SPECIFICALLY TUFTCO CORPORATION V. UNITED STATES, 614 F.2D 740 (CT.CL. 1980), IN WHICH A CLAIM BY AN ASSIGNEE WHO ALSO FAILED TO FURNISH COMPLETE NOTICE OF THE ASSIGNMENT WAS ALLOWED. WE DISTINGUISHED TUFTCO ON THE BASIS THAT THE DISBURSING OFFICER OBVIOUSLY KNEW OF THE ASSIGNMENT BECAUSE HE HAD MADE PAYMENT UNDER THE CONTRACT TO THE ASSIGNEE BEFORE SENDING THE DISPUTED PAYMENTS TO THE ASSIGNOR. THE BANK POINTS OUT THAT THE CLAIMS COURT, IN MARYLAND SMALL BUSINESS DEVELOPMENT FINANCING AUTHORITY V. UNITED STATES, 4 CL.CT. 76 (1983), RECENTLY RELIED ON TUFTCO FOR THE PROPOSITION THAT THE GOVERNMENT'S RECEIPT AND RECOGNITION OF A NOTICE OF ASSIGNMENT WAIVES THE REQUIREMENTS OF THE ASSIGNMENT OF CLAIMS ACT. THE BANK SUGGESTS THAT THESE DECISIONS ESTABLISH THAT THE BANK'S NOTICE OF ASSIGNMENT TO THE CONTRACTING OFFICER WAS SUFFICIENT TO SUPPORT ITS CLAIM.

THE CITED CASES, HOWEVER, ONLY ESTABLISH THAT THE GOVERNMENT CANNOT ESCAPE LIABILITY, BASED ON AN ASSIGNEE'S FAILURE TO MEET ALL "TECHNICAL" REQUIREMENTS FOR AN ASSIGNMENT, WHERE IT HAD BEEN AWARE OF, ASSENTED TO AND RECOGNIZED THE ASSIGNMENT. THUS, IN ITS MARYLAND OPINION, THE CLAIMS COURT QUOTED FROM TUFTCO:

"'IT IS UNNECESSARY TO IDENTIFY ANY ONE PARTICULAR ACT AS CONSTITUTING RECOGNITION OF THE ASSIGNMENTS BY THE GOVERNMENT. IT IS ENOUGH TO SAY THAT THE TOTALITY OF THE CIRCUMSTANCES PRESENTED TO THE COURT ESTABLISHES THE GOVERNMENT'S RECOGNITION OF THE ASSIGNMENTS BY ITS KNOWLEDGE, ASSENT, AND ACTION CONSISTENT WITH THE TERMS OF THE ASSIGNMENTS.'" 4 CL.CT. AT 79 -80 QUOTING 614 F.2D AT 746. (EMPHASIS ADDED.)

IN TUFTCO AND MARYLAND THEREFORE, THE DISBURSING OFFICERS DID MAKE PAYMENTS TO THE ASSIGNEES CONSISTENT WITH THE TERMS OF THE ASSIGNMENT. THE TOTALITY OF THE CIRCUMSTANCES LEFT NO DOUBT THAT THE ASSIGNMENTS WERE RECOGNIZED. THE DIFFERENCE IN THE BANK'S SITUATION HERE IS THAT PRECISELY BECAUSE OF THE BANK'S FAILURE TO GIVE COMPLETE NOTICE, THE DISBURSING OFFICER SENT THE ONLY PAYMENT MADE AFTER THE ASSIGNMENT TO THE ASSIGNOR.

THE BANK ALSO ARGUES THAT OUR DECISION CENTENNIAL SYSTEMS, INC., 61 COMP.GEN. 53 (1981), 81-2 CPD PARA. 403, IN WHICH WE ALLOWED A CLAIM IN A SIMILAR SITUATION, SUPPORTS ITS CLAIM. AS WE EXPLAINED IN OUR EARLIER HOLDING, HOWEVER, THAT DECISION IS DISTINGUISHABLE. THERE, THE CONTRACTOR SUBMITTED INVOICES WITH NOTES WRITTEN ON THEM DIRECTING THE DISBURSING OFFICER TO PAY THE ASSIGNEE BANK. EVEN THOUGH THE DISBURSING OFFICER DID NOT ACT ACCORDINGLY, THERE WAS EVIDENCE, I.E., THE NOTES ON THE INVOICES, WHICH INDICATED THAT THE DISBURSING OFFICER COULD HAVE AND SHOULD HAVE KNOWN OF THE ASSIGNMENT. UNLIKE THE DISBURSING OFFICER IN CENTENNIAL, THE DISBURSING OFFICER HERE RECEIVED NO NOTICE OF ANY KIND. AS WE SAID BEFORE, THE DISBURSING OFFICER HAD NO REASON TO KNOW OF THE ASSIGNMENT.

FINALLY, THE BANK ARGUES THAT THE ACT IN FACT WAS INTENDED TO ENABLE CONTRACTORS, ESPECIALLY SMALL BUSINESSES, TO SECURE FINANCING SO THEY MIGHT CARRY OUT THEIR OBLIGATIONS UNDER GOVERNMENT CONTRACTS MORE SPEEDILY AND EFFECTIVELY. IT COMPLAINS THAT IN OUR DECISION, WE STATED THAT THE PURPOSE OF THE ASSIGNMENT OF CLAIMS ACT WAS TO PROTECT THE GOVERNMENT FROM DOUBLE PAYMENTS UNDER CONTRACTS. WE DID NOT SUGGEST, HOWEVER, THAT THE OVERALL PURPOSE OF THE ACT IS OTHER THAN IS ARGUED BY THE BANK. OUR STATEMENT IN FACT WAS DIRECTED AT THE "PROHIBITORY ASPECT" OF THE STATUTE.

AFTER CONSIDERING THE BANK'S ARGUMENTS, WE FIND NO BASIS TO MODIFY THE 1983 DECISION.

THAT DECISION IS AFFIRMED.