B-205563 L/M, DEC 7, 1981, OFFICE OF GENERAL COUNSEL
Highlights
DIGEST: SETTLEMENT OF CLAIMS BY SUBCONTRACTOR SUPPLYING MATERIAL AND LABOR UNDER FEDERAL CONSTRUCTION CONTRACTS IS NOT AUTHORIZED AS NO PRIVITY EXISTS BETWEEN SUBCONTRACTOR AND THE UNITED STATES. RESPONSIBILITY OF GAO TO SUBCONTRACTORS UNDER SUCH CONTRACTS IS LIMITED TO FURNISHING COPIES OF CERTAIN CONTRACTS AND PAYMENT BONDS WHEN ENTITLEMENT HAS BEEN ESTABLISHED BY AFFIDAVIT IN MANNER PRESCRIBED BY SECTION 3 OF THE MILLER ACT. OUR RESPONSIBILITY TO PERSONS SUPPLYING MATERIAL AND LABOR UNDER GOVERNMENT CONSTRUCTION CONTRACTS IS LIMITED TO FURNISHING THEM COPIES OF CERTAIN CONTRACTS AND PAYMENT BONDS WHEN ENTITLEMENT HAS BEEN ESTABLISHED BY AFFIDAVIT IN THE MANNER PRESCRIBED BY SECTION 3 OF THE MILLER ACT.
B-205563 L/M, DEC 7, 1981, OFFICE OF GENERAL COUNSEL
DIGEST: SETTLEMENT OF CLAIMS BY SUBCONTRACTOR SUPPLYING MATERIAL AND LABOR UNDER FEDERAL CONSTRUCTION CONTRACTS IS NOT AUTHORIZED AS NO PRIVITY EXISTS BETWEEN SUBCONTRACTOR AND THE UNITED STATES. RESPONSIBILITY OF GAO TO SUBCONTRACTORS UNDER SUCH CONTRACTS IS LIMITED TO FURNISHING COPIES OF CERTAIN CONTRACTS AND PAYMENT BONDS WHEN ENTITLEMENT HAS BEEN ESTABLISHED BY AFFIDAVIT IN MANNER PRESCRIBED BY SECTION 3 OF THE MILLER ACT, 40 U.S.C. SEC. 270C.
MR. CLIFF TAUBENECK:
IN YOUR LETTER OF OCTOBER 16, 1981, YOU REQUEST THAT WE ACKNOWLEDGE YOUR CLAIM AGAINST OSBERG CONSTRUCTION AND ITS SUBCONTRACTOR, A&S CONSTRUCTION, FOR LABOR AND MATERIAL FURNISHED IN CONNECTION WITH THE PERFORMANCE OF CONTRACT NO. 50-04H1-0-8055C.
HOWEVER, OUR RESPONSIBILITY TO PERSONS SUPPLYING MATERIAL AND LABOR UNDER GOVERNMENT CONSTRUCTION CONTRACTS IS LIMITED TO FURNISHING THEM COPIES OF CERTAIN CONTRACTS AND PAYMENT BONDS WHEN ENTITLEMENT HAS BEEN ESTABLISHED BY AFFIDAVIT IN THE MANNER PRESCRIBED BY SECTION 3 OF THE MILLER ACT, 40 U.S.C. SEC. 270C (1976).
THE MILLER ACT, 40 U.S.C. SEC. 270A-D (1976), IS THE LAW REQUIRING CERTAIN GOVERNMENT CONTRACTORS TO FURNISH PAYMENT BONDS WHICH ARE IN THE NATURE OF SUBSTITUTES FOR MACHANICS LIENS NOT RECOGNIZABLE BY THE GOVERNMENT. THE ACT DOES NOT ESTABLISH ANY PRIVITY BETWEEN THE UNITED STATES AND PERSONS SUPPLYING MATERIAL AND LABOR IN THE PROSECUTION OF THE PRIME CONTRACT SO AS TO AUTHORIZE THE SETTLEMENT OF THEIR CLAIMS BY THE GOVERNMENT. CURTIS JEPSON, TRADING AS CURT'S PLUMBING AND HEATING, B-194773, MAY 24, 1979, 79-1 CPD 376. THE ONLY PROTECTION PROVIDED FOR PERSONS SUPPLYING MATERIAL AND LABOR IN THE PROSECUTION OF THE PRIME CONTRACT IS THE PAYMENT BOND. IN THE EVENT A PERSON FURNISHING TO A SUBCONTRACTOR MATERIAL AND LABOR USED IN THE PROSECUTION OF THE PRIME CONTRACT IS UNABLE TO WORK OUT AN ADJUSTMENT OF HIS UNPAID ACCOUNT, HE IS GIVEN THE RIGHT UNDER SECTION 2 OF THE MILLER ACT, 40 U.S.C. SEC. 270B (1976), TO ENFORCE COLLECTION THROUGH SUIT UNDER THE PAYMENT BOND IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT IN WHICH THE CONTRACT WAS PERFORMED AND EXECUTED 90 DAYS AFTER HE FURNISHES THE LAST OF THE LABOR OR MATERIAL, BUT NO LATER THAN 1 YEAR AFTER HE FURNISHES THE LAST OF THE LABOR OR MATERIAL, PROVIDED HE GAVE NOTICE OF THE CLAIM TO THE PRIME CONTRACTOR WITHIN 90 DAYS FROM THE DATE ON WHICH HE SUPPLIED THE LAST OF THE LABOR OR MATERIAL.