B-164641-1, SEP 18, 1969

B-164641-1, SEP 18, 1969

CONTRACTS - SUBCONTRACTS - PRIVITY DECISION TO ROBERTS SUPPLY CO. SUBCONTRACTOR UNDER CONSTRUCTION CONTRACT BETWEEN DISCOUNT CO. AND FOREST SERVICE. SINCE OTHER THAN REMEDY PROVIDED BY MILLER ACT PAYMENT BOND, WHICH IS IN NATURE OF A SUBSTITUTE FOR LIENS NOT RECOGNIZABLE BY THE GOVERNMENT THERE IS NO LEGAL AUTHORITY FOR SETTLEMENT OF SUBCONTRACTOR'S CLAIMS.

FURTHER REFERENCE IS MADE TO YOUR LETTER OF JUNE 24, 1969, REQUESTING A PARTIAL DELAY DAMAGES SETTLEMENT UNDER CONTRACT 001850 FOR THE CONSTRUCTION OF THE NORTH WALDO CAMPGROUND IN THE WILLAMETTE NATIONAL FOREST, OREGON.

WE HAVE RECEIVED A REPORT FROM THE DEPARTMENT OF AGRICULTURE ADVISING US THAT YOUR COMPANY HAS BEEN DECLARED IN DEFAULT AND THAT YOUR SURETY, THE UNITED PACIFIC INSURANCE COMPANY, HAS TAKEN OVER THE COMPLETION OF THE CONTRACT. IT IS REPORTED THAT THE SURETY HAS BECOME ENTITLED TO ALL RIGHTS YOU HAD IN THE CONTRACT INCLUDING THE DAMAGE CLAIM WHICH WAS THE SUBJECT OF OUR DECISION OF AUGUST 7, 1968. IT IS FURTHER REPORTED THAT DURING THE COURSE OF COMPLETING THE CONTRACT THERE WILL BE A REEXAMINATION OF THE FACTS SURROUNDING THE DAMAGE CLAIM BY THE SURETY AND THE FOREST SERVICE WHICH MAY CHANGE THE CLAIM SUBSTANTIALLY.

IN ADDITION, WE ARE INFORMED THAT THERE IS AN OUTSTANDING INTERNAL REVENUE SERVICE LEVY FOR $4,250, PLUS INTEREST, AGAINST ANY FUNDS WHICH MIGHT BE PAYABLE TO YOU.

IN VIEW OF THE FOREGOING, IT IS OUR VIEW THAT A PARTIAL PAYMENT WOULD BE INAPPROPRIATE AT THIS TIME.