[Request for Decision Concerning Erroneous Contract Fund Payments]

An Army finance and accounting officer requested an advance decision in connection with an erroneous payment of funds to a contractor which had assigned the contract proceeds to a bank. Subsequent to the erroneous payment, the finance officer discovered an executed assignment of proceeds in the contract file, but he was not able to recoup the overpayment from the contractor. At issue is whether the Army is liable for payment to the bank or a third party which the bank had made contractual arrangements with, or whether the contractor is responsible to forward the funds to the assignee. GAO held that: (1) since the assignment of proceeds was processed in accordance with statutory requirements, the assignee was entitled to payment; (2) the Army paid the assignor at its peril and is liable for payment to the assignee; and (3) the Army should continue its efforts to collect the overpayment from the contractor. Accordingly, the amount of the erroneous payment should be paid to the bank, not the third party.