Defense Finance and Accounting Service: Making Payments to

B-270715 Jul 23, 1996 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights The record establishes that the agency was aware of. Assignee is entitled to payment even though the agency has not yet recovered the erroneous payments from the assignor. Air Force certifying officers are not statutorily liable for improper certifications. Of Air Force certifying officers is governed by Air Force regulation. An agency's accounts must be settled within 3 years of the date when they are substantially complete and ready for audit. An agency's accounts are substantially complete and ready for audit as of the date of payment. We are suspending the statute of limitations with regard to this matter. Should we determine that the payment was improper. We conclude that the assignment of lease payments is valid and enforceable since the agency was aware of and recognized the assignment through its past payments to the assignees. View Decision Matter of: Defense Finance and Accounting Service: Making Payments to Assignees Under a Lease Agreement After Improper Payment Has Been Made to Assignor File: B-270715 Date: July 23, 1996 Although lease assignment did not comply with the notice requirement of the Assignment of Claims Act, the record establishes that the agency was aware of, assented to and recognized the assignment of the payments under the lease contract. Therefore, the agency should pay money owed under contract to the assignees but improperly paid to the assignor. See cases cited. When an agency pays a party other than the assignee when an assignment has been recognized, it pays at its peril. Therefore, assignee is entitled to payment even though the agency has not yet recovered the erroneous payments from the assignor. The making of the payment to the assignees does not relieve the Air Force accountable officers of liability for the erroneous payment. As a result of 31 U.S.C. Sec. 3528(d), Air Force certifying officers are not statutorily liable for improper certifications, and hence not subject to relief from liability by the Comptroller General. The liability and relief therefrom, if any, of Air Force certifying officers is governed by Air Force regulation. Under 31 U.S.C. Sec. 3526, an agency's accounts must be settled within 3 years of the date when they are substantially complete and ready for audit. For purposes of an improper payment to an assignor (instead of to the assignee), an agency's accounts are substantially complete and ready for audit as of the date of payment. To protect the governments rights to collect from any accountable officers liable for the improper payment and to permit consideration of any requests for relief, pursuant to 31 U.S.C. Sec. 3526(g), we are suspending the statute of limitations with regard to this matter. DECISION The Defense Finance and Accounting Service (DFAS), Department of Defense, requests an advance decision on the propriety of a payment made to a lessor/assignor under a lease contract assigned to two financial institutions. Specifically, DFAS asks about the enforceability of the lease assignment and the accountability of responsible parties involved in making the lease payment. Further, should we determine that the payment was improper, DFAS asks when the 3-year statute of limitations for settlement of accounts contained in 31 U.S.C. Sec. 3526(c) began to run. For the reasons discussed below, we conclude that the assignment of lease payments is valid and enforceable since the agency was aware of and recognized the assignment through its past payments to the assignees. Therefore, the agency is liable to the assignees for the amount of the improper payment to the assignor and the accountable officers involved are financially liable to the government. For purposes of our settlement of accounts authority, the 3-year period begins to run on the date the Air Force made the improper payment to the assignors. Hence, in this case, the 3-year period of limitation started to run on May 9, 1994. To protect the interests of the government and the accountable officers, we are suspending the statute of limitations to permit the submission of any appropriate requests for relief of the accountable officers involved in this matter. BACKGROUND On December 16, 1985, the Department of the Air Force entered into a build-lease agreement with an Italian construction company, Societa Italiana per gli appalti construzioni S.P.A. (SIAC), owned by Mr. Guiseppe Spampinato, to provide housing units for assigned personnel at the Comiso Air Base, Italy (Comiso). SIAC agreed to build the housing development with third party financing in return for the Air Force's promise to enter into a firm 10-year lease for an annual rent of Swiss Franc 10,189,920 upon proper completion of the housing development.