Request for Advance Decision from Defense Finance

B-270801 Mar 19, 1996 Jump To VIEW DECISION RELATED PAGES GAO CONTACTS Highlights Where assignment was properly executed and notice given in accordance with statutory requirements. The assignee is entitled to payment. Paid assignor is liable to the assignee for the amount of erroneous payment. It was at that time that the New Orleans office first learned that on July 20. Which is the proper payee according to the assignment of July 20. If the payment should have been made to Boston Financial. Is the accountable officer liable for the payment? We conclude that Boston Financial is entitled to a payment of $31. Since the assignment was executed and notice given in accordance with statutory requirements. It is well-settled that once an obligor (the United States in this case) has notice of a valid assignment. View Decision Matter of: Request for Advance Decision from Defense Finance and Accounting Service File: B-270801 Date: March 19, 1996 Where assignment was properly executed and notice given in accordance with statutory requirements, the assignee is entitled to payment. Obligor (United States in this case) who had notice of valid assignment and, nevertheless, paid assignor is liable to the assignee for the amount of erroneous payment. A disbursing officer who, pursuant to an invoice approved by the contracting officer, made erroneous payment to a contractor may be relieved of financial responsibility because the loss did not occur as result of bad faith or lack of due care on the officer's part. DECISION The Defense Finance and Accounting Service, Cleveland Center/New Orleans (New Orleans office), requests an advance decision in connection with an erroneous payment of contract funds to a contractor, Nantucket Renovations, which had assigned those funds to the Boston Financial Corporation pursuant to the Assignment of Claims Act of 1940, as amended, 31 U.S.C. sec. 3727; 41 U.S.C. sec. 15. On January 4, 1995, the New Orleans office bill payment branch received a voucher in the total amount of $31,755, for exterior repairs performed on hangars at South Weymouth, Massachusetts, Naval Air Station, by Nantucket Renovations under Contract #N62472-93-C-8768. The South Weymouth Naval Air Station certified the voucher for payment. The New Orleans office made payment to the payee shown in the contract document, Nantucket Renovations, by check number 8357-01181074, dated January 20, 1995, for $31,769.31. [1] On February 14, 1995, Boston Financial inquired about the payment. It was at that time that the New Orleans office first learned that on July 20, 1994, Nantucket Renovations had executed an assignment of moneys due under the contract to Boston Financial. The contracting officer at South Weymouth Naval Air Station acknowledged receipt of the instrument of assignment on September 2, 1994. The contracting officer signed the modification to the contract reflecting the assignment (P00004) on November 7, 1994. However, Boston Financial states that it mailed a copy of the notice of assignment to the New Orleans office as evidenced by a certified mail receipt signed by an employee in the New Orleans office mailroom on August 3, 1994. The bill payment branch apparently never received the notice of assignment from the mailroom. The New Orleans office has attempted, without success, to recoup the $31,769.31 from Nantucket Renovations. The New Orleans office asks two questions: should a duplicate payment be made to Boston Financial, which is the proper payee according to the assignment of July 20, 1994? If the payment should have been made to Boston Financial, is the accountable officer liable for the payment? The Assignment of Claims Act, 31 U.S.C. sec. 3727(c), permits an assignment to a financing institution of money due or to become due from the United States under a contract providing for payments aggregating $1,000 or more. An assignment does not become effective until the assignee files written notice of the assignment together with a copy of the instrument of assignment with the contracting officer or the head of the contracting officer's agency, and the disbursing officer, if any, for the contract. 31 U.S.C. sec. 3727(c)(3). We conclude that Boston Financial is entitled to a payment of $31,755, since the assignment was executed and notice given in accordance with statutory requirements. It is well-settled that once an obligor (the United States in this case) has notice of a valid assignment, as in the present case, it pays the assignor at its peril and is, therefore, liable to the assignee for the amount of the erroneous payment. See Central Bank of Richmond, Virginia, A National Banking Association v. United States, 117 Ct. Cl. 389 (1950). The New Orleans office does not deny that its mailroom received and signed for a package on August 3, 1994, from Boston Financial.