BNUMBER:  B-270801
DATE:  March 19, 1996
TITLE:  Request for Advance Decision from Defense Finance
and Accounting Service

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Matter of:Request for Advance Decision from Defense Finance
          and Accounting Service

File:     B-270801

Date:     March 19, 1996

DIGEST

1.  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.

2.  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.  
However, it questions the contents of the package for which Boston 
Financial provided mail receipts as proof of delivery of the notice of 
assignment.  The New Orleans office argues that if the package was 
delivered on August 3 and the actual modification of the contract was 
not signed until November 4, it is unlikely the New Orleans office 
received a notice of assignment on August 3. 

There is evidence in the record, however, reflecting that notice of 
the assignment was duly mailed by Boston Financial and received by the 
New Orleans office mailroom.  Nantucket Renovations signed the 
original assignment on July 20, 1994, and Boston Financial states that 
it mailed the assignment to the New Orleans office on or about July 
26, 1994.  On or about July 28, 1994, Boston Financial sent a 
follow-up letter to the New Orleans office with a corrected notice of 
assignment.  On or about July 20, 1994, a notice of assignment was 
also sent to the contracting officer in South Weymouth who did not 
acknowledge receipt until September 2, 1994.  Boston Financial's 
statement that it mailed a copy of the assignment is supported by a 
certified return receipt signed by an employee of the New Orleans 
office mailroom on August 3 which has the notation "Nantucket 
Renovations" on it.  This convergence of dates as well as the notated 
return receipt, in the absence of any evidence from the New Orleans 
office to the contrary, supports Boston Financial statements that it 
mailed to the New Orleans office a letter apprising it of the 
Nantucket Renovations assignment as required by 31 U.S.C.  sec.  3727(c).  
See generally, United States v. Garrity, 433 F.2d 649 (8th Cir. 1970) 
(proof of deposit of an item in the mail raises a presumption that it 
has been delivered and defendant presented no evidence to rebut 
presumption that item after mailing was received by him); United 
States v. Dollinger, 384 F. Supp. 682, 687 (S.D.N.Y. 1974) (evidence 
that letter was duly mailed to defendant's address, combined with 
mother's signature on certified mail receipt sufficient to find beyond 
reasonable doubt that defendant received and knew contents of letter); 
Fidelity Mortgage Co. v. Fidelity America Mortgage Co., 15 B.R. 622 
(1981). 

The New Orleans office does not dispute that its mailroom received a 
certified letter from Boston Financial, but argues that since the 
contracting office did not sign the contract modification until 
November 4, 1994, the certified letter mailed by Boston Financial in 
August could not possibly have contained the contract modification.  
However, 31 U.S.C.  sec.  3727(c)(3) only requires that the assignee 
provide written notice of the assignment and a copy of the assignment, 
not a copy of the contract modification.  

As for the second question, our Office is authorized by 31 U.S.C.  sec.  
3527(c) to relieve accountable officers of responsibility for an 
improper or erroneous payment if we determine that the payment was not 
the result of bad faith or lack of due care on the part of the 
accountable officer.  B-206902, June 1, 1982.  The record reflects 
that the payment office followed established procedures and did not 
have actual notice of the assignment until February 1995.  If the 
payment office had received notice, procedures mandate that "the 
disbursing officer will make no payments under the contract until he 
receives the acknowledged copy from the administrative contracting 
office . . . ."  NavCom Manual, Vol. IV,  sec.  046053, Disbursing, 
Preparation and Payment of Public Vouchers.  In the current case, the 
disbursing officer apparently had no reason to doubt the correctness 
of the voucher that she received from the South Weymouth Naval Air 
Station.  The disbursing office did not have actual notice of the 
assignment prior to making the payment.  Nor did the disbursing office 
lose the certified letter.  Although the New Orleans office may be 
faulted for the loss of the package received from Boston Financial 
Corporation on August 3, 1994, this lack of care does not prevent 
relief of the disbursing officer.  Indeed, the contracting officer at 
the Naval Air Station in South Weymouth, who clearly had notice of the 
assignment, endorsed Nantucket Renovations' invoice for payment.  
Therefore, we grant relief.  We note that granting of relief does not 
affect the liability of the Nantucket Renovations for the improper 
payment, nor does it affect the agency's duty to continue to pursue 
collection action.  

/s/Robert P. Murphy
for Comptroller General 
of the United States

1. There is no indication in the documents provided why the amount 
certified differs from the amount of the check.