C 6

e. WITHHOLDING FINAL PAYMENT DUE TO NOTICES OF EXCEPTIONS. The fact that Notices of Exceptions are outstanding which can be cleared by furnishing certain information or supporting papers or that the General Accounting Office has not audited prior payments is no reason for withholding subsequent or final payments, and such action should in no instance be taken when it is apparent that the Notices of Exceptions can be cleared or there are other current contracts in existence with the contractor involved from which recoupment can be made in case the Notices of Exceptions finally result in disallowances by the General Accounting Office.

f. WAIVER OF CONTRACTUAL CLAIMS. Certain cost-plus-a-fixed-fee contracts issued in connection with constructior projects require as a condition to final payment that the contractor execute a release of all claims against the Government arising under the contract other than such claims as are specifically excepted from the release in stated amounts set forth therein. Contracting officers, however, have been authorized to waive the contractual requirement that claims excepted from the operation of the release be in stated amounts where the claims involved are claims for reimbursement under the contract of payments arising out of any employment by the contractor in connection with the contract work and based on the maximum hour and overtime provisions of the Fair Labor Standards Act or are claims in connection with any proceedings for the enforcement thereof. Disbursing officers will accept such releases, when accepted by the contracting officer, as being in full compliance with the contract provisions, and will make final payment thereagainst when otherwise proper.

17-17.1

g. SUBSISTENCE CLAIMS RAILROAD СомPANIES AND OTHERS. Claims received from railroad companies and others concerned covering incidental expenses of subsistence incurred by troops while en route, where reimbursement by train commanders is impossible because the organizations have departed for oversea destinations, will be forwarded to the Office of the Fiscal Director, Army Service Forces, Attention: Receipts and Disbursements Division, Washington 25, D. C.

17.1. Payment to Canadian firms.

a. Purchasing and contracting officers in the United States who make purchases in Canada will designate on the procuring instruments the usual local disbursing officers in the United States to make payment of such obligations.

b. When payment is to be made to a Canadian vendor in United States funds the purchasing and contracting officer preparing and certifying the voucher, will forward the completed voucher, with supporting papers, to the local disbursing officer. Upon receipt of such completed voucher. or (if the disbursing officer is to prepare the voucher) upon receipt of the necessary supporting papers, the local disbursing officer will take necessary action to make settlement of the account.

c. When payment is to be made to a Canadian vendor expressed in terms of Canadian dollars the local disbursing officer will forward the completed voucher, with supporting papers, by franked envelope. to the Finance Officer, U. S. Army, Edmonton, Alberta, Canada, for payment. All pertinent certifications on the vouchers and supporting documents should be accomplished and the voucher presented in such form that payment can be made without further correspondence.

18

C 5

18. Restrictions on assignments or transfers. a. ASSIGNMENTS OF CLAIMS. All transfers and assignments made of any claim upon the United States, or any part or share thereof, or interest therein, whether absolute or conditional, and whatever may be the consideration therefor, and all powers of attorney orders. or other authorities for receiving payment of any such claim, or of any part or share thereof, shall be absolutely null and void, unless they are freely made and executed in the presence of at least two attesting witnesses, after the allowance of such a claim, the ascertainment of the amount due, and the issuing of a warrant for the payment thereof. Such transfers, assignments, and of attorney, must recite the warrant for powers payment, and must be acknowledged by the person making them before an officer having authority to take acknowledgments of deeds, and shall be certified by the officer; and it must appear by the certificate that the officer, at the time of the acknowledgment, read and fully explained the transfer, assignment, or warrant of attorney to the person acknowledging the same (R. S. 3477; 31 U. S. C. 203; M. L. 1939, Sup. II, sec. 701).

b. TRANSFERS OF CONTRACTS. No contract or order, or any interest therein, shall be transferred by the party to whom such contract or order is given to any other party, and any such transfer shall cause the annulment of the contract or order transferred, so far as the United States are concerned. All rights of action, however, for any breach of such contract by the contracting parties, are reserved to the United States (R. S. 3737; 41 U. S. C. 15; M. L. 1939, Sup. II, sec. 739).

c. EXCEPTIONS. (1) Transfer of entire business. Where the entire business of a contractor is sold, the transfer is not such an assignment as is prohibited by sections 3477 and 3737, Revised Statutes, and payment to the transferee is au

thorized upon compliance with contract terms and the furnishing of a waiver from the original contractor (9 Comp. Gen. 72).

(2) Merger. The merger of a corporation or a change in the corporate name does not operate to annul existing contracts between such corporation and the Government and is not of itself a change in the contractor's responsibility (4 Comp. Gen. 184).

(3) Assignment to a bank, trust company, or other financing institution. The provisions of a and b above shall not apply in any case in which the moneys due or to become due from the United States or from any agency or department thereof, under a contract providing for payments aggregating $1,000 or more, are assigned to a bank, trust company. or other financing institution, including any Federal lending agency: Provided,

(a) That in the case of any contract entered into prior to the date of approval of the Assignment of Claims Act of 1940, no claim shall be assigned without the consent of the head of the department or agency concerned;

(b) That in the case of any contract entered into after the date of approval of the Assignment of Claims Act of 1940, no claim shall be assigned if it arises under a contract which forbids such assignment;

(c) That unless otherwise expressly permitted by such contract any such assignment shall cover all amounts payable under such contract and not already paid, shall not be made to more than one party, and shall not be subject to further assignment, except that any such assignment may be made to one party as agent or trustee for two or more parties participating in such financing;

(d) That in the event of any such assignment the assignee thereof shall file written notice of the assignment together with a true copy of the instrument of assignment (see par. d) with

C 5

1. The General Accounting Office.

2. The contracting officer or the head of his department or agency.

3. The surety or sureties upon the bond or bonds, if any, in connection with such contract, and

4. The disbursing officer, if any, designated in such contracet to make payment.

(e) Notwithstanding any law to the contrary governing the validity of assignments, any assignment pursuant to the Assignment of Claims Act of 1940 shall constitute a valid assignment for all purposes. (Assignment of Claims Act of 9 October 1940 (54 Stat. 1029); 41 U. S. C. 15; M. L. 1939, Sup. II, sec. 739).)

(f) Financing institutions. A "company" regularly engaged in the financing business is not disqualified from accepting assignments under the Assignment of Claims Act of 1940 as a "financing institution" solely because it consists of an individual or a partnership (20 Comp. Gen. 415). A business concern which merely as an incident to its principal business of acting as selling agent, advances money to pay for raw materials, labor, etc., is not a "financing institution" to which moneys due or to become due under a Government contract may be assigned under authority of the Assignment of Claims Act of 1940. 20 Comp. Gen. 415 distinguished (22 Comp. Gen. 44).

d. PROCEDURE UNDER ASSIGNMENT OF CLAIMS ACT OF 1940. (1) Evidence of Notices of A8signments. Extract from Circular Letter 447, Treasury Department, Procurement Division, 3 December 1940 (20 Comp. Gen. 306), is quoted as follows:

In the event that any moneys due or to become due from the United States under any contract are assigned pursuant to the terms of the Assignment of Claims Act of 1940, the assignee is required to forward a true copy of the assignment, together with written notice thereof, to each of the parties specified in proviso 4 of the Act. This notice of said assignment * should be furnished to each of such parties in quadruplicate. Three of the four copies of each notice of assignment should be returned to the assignee under the contract with the receipt form at the end thereof properly executed. One of these copies is for the assignee. The other two copies should be attached to the first voucher, invoice, or other similar document submitted for payment. One copy of each

18

receipt should be furnished to the General Accounting Office with the first voucher and the other copy of each receipt retained by the appropriate officer of the department making payment. Reference as to the previously filed receipts should be made on subsequent Vouchers.

This procedure is designed to afford the assignee and the appropriate officers of the Government convenient evidence that there has been compliance with the requirements of the statute with the reference to the filing of notice of such assignments. However, rigid adherence to this procedure should not be insisted upon if satisfactory evidence of compliance with the statute is provided by other means.

*

(2) Affidavit of assignee that notices of assignment have been furnished. While a disbursing officer making payment to an assignee under a Government contract may accept assignee's affidavit that notice and true copy of assignment have been furnished each person and agency specified in section 4, Assignment of Claims Act of 1940, and General Accounting Office will require no additional evidence unless affidavit proves false, acceptance of such affidavit will not relieve disbursing officer of his responsibility, but the procedure outlined by Director of Procurement ((1) above) which provides for giving receipts to assignees for notices and assignments and for production of such receipts as evidence of compliance with section 4, should afford ample protection to disbursing officers so far as concerns said section (20 Comp. Gen. 306).

(3) Caution in case surety is involved. Should the disbursing officer make a payment based on an affidavit ((2) above) under a voucher which shows that the contractor recognizes the assignment, its validity, and the right of the assignee to receive the payment, the Government might have a valid defense to any subsequent claim from the contractor for the said amount should the contractor base such claim on the fact that notices and copies had not been furnished as required by the act. However, should the payment be made in connection with a contract supported by bonds the interests of the Government might be unduly prejudiced in the event the surety had not been furnished a notice and copy of assignment. Consequently, it would appear advisable in such cases, for the protection of the disbursing officer,

21

18-19

that no payment be made to the assignee until it be established that the surety had received a notice and copy of the assignment (20 Comp. Gen. 306).

(4) Voucher to indicate that contractor recognizes assignment. The voucher, invoice, or other data in support of a payment directly to the assignee should clearly indicate that the contractor recognizes the assignment, its validity, and the right of the assignee to receive payment. For instance the contractor's certification of a voucher on which the name of the assignee is shown is sufficient to give effect to this requirement. A copy of the written notice of assignment, which has been forwarded to the surety for execution of the receipt form at the end thereof, will accompany the first voucher to the General Accounting Office and will be referred to on subsequent vouchers (20 Comp. Gen. 295; AR 35-1040).

19. Advance payments.

a. ADVANCES OF PUBLIC MONEY PROHIBITED. (1) Section 3648 Revised Statutes (31 U. S. C. 529; M. L. 1939, Sec. 1678) prohibits payments in advance of delivery of supplies or rendition of service.

(2) Purchases of coupon books for gasoline and oil are within the prohibition and payment may not be made until the supplies are actually furnished. Certain exceptions to the general prohibition contained in section 3648, Revised Statutes, have been made by later statutes (8 Comp. Gen. 454; AR 35–6040).

b. EXCEPTIONS. (1) Periodicals. provided, that hereafter subscriptions to newspapers, magazines, periodicals, and other publications purchased from funds of the Quartermaster Corps may be paid in advance; * Act 27 April 1914 (38 Stat. 362); 31 U. S. C. 530. That subscription charges exceeding the 1-year period for newspapers, magazines and other periodicals for official use of any office under the Government of the United States, or the municipal government of the District of Columbia, may be paid in advance from the current appropriations available when it is proved more economical to take advantage of such subscriptions, notwithstanding, the provisions of section 3648 of the Revised Statutes

C 5

(31 U. S. C. 529). Act 12 June 1930 (46 Stat. 580; 5 U. S. C. 118b; M. L. 1939, sec. 1680; 23 Comp. Gen. 326).

(2) Mileage books. In cases where continuous travel between places but a short distance apart is involved and a substantial saving or convenience to the Government will result, the purchase of mileage books not in excess of the current needs is authorized under paragraph 34 of the Standardized Government Travel Regulations, such purchase not being in contravention of section 3648 of the Revised Statutes (9 Comp. Gen. 151).

(3) Civilian witness fees. The officer serving subpoena for the appearance of a civilian witness before an Army general court-martial, when ordered by proper authority, is entitled to reimbursement for fees and mileage necessarily advanced to the witness from personal funds at the time of the service, and there is no requirement that such advances be only by a disbursing officer, but the orders should be in writing, issued in advance of the payment directed and not confirmatory of the action previously taken, and a certified copy should be filed in support of the reimbursement voucher, as well as the cash receipt, evidencing actual payment (18 Comp. Gen. 352).

(4) War emergency exceptions. (a) Statutory provision. The President may authorize any department or agency of the Government exercising functions in connection with the prosecution of the war effort, in accordance with regulations prescribed by the President for the protection of the interests of the Government, to enter into contracts and into amendments or modifications of contracts heretofore or hereafter made and to make advance, progress, and other payments thereon, without regard to the provisions of law relating to the making, performance, amendment, or modification of contracts whenever he deems such action would facilitate the prosecution of the war: Provided, That nothing herein shall be construed to authorize the use of the cost-plus-apercentage-of-cost system of contracting: Provided further, That nothing herein shall be construed to authorize any contracts in violation of existing law relating to limitation of profits: Provided further, That all acts under the au

C 5

thority of this section shall be made a matter of public record under regulations prescribed by the President and when deemed by him not to be incompatible with the public interest. (Sec. 201, Title II, First War Powers Act, 18 December 1941 (55 Stat. 839; 50 U. S. C. App. 611; M. L. 1939, Sup. II, sec. 2256).)

Titles * II of this Act shall remain in force during the continuance of the present war and for 6 months after the termination of the war, or until such earlier time as the Congress by concurrent resolution or the President may designate. (Sec. 401, Title IV, First War Powers Act, 18 December 1941 (55 Stat. 841; 50 U. S. C. App. 621; M. L. 1939, Sup. II, sec. 2259).)

(b) Executive order. Executive Order No. 9001, dated 27 December 1941, issued pursuant to title II of the First War Powers Act, 1941 (55 Stat. 839) authorizes the War Department to make advance, progress, and other payments upon contracts of any per centum of the contract price and to enter into amendments or modifications of contracts heretofore or hereafter made without regard to the provisions of law relating to the making, performance, amendment, or modification of contracts. The order permits the exercise of such authority by the Secretary of War or at his discretion by any other officer or officers or civilian officials of the War Department and further permits the Secretary of War to confer upon any officer or officers of the War Department or civilian official thereof power to make further delegations of such power within the War Department. The order provides that the War Department may make advance, progress, and other payments upon contracts whenever in the judgment of the War Department prosecution of the war is thereby facilitated and directs that advance payments shall be made under such authority only after careful scrutiny to determine that such payments will promote the national interest and under such regulations to that end as the Secretary of War may prescribe.

(c) Regulations. See Procurement Regulations, paragraph 321 for policies and provisions for advances, interest, etc., under authority of Title II, First War Powers Act, 18 December

19

1941, and Executive Order No. 9001, 27 December 1941.

(d) Responsibility for liquidation of advance payments on contracts. Although it is the duty and responsibility of the contracting officer to insure that advance payments are liquidated during the life of the contracts to which they pertain, a secondary responsibility rests on the disbursing officer to maintain a record of advances, payments and liquidations under each contract and to notify the contracting officer, or higher authority in appropriate cases, when it appears that the contract is being administered in a manner prejudicial to the interests of the United States.

(e) Communications services and facilities in accordance with established tariffs of foreign communications companies. In accordance with the First War Powers Act and Executive Order No. 9001, contracts covering the procurement of commercial communications services or facilities in foreign countries may authorize advance payment of charges therefor when such advance payment is provided for in established tariffs or is in accordance with rules, practices, or regulations applicable to the furnishing of similar services and facilities to the general. public (PR 321.15).

c. CODE USED IN CASE OF INFORMAL CONTRACTS. Whenever funds are to be advanced under a contract which is not a formal contract, the disbursing officer will require the use of a code which will furnish the same basic information that is contained in the formal contract designation. This code will show in abbreviated form

(1) The type of fund (War, Defense AidWar, etc.).

(2) Service (Engineers, Ordnance, etc.).
(3) Procuring station number.

(4) An assigned agreement number. This number will be stated on each report of advances and recoupments, and each disbursing and collection voucher used in connection therewith. An example of the desired code number is shown below: