I readily admit I am not as experienced in researching these topics as I should be, but was hoping for some help on this.

What, specifically, are the duties of the Contracting Officer/Agency when processing an invoice on an assigned contract? I have been challenged by a lending institution, who states I am "required" by the ACT to send him the invoice once I have certified it for payment. This doesn't seem right to me...but can't find the darn ACT to check out what it says!!!

Thanks for any help offered....

Anonymous  Posted on Monday, July 07, 2003 - 04:24 pm:

What do you mean by "the ACT"?

Anonymous  Posted on Monday, July 07, 2003 - 04:38 pm:

I am so sorry...

Assignment of Claims Act of 1940...31 U.S.C. 3727, 41 U.S.C. 15

thanks....

Phil C.  Posted on Monday, July 07, 2003 - 05:27 pm:

See FAR 32.8, the "ACT" the lending institution is referring to could be the Assignment of Claims Act.

Anonymous of Monday, July 07, 2003 - 04:00 pm:

Recommend reading FAR part 32 Assignment of Claims and the contract if your not familiar with procedures for processing an assignment of claims. The contract should also contain the Assignment of Claims document. Also, believe that a SF-30 mod is done to notify the payment office to make payments to the financial institution vice the contractor.

Been a few years since I processed payments under an Assignment of Claims, but believe it works something like this......please bear with me not sure if I’ll have all the steps correct.

1. a contractor will enter into an agreement with a financial institution, bank, etc (Assignee). for an Assignment of Claims to improve its cash flow i.e, get "paid" faster. The benefit to the financial institution is that they charge the contractor a fee (I think percentage of invoice amount) for this service.

2. the contractor invoices the Government and the Government certifies the invoice and sends-off to the payment office. If prompt payment applies, payment office must make payment within 30 days (hopefully) or else interest accrues. However, the contractor needs the money now and can’t wait 30 days hence the Assignment of Claims enters at this point.

3. the Assignee by agreeing to the Assignment assumes the contractor's "accounts receivable" for monies due by the Government under contract X. Once the contracting office certifies the invoice, it is sent to the payment office and the Assignee. Can’t recall if the contractor sent the certified invoice to the Assignee, or if the Contracting Office sent it directly. For the Assignee the certification serves as documentation that the contractor is due certain monies from the Government, thus, the Assignee provides "payment" to the contractor in the certified invoice amount less the rate the Assignee is charging the contractor to perform this service.

4. The payment office processes the invoice and makes payment to the Assignee. FAR 32.805(e) contains a requirements if the contractor wants to receive direct payments under the specific contract (Release of Assignment).

Phil C.   Posted on Monday, July 07, 2003 - 05:29 pm:

Sorry by the time I posted the "ACT" was already addressed.

Anonymous  Posted on Monday, July 07, 2003 - 05:59 pm:

Phil...thanks for your response. The process you described is basically what I understood it to be...except sending the certified invoice to the Assignee. I simply have not had alot of experience with this. Here is my problem, specifically...

I failed to send the certified invoice (he has a copy that the contractor provided, but of course it does not have my signature on it and therefore the Assignee is not certain it is correct). Now the Assignee is threatening to "turn me in" because I did not comply with the "ACT", which he claims specifically states I need to send him a certified copy of the invoice as well.

These seems crazy to me....sending the certified invoice to the payment office and then sending it to the Assignee is doubling the work required to process the invoice. I simply thought the payment office, once the assignment is rec'd, sent the monies to the Assignee. I thought this was an arrangement between the Contractor and the Assignee, and that I was not a party to it. I approve the assignment, but to be required to provide the proper paperwork to ensure payment to the contractor was beyond what I thought my responsibility was.

I wanted to verify the requirements of the "ACT" and see if indeed I have violated its terms.

Long post...sorry...but this guy has really gotten under my skin and for the life of me I can't find the specific requirement.

thanks again....

anon2  Posted on Monday, July 07, 2003 - 10:42 pm:

If the "ACT" required you to send a signed invoice to the assignee, the clause would describe the requirement. Let them "turn you in".

anon2  Posted on Tuesday, July 08, 2003 - 08:26 am:

Suggest that you ask the assignee to show you the requirement, since it isn't in the regulations or the clause.

ji20874  Posted on Tuesday, July 08, 2003 - 09:25 am:   

I agree with anon2 -- nicely ask the assignee to cite chapter and verse of the requirement for the contracting officer to provide the assignee with a "certified" copy of the invoice -- I have never heard of this before...

Jerry  Posted on Tuesday, July 08, 2003 - 09:41 am:

Here is the Act in its entirety.

Section 15. Transfers of contracts; assignments; assignee not subject to reduction or setoff

(a) Transfer
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 is
concerned. All rights of action, however, for any breach of such
contract by the contracting parties, are reserved to the United
States.
(b) Assignment

The provisions of subsection (a) of this section 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:
(1) That, in the case of any contract entered into after
October 9, 1940, no claim shall be assigned if it arises under a
contract which forbids such assignment.
(2) 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.

(3) 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 the assignment with -
(A) the contracting officer or the head of his department or
agency;
(B) the surety or sureties upon the bond or bonds, if any, in
connection with such contract; and
(C) the disbursing officer, if any, designated in such
contract to make payment.
(c) Validity of assignment
Notwithstanding any law to the contrary governing the validity of
assignments, any assignment pursuant to this section shall
constitute a valid assignment for all purposes.
(d) Assignee liability
In any case in which moneys due or to become due under any
contract are or have been assigned pursuant to this section, no
liability of any nature of the assignor to the United States or any
department or agency thereof, whether arising from or independently
of such contract, shall create or impose any liability on the part
of the assignee to make restitution, refund, or repayment to the
United States of any amount heretofore since July 1, 1950, or
hereafter received under the assignment.
(e) Amendment of contract
Any contract of the Department of Defense, the General Services
Administration, the Department of Energy, or any other department
or agency of the United States designated by the President, except
any such contract under which full payment has been made, may, upon
a determination of need by the President, provide or be amended
without consideration to provide that payments to be made to the
assignee of any moneys due or to become due under such contract
shall not be subject to reduction or setoff. Each such
determination of need shall be published in the Federal Register.
(f) Assignor liability arising independent of contract
If a provision described in subsection (e) of this section or a
provision to the same general effect has been at any time
heretofore or is hereafter included or inserted in any such
contract, payments to be made thereafter to an assignee of any
moneys due or to become due under such contract shall not be
subject to reduction or setoff for any liability of any nature of
the assignor to the United States or any department or agency
thereof which arises independently of such contract, or hereafter
for any liability of the assignor on account of -
(1) renegotiation under any renegotiation statute or under any
statutory renegotiation article in the contract;
(2) fines;
(3) penalties (which term does not include amounts which may be
collected or withheld from the assignor in accordance with or for
failure to comply with the terms of the contract); or
(4) taxes, social security contributions, or the withholding or
non withholding of taxes or social security contributions,
whether arising from or independently of such contract.
(g) Accrued rights and obligations
Except as herein otherwise provided, nothing in this section
shall be deemed to affect or impair rights or obligations
heretofore accrued.


So, let them turn you in.

Phil C.  Posted on Tuesday, July 08, 2003 - 10:08 am:

I've read FAR 32.8, 52.232, and 41 U.S.C. 15 and didn't note anywhere where it is "mandatory" that the Government provide a copy of the certified invoice to the Assignee. Possibly someone on the wifcon site knows different.

As others noted above, I would ask the Assignee to cite the specific requirement (chapter and verse) that mandates the contracting office provide a certified copy of the invoice. I would let they Assignee know that I reviewed the "regs" and could not locate his assertion. Certainly wouldn't want the Assignee thinking I was too lazy to read.

However, even if the Assignee could not produce the citation that madates a copy of the certified invoice be sent to them, and their position is that they require one in order to "pay" the contractor, I would provide them the certified copy of the invoice with the contractors knowledge and concurrence.

This seems a trival amount of work to help facilitate the process for the contractor receiving the funds they are properly due. Especially as contracting offices I've worked in had the "electronic" capability to make this a quick and painless process.

Vern Edwards  Posted on Tuesday, July 08, 2003 - 11:32 am:

The word invoice does not appear in either 31 U.S.C. § 3727, Assignments of Claims, or 41 U.S.C. § 15, Transfers of contracts; assignments; assignee not subject to reduction or setoff, thus it seems reasonable to conclude that those sections do not require the government to send a copy of a "certified" invoice to an assignee.

The word invoice does not appear in FAR Subpart 32.8, Assignment of Claims, and it does not say anything about the government sending a copy of a "certified" invoice to an assignee.

The word invoice does not appear in FAR clause 52.232-23, Assignment of Claims, and the clause does not state that the government must provide the assignee with copies of "certified" invoices.

Having said all that, the lending institution is providing financing that helps your contractor to perform, and the government apparently agreed to the assignment. So why not send a copy of the invoice to the lending institution? How long can it take to print a name and address on an envelope, insert a copy of the invoice, and send it off? Refusing and quoting the law only makes you seem like a blockheaded bureaucrat, which I'm sure that you're not. So why not act like a businessperson and cooperate with the other business?

Anonymous  Posted on Tuesday, July 08, 2003 - 12:03 pm:

Wow...thanks so much for all of your help!!! I knew I could count on this site for some assistance.

Vern....without addressing all of your comments...it was the assignee who behaved like a blockhead, not I. He was the one screaming he was going to "turn me in" for failing to comply with the ACT. I processed the invoice timely, but didn't FAX him a copy when it was processed and that ticked him off. Yes, he is providing a service for my small business contractor, but don't think for a minute it isn't his "fee" driving this, as opposed to his concern about my contractor's finances. I did not refuse to do anything, but resent being told I violated the ACT.

Thanks again for your feedback...

Vern Edwards  Posted on Tuesday, July 08, 2003 - 12:11 pm:   

Anonymous:

Of course he's doing what he's doing for a fee.

Your contractor is doing what it is doing for a fee.

You do what you do for a fee (paycheck).

I certainly do what I do for a fee.

I didn't mean to imply that you had actually acted like a blockhead. What I meant was that you would be acting like a blockhead if you wasted time arguing about the law. Yes, the assignee lost his cool, but a lot of people do when dealing with the government.

anon2  Posted on Tuesday, July 08, 2003 - 03:03 pm:   

Anonymous, don't feel guilty. It's fine if you want to help the assignee determine the payout rather than letting the contractor and the assignee to take care of their own business. If you want them to take care of business, that's also ok.

less patient Anonymous  Posted on Tuesday, July 08, 2003 - 03:32 pm:

Normally I might agree with "what is the problem?" and "nicely ask" position. Here it appears the financial institution or some individual in its employ does not understand that they are simply a convenience to a government contractor and not in charge. They certainly do not yank the Government about.

I believe you have other options and means of reminding your contractor and its little helper that you will not be bullied if their demands, beyond what is actually required, become an undue burden on the government.

Phil C.  Posted on Tuesday, July 08, 2003 - 07:04 pm:

Less patient,

I see the situation differently. I do agree that the Assignee got "demanding", but in situations like these my experience is that a "I want to help" from the Government side goes a long towards building the business relationship that Vern spoke to in his 8 Jul 11:32 posting. Moreover, the Assignee is more likely to take a deep breath after the Government makes such a comment and the Assignee would apoligize for the "bullying" behavior. The phrases "one catches more bees with honey than vinegar or don't throw gas on a fire" come to mind. Of course, this doesn't mean as KOs we sit by and watch while a contractor, assignee, or anyone else "rapes" the taxpayer or is abusive to Government employees.

That was my intent in addressing the situation is informing the Assignee

"hey, I looked everywhere FAR/DFAR/The Act and could not find the mandatory certified invoice requiremnt, could you help me out and let me know where it is for future reference. Even if you can't cite the specific, I'm going to have our invoice clerk send you a certified copy as an email attachement each time anyway. Our contracting office is appreciative of the work done by our contractors and their "partners" and we work to foster these business relationships."

Some may see my mindset as kissing the contractors/assignees you know what, but I see it as building a business relationship and acting in good faith i.e.; want the contractor to succeed by providing the required service at a fair and reasonable price and make a fair and reasonable profit.

less patient Anonymous  Posted on Tuesday, July 08, 2003 - 08:53 pm:
 

Then we see the situation differently. I have no problem with working to form good business relationships as long as roles are clearly understood. The individual in or the financial institution in general is confused in that respect.

Here the Government is the source of the business the others seek. The Government has the requirement and the money. Polite accommodation to make things run more smoothly and everyone's life simpler is wonderful; however, it is the role of the contractor to conduct the required business without complicating the customer's life.

That applies to those a contractor bring into the relationship. It applies to subcontractors, personnel and those they bring in to assist them with financial arrangements. When they or their agents begin to be a problem for the Government we have remedies to solve the problem. That should be made clear at the first signs of misunderstanding. It saves a lot of trouble downstream. I would certainly not appear to cave in to a demand outside the scope of the relationship. That is "feeding the tiger" and often brings unpleasant consequences. Now, once positions are clear and presuming the assignee can demonstrate how all our lives will be simpler by doing the extra bit I'll see what we can do. Not otherwise.

The terms for any assignment can be specified in the contract. Approval of assignee is an option in some. Past performance for assignee financial institutions might be a reasonable part of that process. Perhaps assignees who do not grasp the concept should be made aware of the fact that their continued business is at our option, not theirs and not the contractor's.

In my personal business I expect no less when it comes to understanding who is paying and who is providing the service or goods; who is requiring and accepting and who is vending. I find clarity on those points does not hinder good relationships except among those confused about roles. They are then not people with whom I care to maintain any business relationship. I do not do return business with these sorts. Why should I expect less clarity of my Government in its business relationships?

Vern Edwards  Posted on Tuesday, July 08, 2003 - 09:30 pm:

less patient Anonymous:

The assignee erroneously believed that the government was obligated to provide it with copies of invoices that had been approved for payment. Had the government's contract administrator known the FAR and how to look up federal statutes on the internet -- things which all contract administrators ought to know -- then he or she could have explained the rules to the assignee and proceeded from there to make suitable arrangements.

This is why you want knowledgeable and trained people on the government's end. FAR Subpart 32.8 and the FAR clause are very short, and FAR Subpart 32.8 cites the relevant statutes.
A little professional knowledge would have given the first Anonymous the confidence to have dealt with the assignee's representative in the professional manner suggested by Phil C. Lacking that knowledge, he or she let the assignee get under his or her skin.

Under the law and the FAR, a contractor is entitled to assign its claims unless the agency determined before award that assignment is not in the government's interests. See FAR §§ 32.802 and 32.803. The government has a duty to cooperate and contracting officers have a duty to conduct themselves professionally. In my opinion, the assignee's request was reasonable and did not represent an undue burden on the government. If the contract administrator had known his or her business, he or she would have been able to better cope with the misinformed assignee. If the assignee was, in fact, personally abusive, then there are professional ways to cope with that kind of thing. I'm confident that the Anonymous who initiated this thread conducted himself or herself in a professional manner throughout the encounter.

I'm with Phil C.

Phil C.  Posted on Tuesday, July 08, 2003 - 09:48 pm:

Less Patient,

Yes we disagree. I'm certainly not right all the time.

In this case I don't think there is any confusion in the roles on anyone's part,,,,the Assignee clearly knows the Government is "holding the checkbook",,,,,,,the contractor clearly knows the Assignee is "paying" them and picked up their accounts receivables for the contract,,,,,and the government certainly understands that it is the contractor who is providing service.

The Assignee could show some more "business class and rationale behavior", but at times many of us get more demanding than the situation calls for.

I do have some disagreement with your statement "however, it is the role of the contractor to conduct the required business without complicating the customer's life. " as I think it is also a 2 way street, i.e.;, Government has a role to conduct the required business without complicating the contractor's life. FAR 13 and FAR 12 come to my mind as ways Govt. is trying to do this by making it simpler and easier to get business done.

Of course, some contractors have difficulty responding to partnership and working together. Fortunately, we have more "attention getting" tools such as: discrepancy notices, deductions, liquidated damages, cure notice, show cause, and the "big kahuna" T4D.

In this instance, the contractor for whatever reason required an Assignment of Claims as is allowed them under the contract. I see sending the Assignee a copy of the certified invoice as an insignificant cost of doing business and the Govt. doing its part keeping the contract moving along and not complicating the contractor's life. Especially with modern electronic means sending the certified invoice to the contractor is only adding them to the "CC" on an email away.

Phil C.  Posted on Tuesday, July 08, 2003 - 09:50 pm:

P.S.

Of course, the Assignee was wrong saying The ACT required the Govt provide the certified invoice.

less patient Anonymous  Posted on Wednesday, July 09, 2003 - 02:20 pm:

In reality I do not think we disagree all that much, though we may still see the exact situation differently. I largely agree with Vern on this. And Phil, your "Vern's statement 'you don't know things and look things up for yourself, you ask somebody else (usually a lawyer) what to do.' is right on the mark I think for far too many in the 1102 profession" (Professional Reading thread) shows you and I agree on that aspect as well.

I was being too gentle with the originator. One of my first thoughts was if Anonymous had a contract in which a contractor requested assignment why would they not immediately come up to speed on current law and regulation concerning assignment? "I am not as experienced in researching these topics as I should be" is a deficiency that needs remedy. It is not all that complicated, particularly with law and FAR on line subject to electronic search. A basic, very basic, professional skill is to be able to quickly find information.

It is foolish to sit down and just read the FAR cover to cover and try to remember everything all the time. It is wise to know what you have to know for jobs at hand and, particularly when faced with something you know you are not familiar with, be able to selectively read or refresh on specifics. The FAR is reasonably well indexed. A contractor goes for the assignment route. You haven't worked with one in a while or ever. You check the law and FAR on the subject and be prepared to intelligently and accurately discuss any issues before that first invoice. That does not mean you are always right. It simply means you have your facts in order and can discuss issues from that strength.

When the assignee's person called requesting what was requested as an accommodation I would have immediately considered doing so. Actually doing so would depend on whether it fit within the agency's policy and practice. Would doing this for one assignee require special modification of a standard operation involving other agency organizations? Would doing it for one require doing it for all? If it were as simple as making a copy and sending a FAX I would probably do it. If it meant coordinating with another branch to pull one invoice out of a stream I might probably not.

Now, it the assignee was "screaming he was going to 'turn me in' for failing to comply with the ACT" he'd be handed his head in a basket. I'd know, from my prior research, that there was no such requirement and could pull our and read or FAX what Jerry and Vern posted earlier. Since I am indeed less patient, my position would be documented to responsible individuals in both companies. The cover letter would be clear that "screaming" at the Government is unacceptable and has consequences. I would await another call from a suitably contrite assignee employee or his replacement. Then we could get on to establishing a good working relationship with everyone understanding who does what how.

The Government has clear obligations. Elsewhere in this forum we have discussions on the result of hindrance and non cooperation. Nowhere does that require a government agency to accept a contractor or those the contractor brings into play becoming a problem for the government with out of scope demands. I use "out of scope" precisely. Not only was the individual out of line, the demand is beyond requirement and anticipated work load. Depending on complications at my end a reasonable accommodation may or may not be made. The assignee would know it is an accommodation and not a right after a very short conversation.

One more point. Yes, "Under the law and the FAR, a contractor is entitled to assign its claims unless the agency determined before award that assignment is not in the government's interests" and I think it reasonable to state up front what an agency will do with respect to process when we are allowing a process. If, as I believe, what was requested would not be so trivial in some agencies' highly structured invoice-financial processes, it is not unreasonable to state how the agency requires contractor and assignee to play their parts in that process. A single paragraph should suffice.

Some misery comes with any contractual relationship. There is no need to compound it by not being well prepared and fully clear before the contract is awarded. My patience is near zero for that as well.

Vern Edwards  Posted on Wednesday, July 09, 2003 - 03:52 pm:

I agree that it is pointless to try to read the FAR cover to cover. Indeed, reading the FAR is a special kind of reading, unlike reading nonfiction narrative or exposition. Reading regulations like the FAR is an acquired skill. Consider the problem that the original Anonymous faced:

First, he had to recognize that assignment of claims is a topic covered in the FAR.

Second, he had to find the FAR coverage.

Third, he had to read and understand the FAR coverage. In order to understand what he read he might require some background information that the FAR does not provide, such as "What is an assignment of claims?" In order to do that he would need Black's Law Dictionary, which defines assignment as: "The transfer of rights or property," or The Government Contracts Reference Book, which explains that an assignment of claims is: "A contractor's transfer or making over to a bank, trust company, or other financing institution, as security for a loan to the contractor, of the contractor's right to be paid by the Government for contract performance." If he wanted to look up the pertinent statutes, he would have to know how to find them on the internet, either at www.gpo.gov or www.findlaw.com, or at one of many other sources.

He would have to read slowly and carefully and make sure that he understood all of the terminology that he encounters.

Then he would have to check his agency FAR supplement, such as DFARS Subpart 232.8. Then he would have to check to see if his agency has issued any "policy letters" or "guidance" about assignments of claims.

Lastly, he might want to read the 1987 Westlaw briefing paper, Assignment of Claims Act, by Raymond E. Vickery, Jr. and Andrew M. Paalborg, which, though old, is probably still informative, since the FAR clause has not changed since 1986.

It might interest Anonymous to know that there is no requirement in FAR for the government to "certify" an invoice and that, to the best of my ability to determine, the term "certified invoice" appears only with reference to contractor certification. See, e.g., FAR § 52.232-4 and 52.232-12. To the best of my knowledge, there is no requirement for the government to provide even a contractor with a copy of a "certified invoice," much less to provide an assignee with one.

Anonymous  Posted on Wednesday, July 09, 2003 - 05:40 pm:

Original Anonymous here.....sorry, duty required that I be out of the office for a bit.

What a lively discussion I started! I have enjoyed reading all the posts and appreciate all the opinions they contain.

For the record tho....the assignee asked if I knew what the "ACT" required, specifically. I admitted that I did not, but I advised his that I did INDEED know what the FAR required, as well as agency specific supps. I did review 31 U.S.C. 3727, 41 U.S.C. 15 (I could find them), and I discovered they contained no such requirement. But, for the life of me, I could not find the Assignment of Claims ACT of 1940 no matter what I tried. So, I stand guilty as charged by some of you. I readily admit here that I do not know what every ACT states, specifically, as it relates to what I try, in the best of my ability, to accomplish.

What my original post should have said was..."Can someone please provide me with a link to the Assignments of Claims Act of 1940?" and leave it at that. So many assumptions were generated on what I can or can't accomplish in my position, how professional or unprofessional I am, how prepared or unprepared I was for the question, that if I let it, I could really be insulted.

Thanks again for all you comments, and please rest assured, I haven't given this guy a second thought the past couple days. Life goes on...

Vern Edwards  Posted on Wednesday, July 09, 2003 - 08:16 pm:

Anonymous:

If you have read 31 U.S.C. § 3727 and 41 U.S.C. § 15, then you have read the Assignment of Claims Act of 1940, as amended. Together, 31 U.S.C. § 3727 and 41 U.S.C. § 15 are the Assignment of Claims Act of 1940 as codified in the United States Code (U.S.C.). The Act changed two earlier assignment statutes. By the way, it's just "the Act," not "the ACT."

When permanent and general laws are enacted by Congress and approved by the president, they are codified (arranged) by insertion into one or more of the titles of the U.S. Code. (A "title" is a collection or set of laws about a certain topic.) Even after codification laws are often referred to by their legislative names, such as the "Federal Acquisition Streamlining Act of 1994," which modified several titles of the U.S. Code, including titles 10, 15, 31, 37, and 41. The legislative name gives the impression of a single text, which is misleading in terms of the law as codified. If you want to see the Assignment of Claims Act of 1940 as originally enacted, as a single body of text, then you have to go to a law library and look it up in the one of the volumes of the U.S. Statutes at Large or the U.S. Code and Administrative News.

joel hoffman  Posted on Wednesday, July 09, 2003 - 08:27 pm:

Orig, don't worry about the critics, concerning your lack of intimate knowledge of the procurement statutes. You shouldn't normally be required to be an expert on the letter of the statutes. The acquistion regulations and agency supplements are supposed to implement the law. There are many bureaucrats in the Secreariats, who interpret and implement statutes in the FAR and its supplements. Many procurement laws are not easily interpreted.

If you don't have access to LEXUS, it is sometimes a real bear to find some of the statutes. Yesterday, I tried unsuccessfully, for at least an hour, to find the Assignment of Claims Act on-line - forgetting that it's downstairs in a book in our law library. I simply got wrapped up in the challenge, dad-gummit.

As an aside, I just read where the DOT is going to implement Prompt Payment procedures which appear to be in conflict with the Prompt Payment Act - unless it was recently revised, again. I thought I was pretty up to date with the PPA - Since 1989, I've read the Act, the OMB Circulars, the FAR Council's repeated attempts to implement it, the Legislative history and intent, the Federal Register Notices, etc.

At any rate, the procurement regs and other agency implementing regs are what we usually use for daily contract admin, not necessarily the verbatim text of the stautes. happy sails! joel hoffman

less patient Anonymous  Posted on Wednesday, July 09, 2003 - 08:41 pm:

Don't get offended or insulted, get the tools.

I just tested a cold start with "Assignment of Claims Act" in a Google Advanced Search that was limited to .gov sites (Under "Domain"). That gave me FAR, agency policy, discussions and several cites. I copied one and searched on: "assignment of claims act" "31 U.S.C. 3727" site:.gov and got more precise hits. Then I just looked for "U.S. Code" site:.gov and found GPO Access as a high probability hit. Sure enough:

Legislative Resources
• View All
• Congressional Bills
• Congressional Record
• Public and Private Laws
• United States Code

Entering "Assignment of Claims Act" on the search line gave me four hits, one of which is quoted above. Extras are interesting bits on amendment history. You can also check on what the other mention and cite for "Assignment of Claims" is about by searching "31USC3727" for that text.

Not counting detailing the process here this took less than five minutes from entering Google to hitting the 41USC15 text. Granted, the GPO notes "The general and permanent laws are in effect as of January 2, 2001)" and this is 2003, but it is a good start.

Professionals might also want to bookmark Law Library of Congress where there are links to GPO and other sites with this type of information. Click on "U.S. Code" and you get United States Law,United States Code, Statutes at Large, and Public Laws with the opportunity to "Download the United States Code" no less. Follow the links and you have quite a library at your fingertips. Better yet, most is searchable and you really don't have to download it--someone else is maintaining it for you.

You are definitely not one of the clueless, but your life might be quite a bit easier if you take the time to use Wifcon and all the other great resources for quick cram sessions. No, one should not try to be a lawyer with these materials. Yes, one should be able to check black letter cites when someone tries the stunt that assignee idiot tried with you.

By the way, Bob, if you read this I notice there is no quick link from the forum pages to the main site resources. Some dropping into the forum might not know what a real resource you have over in the "hard" side. How about a banner link?

Vern Edwards  Posted on Wednesday, July 09, 2003 - 08:41 pm:

I disagree with you, Joel, in a case like this, when someone is citing a statute as the basis for claiming that you owe him something and threatening to "turn you in" for breaking the law. The ability to find the text of a statute is useful in such a case, as is an understanding of how our laws are designated, codified and published, if only to enable you to show up the attacker.

joel hoffman  Posted on Wednesday, July 09, 2003 - 10:26 pm:

Vern, I don't necessarily disagree with you. My point is that "original anonymous" shouldn't be expected to be an expert in the law, particlarly at the time he/she was challenged by the assignee. The tone of several posters here appears to chide anon for not knowing the law when challenged. I'm fairly confident that nobody here, including you, was intimately familiar with the law. Anon admitted that he/she isn't an expert at legal research (and doesn't appear to have access to an attorney), used an available resource (WIFCON Forum) asking for assistance here in finding the statute or what it says. Instead, there were several cries of incompetency because anon isn't a trained paralegal.

"Less", I used Google, too. Obviously, I'm not adept at it. Thanks for the lesson. I got over 100 hits, some of which included portions of the statute. I eventually resorted to walking down to the law library and read the US Code. By the way, in citing "the Act in its entirety", one of the experts here included language from the Anti-Assignments Act as well as from the Assignment of Claims Act. It's not always easy to determine the wording of a specific Act when reading the USC, because there may be language from several statutes in the citation. happy sails! joel

happy sails! joel

Vern Edwards  Posted on Wednesday, July 09, 2003 - 11:10 pm:

Joel:

The "Anti-Assignment Act" and the "Assignment of Claims Act of 1940" are one and the same. Some authorities refer to 41 U.S.C. §15 as the "Anti-Assignment Act." But see FAR § 32.800. That's the problem with legislative names. Good luck finding the text of the "Competition in Contracting Act of 1984." It is scattered in several titles of the U.S. Code.

Every contracting officer and contract administrator should know the rudiments of legal research, including how to use the Federal Register and how to search for public laws, sections of the U.S. Code, and sections of the Code of Federal Regulations.

It is kind of you to defend Anonymous. After all: "You can't know everything in the world. Whatever happens, you'll die a fool."

Vern

joel hoffman  Posted on Thursday, July 10, 2003 - 07:58 am:   

"HOKAY... I believe you", as the old song goes!

Eric Ottinger   Posted on Thursday, July 10, 2003 - 11:17 am:

Vern,

41 U.S.C. §15 is the Anti-Assignment Act. The Assignment of Claims Act of 1940 is the other anti-assignment act.

Carl Peckinpaugh does a good job of discussing these issues.

http://www.fcw.com/fcw/articles/1996/FCW_060396_348.asp

The Department of Justice also considers 41 U.S.C. § 15 to be the "Anti-Assignment Act."

"c) We argue that government contracts, because of the Anti-Assignment Act, 41 U.S.C. § 15, are not assumable as of right in bankruptcy proceedings."

http://www.usdoj.gov/usao/eousa/foia_reading_room/usam/title4/civ00060.htm

The Court of Claims is also perfectly clear on this point.

See WESTINGHOUSE ELECTRIC CO., v. THE UNITED STATES.

http://www.uscfc.uscourts.gov/Opinions/Firestone/03/FIRESTONE.Westinghouse.pdf

Like some participants in this forum, it appears that Westinghouse put an excessive reliance on assignment by operation of law.

Eric

Vern Edwards   Posted on Thursday, July 10, 2003 - 12:31 pm:   

Eric:

As I told Joel, 31 U.S.C. § 3727 and 41 U.S.C. § 15, together, constitute the "Anti-Assignment Act of 1940," but some authorities refer to 41 U.S.C. § 15 as the "Anti-Assignment Act." Here are some quotes that back me up. I have put references to 41 U.S.C. § 15 in bold to make things easier for you.

Federal Courts

Here is a quote from the U.S. Court of Appeals for the Federal Circuit, in Applied Companies v. U.S., 144 F.3d 1470 (1998):

"Applied relies on the Assignment of Claims Act of 1940, which restricts the government's right to set off funds that are to be paid to an assignee. See 31 U.S.C. § 3727; 41 U.S.C. § 15."
----------
Here is a quote from the U.S. Claims Court in U.S. Fidelity & Guar. Co. v. U.S., 16 Cl.Ct. 541 (1989):

"Before award of the contract, NRPC assigned the contract proceeds to First American Bank of Pensacola (FABP), pursuant to the Assignment of Claims Act of 1940, 31 U.S.C. § 3727, 41 U.S.C. § 15."
----------
Here's one from the 11th Circuit in U.S. v. Dekalb County, 729 F.2d 738 (1984):

"Pursuant to the provisions of the Assignment of Claims Act of 1940, as amended (31 U.S.C. 203, 41 U.S.C. 15), claims for moneys due or to become due from the Government to the Investor under this Contract may be assigned to a bank, trust company, or other financing institution, including any Federal lending agency and may thereafter be further assigned and reassigned to any such institution."

(31 U.S.C. § 203 no longer exists.) I can provide many more such quotes from various federal courts.
----------
----------
Boards of Contract Appeals

Here's a quote from the Corps of Engineers Board of Contract Appeals in First Commercial Funding, L.L.C., Assignee of Power Construction Group, Inc., EGBCA No. 6447, 00-1 BCA ¶ 30,769:

"The Government contends that the Appellant is an assignee pursuant to the Assignment of Claims Act of 1940, 31 U.S.C.§ 3727, 41 U.S.C. § 15, to which the contractor assigned moneys due or to become due under the contract."
----------
Here's one from the Department of Interior Board of Contract Appeals, ICBA No. 2103-N, 92-2 BCA § 24,797:

"The contract contains an Assignment of Claims clause, pursuant to the Assignment of Claims Act of 1940, as amended. That Act had amended two prior anti-assignment statutes, now codified at 31 U.S.C. § 3727 and 41 U.S.C. § 15, to allow for certain authorized transfers to financial institutions of monies due under a Government contract."

I can provide similar quotes from the GSBCA, the VABCA, and countless ones from the ASBCA.
----------
----------
Many cases and authorities refer to 41 U.S.C. § 15 as the Anti-Assignment Act because of paragraph (a), entitled "Transfer," which reads as follows:

"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 is concerned. All rights of
action, however, for any breach of such contract by the contracting parties, are reserved to the United States."

However, paragraph (b) goes on say that that prohibition does not apply to assignments to banks, trust companies, or other financing institutions, and most of the text of the statute discusses such assignments.
----------
----------
Other Authorities

Here's a quote from a 1993 Westlaw Briefing Paper, "Dealing with the Effects of Downsizing," by Raymond S.E. Pushkar, Michael T. Janik, and Margaret C. Rhodes:

"Under the Assignment of Claims Act of 1940, also known as the Anti-Assignment Act, a Government contract may not be transferred to another party; if so transferred, it will be annulled. Exceptions to the prohibition include assignments by operation of law and and assignments for which Government approval is obtained."

In a footnote accompanying the quote, the authors cite 41 U.S.C. § 15, but not 31 U.S.C. 3727.
----------
In the 1987 Briefing Paper that I cited in an earlier post, the authors say:

"The policy against the assignment of claims for work already done at the time of assignment is set forth in what is often called the Anti-Claims Act."

In the footnote accompanying the text, they cite 31 U.S.C. § 3727, but not 41 U.S.C. § 15.
----------
In an article in the Winter 1999 edition of the American Bankruptcy Law Journal entitled, "International Project Finance Transactions: Selected Issues Under Revised Article 9," by Carl S. Bjerre, you will find this quote:

"The restrictions imposed by the Assignment of Claims Act of 1940, 31 U.S.C. § 3727 and 41 U.S.C. § 15, are not relevant here. They affect only the obligations of the federal government as account debtor, rather than the effectiveness of the assignment; moreover, they remain valid under the Supremacy Clause."
----------
Here's one the venerable Nash and Cibinic, which appears in the December 1988 edition of The Nash & Cibinic Report (2 N&CR ¶ 78):

"Banks and other 'financing institutions' may take an assignment of claims from contractors, as security for loans, under the Assignment of Claims Act of 1940, 31 U.S.C. 3727, 41 U.S.C. 15."

However, in an October 1992 article, "The Rights of Performance Bond Sureties: It Depends on the Circumstances," (6 N&CR ¶ 57) they said this:

"For example, in Rodgers Construction, Inc., IBCA 2777, 92-1 BCA ¶ 24503, the board found an implied assignment of the contract to the surety when the notice of assignment was sent to the agency, contract modifications showed the surety as the other party, and progress payments were made to the surety. This reasoning is based on Tuftco Corp. v. U.S., 222 Ct. Cl. 277, 614 F.2d 740 (1980), 22 GC ¶ 113, holding that COs may waive the Anti-Assignment Act, 31 USC § 3727."

They made no mention of 41 U.S.C. § 15.

But in yet another quote, in "Novation Agreements: Is you is or is you ain't my baby?" (4 N&CR ¶ 56) they said this:

"Consistent with the situations in which the Anti-Assignment Act has been deemed inapplicable stands the long-recognized principle that 'Despite the bar of the Anti-Assignment statute (41 U.S.C. § 15), the Government, if it chooses to do so, may recognize an assignment.'"

In that article they made no mention of 31 U.S.C. § 3727.
----------
Here's a quote from the Harvard Law Review, in an article entitled, "Accounts Receivable Financing: A Reappraisal of Validation Statutes in Light of Amended 60A," which appeared in the February 1952 edition:

"Assignment of Claims Act of 1940, 54 STAT. 1029, 31 U.S.C. § 203, 41 U.S.C. § 15 (1946). This statute provides expressly for the assignment of "the moneys due or to become due from the United States or from any agency or department thereof, under a contract."

(Note the reference to 31 U.S.C. § 203, which no longer exists.)
----------
----------
As you can see, courts, boards and legal writers have long referred to 41 U.S.C. § 15 as the "Assignment of Claims Act of 1940." In other contexts they have referred to it as the "Anti-Assignment Act." Which proves my point, that legislative names can be confusing.

Do you get it?

Vern Edwards  Posted on Thursday, July 10, 2003 - 12:47 pm:

Eric:

By the way, if you go to Findlaw's Table of Popular Names for the U.S. Code, you will find both "Anti-Assignment Act" and "Assignment of Claims Act of 1940." There is no link for the Anti-Assignment Act, but if you click on the link to Assignment of Claims Act of 1940, which section of the U.S.C. does it take you to? Guess.

Here's a link for Findlaw's U.S. Code Table of Popular Names:

http://caselaw.lp.findlaw.com/casecode/uscodes/popularnames/2.html

Vern

Vern Edwards  Posted on Thursday, July 10, 2003 - 03:21 pm:

Eric:

Knowing you, I suspect that you're looking for cases and other references that will support your assertion that 41 U.S.C. § 15 is known exclusively the "Anti-Assignment Act" and not the "Assignment of Claims Act of 1940," and that 31 U.S.C. § 3727 is the only true "Assignment of Claims Act of 1940."

In the spirit of cooperative scholarship, I thought that I would let you know that I've found several board decisions which, in referring to the "Assignment of Claims Act of 1940," cite 41 U.S.C. § 15 exclusively, without making any reference to any section in Title 31. See, for example, Hayes Contracting Co., GSBCA No. 565 (1961), in which the board said:

"If the Contractor's claim to amounts payable under the contract has been assigned under the Assignment of Claims Act of 1940, as amended (41 U.S.C. 15), a release may also be required of the assignee at the option of the Contracting Officer."

I only show this to you in an attempt to prove my point that legislative (popular) names are not reliable references to statutes. Have fun.

Vern

joel hoffman  Posted on Thursday, July 10, 2003 - 04:32 pm:

I'm not a lawyer or trained paralegal, but it certainly appears that two separate popularly titled Acts are contained in 41 U.S.C. § 15. What "Jerry" referred to on July 8th as "the Act in its entirety" is more than the Assignment of Claims Act of 1940.

I believe that there are (at least) two separate "topics" or popularly titled "Acts" in the 41 U.S.C. § 15 code. The Assignment of Claims Act of 1940 added the exception to the existing language on prohibition on assignment of contracts and claims, derived from the "Anti-Assignment Act" language, dating from 1862.

Carl Peckinpaugh's article states "Statutorily, there are two different Anti-Assignment Acts. The first, dating from at least 1853, prohibits transfers of any interests in claims against the United States (see 31 U.S.C. ¤ 3727). The second, which dates from 1862, prohibits transfers of any interests in a government contract (see 41 U.S.C. ¤ 15)."

Those Acts precede the 1940 Act, which appears to have incorporated what Peckinpaugh explains are the "exceptions for bona fide financing arrangements" (which I believe is the "Assignment of Claims Act of 1940").

41 U.S.C. 15 contains two separate topical pieces of legislation (plus at least a 1951 amendment), since 1862. The Historical and Statutory Notes for 41 U.S.C. § 15 state that the second and fourth paragraphs were added by "Act Oct. 9, 1940" (the Assignment of Claims Act, I presume). The note on Codifications states "R.S. § 3737 derived from Act July 17, 1862, c. 200 § 14, 12 Stat. 596."

That's my layman's view of it. If I was a paralegal or a lawyer, I could tell you what the legislative history is and what all those footnotes mean. Perhaps a lawyer can explain. John Ford?

happy sails! joel

Anonymous  Posted on Thursday, July 10, 2003 - 06:26 pm:

Original Anonymous here...

You guys are awesome!!!! Vern, thanks so much for the little lesson..I actually copied/pasted so I have it for reference.

Less...I use Google as well, but must admit I have never been successful in the Advanced search mode...I will keep trying....

No offense..as I stated earlier. I was just surpized that so many assumptions were made...

Love the site...and, as someone very popular (who may become even more popular in my state)says...

I'LL BE BACK!!!!

Eric Ottinger  Posted on Thursday, July 10, 2003 - 07:18 pm:  

Vern,

I must say that you had this one tangled in a knot, even more than usual.

I agree that popular titles can be misleading. I might even venture the personal opinion that some of the legal authorities that I have read are incorrect, or at least illogical.

I have read a bunch of these cases and I am confident that Carl Peckinpaugh’s usage is the most common and probably the most authoritative. (I’m not a lawyer, etc. etc.)

Usage varies depending on the authority. Sometimes the “Anti-Assignment Act” and the “Assignment of Claims Act” are “acts” and sometimes they are “statutes” or “provisions.” In one instance, presumably for parallelism, the “Anti-Assignment Act” is referred to as the “Assignment of Contracts” Act. Often courts refer to both acts as “Anti-Assignment Act(s).”

Here is a Court of Appeals case.

Fireman’s Fund Insurance Company v. Gordon R. England, Secretary of the Navy

United States Court of Appeals for the Federal Circuit, No. 00-1420, November 27, 2002 313 F.3d 1344

“What is commonly called the Anti-Assignment Act consists of two statutory provisions. Title 41 of the United States Code, Section 15(a) (2000) (which deals with “Public Contracts”) provides that “[n]o contract . . . or any interest therein, shall be transferred by the party to whom such contract . . . 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 is concerned.” Subsection (b) of that provision states that “[t]he provisions of subsection (a) . . . 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 . . . are assigned to a bank, trust company, or other financing institution, including any Federal lending agency.” “
“Title 31 of the United States Code, Section 3727(a)(1)(b) (2000) (which deals with “Money and Finance”) provides that an “assignment of any part of a claim against the United States Government or of an interest in the claim . . . may be made only after a claim is allowed, the amount of the claim is decided, and a warrant for payment of the claim has been issued.” Subsection (c) makes subsection (b) inapplicable “to an assignment to a financing institution of money due or to become due under a contract” provided certain conditions (not here involved) are met.”
“These two provisions together broadly prohibit (with narrow exceptions discussed below) transfers of contracts involving the United States or interests therein, and assignment of claims against the United States. …”

Joel is on the right track.

Your mistake was to assume that the “Assignment of Claims Act of 1940” is the same as the “Assignment of Claims Act.”

The “Assignment of Claims Act of 1940” adds an identical paragraph to two existing acts (statutes or provisions) -- which happen to be the “Anti-Assignment Act” and the “Assignment of Claims Act.”

Assignment of Claims Act of 1940 (P.L. 76-811)

AN ACT

“To assist in the national-defense program by amending sections 3477 and 3737 of the Revised Statutes to permit the assignment of claims under public contracts.”

“Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That sections 3477 and 3737 of the Revised Statutes be amended by adding at the end of each such section the following new paragraph:”

“The provisions of the preceding paragraph shall not apply in any case …”

For instance, see Section 15--

Section 15. Transfers of contracts; assignments; assignee not subject to reduction or setoff

(a) Transfer
“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 is concerned. All rights of action, however, for any breach of such contract by the contracting parties, are reserved to the United States.
(b) Assignment
The provisions of subsection (a) of this section shall not apply …”


Paragraph (a) is normally quoted as the “Anti-Assignment Act.” Paragraph (b) is the paragraph added by the “Assignment of Claims Act of 1940.”

Eric

less patient Anonymous  Posted on Friday, July 11, 2003 - 01:28 am:

Perhaps everyone interested in the discussion on which act gets the most votes as carrying which popular name should note the full notation in the GPO versions. The links to the GPO documents do not work, but go to United States Code: Main Page and enter 41USC15 and 31USC3727, the GPO cite format, in the search line.

Note wording in 41USC15 with my emphasis:

Cross References

Assignment of claims, generally, see section 3727 of Title 31, Money
and Finance.

The opening text dealing with assignment in 41USC15 is not general, it is limited:

(b) Assignment

The provisions of subsection (a) of this section 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:

Layman's reading indicates to me that 41USC15 deals with the special case of assignment for financing while 31USC3727 deals with assignment generally. Presence or absence of the cites in any given court case would clearly depend on the nature of and the arguments made in any individual case. For example, if the only issue is assignment of the contract to another entity for performance without any bank, trust company, or other financing institution, including any Federal lending agency being at issue 31USC3727 might be the only cite.

Trying to prove one and only one is entitled to a claim to a name seems akin to that Medieval religious argument about how many angels could dance on a pinhead--and about as profitable. Any lawyer or contracting professional dealing in the subject in detail had better focus on what the code says and how their issue is addressed in each rather than dwell on the popular name.

Vern Edwards  Posted on Friday, July 11, 2003 - 09:21 am:

All:

This part of this thread began when Joel, in a kind attempt to defend Anonymous, criticized Jerry of July 8 at 9:41am as follows: "By the way, in citing 'the Act in its entirety', one of the experts here included language from the Anti-Assignments Act as well as from the Assignment of Claims Act. " (Joel didn't mention Jerry by name, but he was talking about Jerry.) What Jerry had quoted was 41 U.S.C. 15.

I responded to Joel with the following: "The 'Anti-Assignment Act' and the 'Assignment of Claims Act of 1940' are one and the same. " I said to Anonymous: "If you have read 31 U.S.C. § 3727 and 41 U.S.C. § 15, then you have read the Assignment of Claims Act of 1940, as amended. Together, 31 U.S.C. § 3727 and 41 U.S.C. § 15 are the Assignment of Claims Act of 1940 as codified in the United States Code (U.S.C.). The Act changed two earlier assignment statutes. "

Jerry's mistake was that he did not quote the "Assignment of Claims Act of 1940" in its entirety, he quoted only part of it. He should also have quoted 31 U.S.C. 3727.

Eric jumped into this by saying: "41 U.S.C. §15 is the Anti-Assignment Act. The Assignment of Claims Act of 1940 is the other anti-assignment act. " I have provided ample citations to demonstrate that courts, boards and other legal authorities, including the U.S. Code Table of Popular Names, have used the legislative/popular name "Assignment of Claims Act of 1940" to refer to 41 U.S.C. 15 as well as to 31 U.S.C. 3727. I have shown that they have used it with reference to 41 U.S.C. 15 exclusively. I have shown that they also use "Anti-Assignment Act" to refer to both 41 U.S.C. 15 and to 31 U.S.C. 3727. I have explained that paragraph (a) of 41 U.S.C. 15 is the anti-assignment paragraph of that section of the Code. Joel's most recent statements add nothing to what I have already said. Eric is Eric and you have to read him with that in mind.

My point has been that legislative/popular names are unreliable references and that professionals should cite specific sections and paragraphs of the U.S. Code instead of legislative/popular names. I have made no mistake and I have not been confusing. My explanations have been accurate and clear.

Vern

less patient Anonymous  Posted on Friday, July 11, 2003 - 11:44 am:

Vern, you made the point quite well in the July 09, 2003 - 08:16 pm post. I suppose some will still argue over the number of angels involved in the pinhead dance, but it is a waste of Bob's bandwidth.

Everyone must realize the popular names are assigned to political efforts at each end of Pennsylvania Avenue. When eventually converted into law most flow out into various sections of code and implementation regulations. Continuing to attach the political and lawmaking handle at those levels, as court actions so often do, is a legal shorthand that probably creates as much confusion as clarity. Short of some massive reorganization, clean up and consolidation of code and regulation this will continue to be confusing and most excellent source of employment for legal specialist.

Perhaps contracting people need to be a little more cautious about tossing these shorthand terms about. For example, it isn't the "Buy American Act" that counts now. It is the code and regulations implementing the legislation that requires their attention. Do you have suggestions for getting off the shorthand hook?

Vern Edwards  Posted on Saturday, July 12, 2003 - 12:43 am:   

Less Than Anonymous:

Thanks.

Popular names are poor references to current law. Current law is in the U.S. Code. If you want to read what the FAR calls the "Assignment of Claims Act of 1940" as it exists in current law, then you must read 31 U.S.C. § 3727 and 41 U.S.C. § 15. But if you want to read the Assignment of Claims Act of 1940 as originally enacted, then you have to go to a law library and look it up in the Statutes at Large, in the U.S. Code and Administrative News, or in another historical source. The Act does not exist in the U.S. Code in its original form; the processes of codification and amendment changed its form. The same can be said of other popular names like the Competition in Contracting Act of 1984 and the Federal Acquisition Streamlining Act of 1994.

Popular names for legislation allow politicians to take credit for sponsoring new laws ("I fought for enactment of the Services Acquisition Reform Act."); they are useful references in discussions of legislative history; but they are not good references to current law, for which purpose specific U.S. Code citations are best.

Vern

Vern Edwards  Posted on Saturday, July 12, 2003 - 12:45 am:

I meant Less Patient Anonymous. Sorry. I have had a long day cutting hay and I'm itchy and tired.

less than Anonymous  Posted on Saturday, July 12, 2003 - 12:09 pm:

Whew! Vern, as "Less Than Anonymous" I thought you'd traced and found me out with some spook software! It is a relief to find you were just tired and itchy.

A complete FAR clean up and harmonization is unlikely, but it seems we could work towards a more sensible and accurate reflection of reality. For example, a part of the FAR dealing with the original issue cites the applicable code and then reverts to the popular name.

Subpart 32.8 -- Assignment of Claims

32.800 -- Scope of Subpart.

This subpart prescribes policies and procedures for the assignment of claims under the Assignment of Claims Act of 1940, as amended, 31 U.S.C. 3727, 41 U.S.C.15 (hereafter referred to as "the Act").

The statement "hereafter referred to as 'the Act'" is immediately ignored in 32.802 where
41 U.S.C.15 is in part reproduced. This is a minor inconsistancy, but reinforces the popular name.

32.802 -- Conditions.

Under the Assignment of Claims Act, a contractor may assign moneys due or to become due under a contract if all the following conditions are met:

Perhaps it would be better to reword:

Subpart 32.8 -- Assignment of Claims

32.800 -- Scope of Subpart.

This subpart prescribes policies and procedures for the assignment of claims under 31 U.S.C. 3727, 41 U.S.C.15 implementing the Assignment of Claims Act of 1940 as amended.

and

32.802 -- Conditions.

Under 41 U.S.C.15 a contractor may assign moneys due or to become due under a contract if all the following conditions are met:

The topical subject "assignment of claims" (lower case) or "claim assignment" is certainly appropriate. I do think code cites as illustrated above would reduce confusion by pointing directly and specifically to the law being implemented in regulation. It might require more up front work, but that often offers compounded savings later.

Eric Ottinger  Posted on Saturday, July 12, 2003 - 10:08 pm:

Vern,

The 1993 Briefing Paper Article that you quoted is simply incorrect. Your other cites are correct but irrelevant.

In the earlier thread you were kind enough to refer me to an excellent article by Ms. Manos, "Novation Agreements in Corporate Restructuring: The Government's Contractual Stealth Weapon," by Karen L. Manos, in the Public Contract Law Journal, Vol. 26, No. 3, Spring 1997.

You will note that Ms. Manos specifies specific paragraphs as well as the title and the section.

“The Anti-Assignment Act prohibits the transfer of government contracts and provides that “any such transfer shall cause the annulment of the contract or order transferred, so far as the United States is concerned.” [Footnote 3. 41 U.S.C. ¤ 15(a) (1994).] Similarly, the Assignment of Claims Act prohibits the “transfer or assignment of any part of a claim against the United States Government or of an interest in the claim; or … the authorization to receive payment for any part of the claim[,]” until and unless the claim has been “allowed, the amount of the claim decided and warrant for payment of the claim has been issued.” [Footnote 4. 31 U.S.C. ¤ 3727 (a)-(b) (1994).] The former prohibits the assignment of contracts, whereas the latter prohibits the assignment of claims; the two statutes are commonly referred to collectively as either the “anti-assignment statutes” or “Anti-Assignment Act.”


41 U.S.C. ¤ 15 paragraph (a) is commonly referred to as the “Anti-Assignment Act,” which has been around in some form since 1853.

31 U.S.C. ¤ 3727 paragraphs (a) and (b) are commonly referred to as the “Assignment of Claims Act,” which has been around in some form since 1862.

41 U.S.C. ¤ 15 paragraph (b) and 31 U.S.C. ¤ 3727 paragraph (c) should be referred to collectively as the “Assignment of Claims Act of 1940,” as indeed the Act so states.

Here is the Assignment of Claims Act of 1940 in its entirety. Would you like to argue that paragraphs other than 41 U.S.C. ¤ 15 paragraph (b) and 31 U.S.C. ¤ 3727 paragraph (c), the add-on paragraphs in the Act, should be included in the Act.


“Assignment of Claims Act of 1940 (P.L. 76-811)

AN ACT

To assist in the national-defense program by amending sections 3477 and 3737 of the Revised Statutes to permit the assignment of claims under public contracts.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That sections 3477 and 3737 of the Revised Statutes be amended by adding at the end of each such section the following new paragraph:

“The provisions of the preceding paragraph 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,

“1. 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;

“2. 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;

“3. That unless otherwise expressly permitted by such contract any such assignment shall cover all amounts payable under such contrat 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;

“4. 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 with--

“(a) the General Accounting Office,

“(b) the contracting officer or the head of his department or agency,

“(c) the surety or sureties upon the bond or bonds, if any, in connection with such contract, and

“(d) the disbursing officer, if any, designated in such contract to make payment.

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.”

Any contract entered into by the War Department or the Navy Department may provide that payments to an assignee of any claim arising under such contract shall not be subject to reduction or set-off, and if it is so provided in such contract, such payments shall not be subject to reduction or set-off for any indebtedness of the assignor to the United States arising independently of such contract.

SEC. 2.

This Act may be cited as the “Assignment of Claims Act of 1940”.”

Regards,

Eric

Vern Edwards  Posted on Sunday, July 13, 2003 - 10:29 am:

Eric:

I guess everybody is wrong except you. Only last Thursday you said: "41 U.S.C. §15 is the Anti-Assignment Act." Now you say that it's only paragraph (a), which I explained three days ago as follows:

"Many cases and authorities refer to 41 U.S.C. § 15 as the Anti-Assignment Act because of paragraph (a), entitled 'Transfer,' which reads as follows:

'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 is concerned. All rights of action, however, for any breach of such contract by the contracting parties, are reserved to the United States.'"

Why can't I get it across to you that when courts, boards and other legal authorities talk about the "Assignment of Claims Act of 1940," they commonly cite both 31 U.S.C. 3727 and 41 U.S.C. 15, without reference to specific paragraphs? Today, when people talk about the "Assignment of Claims Act of 1940," most of them are speaking generally about the body of law currently present in 31 U.S.C. 3727 and 41 U.S.C. 15; they are not talking about the text of the original statute, which is only of historical interest at this point.

I presume that you have read all the quotes and checked the cites that I have provided. If so, why can't you accept the testimony of your own eyes? Look, here is FAR 15.800:

"This subpart prescribes policies and procedures for the assignment of claims under the Assignment of Claims Act of 1940, as amended, 31 U.S.C. 3727, 41 U.S.C. 15 (hereafter referred to as "the Act")."

Please note that FAR does not cite specific paragraphs of those sections of the U.S. Code.

In my opinion, such citations are unhelpful and unnecessary, but they are long-standing practice among judges, practicing attorneys, regulation writers, and legal scholars, as I have amply demonstrated, and which you just can't seem to accept. Are all of those sources "wrong"? Are you better informed than all of those authorities?

Jerry was not wrong in quoting 41 U.S.C. 15 and calling it the "Assignment of Claims Act of 1940." He was only wrong in saying that he was quoting the Act in its entirety when he had not quoted 31 U.S.C. 3727, as well. Legislative/popular names are not reliable references to current law; they are reliable only as references to the historical texts of original statutes.

I think that at this point you are now more concerned with defending your original post on this topic than with contributing to the knowledge of the readers of Wifcon Forum. The readers will have to decide for themselves whom to believe based on our respective contributions.

Vern

Eric Ottinger  Posted on Sunday, July 13, 2003 - 02:02 pm:

Vern,

I gave you the Assignment of Claims Act of 1940 in its entirety to demonstrate that the Act does not include 41 U.S.C. ¤ 15 paragraph (a) and 31 U.S.C. ¤ 3727 paragraphs (a) and (b). The Act is paragraphs (b) and (c) respectively.

Do you acknowledge that much? Yes or No, please.

I have no need to defend my position. It was Carl Peckinpaugh who stated that the Anti-Assignment Act and the Assignment of Claims Act [which predates 1940] are separate Acts. It was Ms. Manos who identified the specific paragraphs. I am merely following better authorities.

Further, I could locate a score of cases where the issue is the assignment of a contract to a third party and demonstrate that 41 U.S.C. ¤ 15(a) is consistently the Anti-Assignment Act in this context. (But that would be tedious.)

FAR 32.800 addresses the assignment of claims to financial institutions. 41 U.S.C. ¤ 15 paragraph (a) addresses the assignment of contracts to third parties. I don’t have any problem with my eyes. I simply note that the context matters. If the context is the assignment of a claim to a financial institution (FAR 32.800) the reference should be to the Assignment of Claims Act of 1940.

Eric

less patient Anonymous  Posted on Sunday, July 13, 2003 - 03:14 pm:

Get this far into popular names and "Acts," or legislative action, as opposed to the law as codified and the angel's pinhead dance begins. Eric, I hear what you are saying and think it is a waste to spend so much time defending what really is a meaningless position. What a contracting officer has to know and implement is in the current Code and FAR, not an essentially historical reference to Congressional action in 1940.

I'd bet regulatory implementation of law could benefit by applying methods and tools developed by industry to provide requirements traceability. We require our contractors, particularly developmental contractors, to provide a requirements traceability matrix and maintain linkage of development to requirements.

There is really nothing all that different in these matters. From Navy's Requirements Traceability we can see parallels in the need to provide structure to complex document systems:

The need to have requirements traceability becomes important as the systems developed become complex. Traceability is the ability to show how requirements are derived from higher level (or "parent") requirements. Conversely, traceability helps to identify all downward requirements derived from parent requirements. The need for requirements traceability becomes more important as a system becomes more complex.

Traceability, aside from making sure requirements are met, also helps make sure those implementing do not wander off into never-never lands of useless bells and whistles and useless arguments about what was intended and what requirement is being responded to in a development effort.

The methods are well developed and software tools exist. For example, the International Council on Systems Engineering' page SE Tools Taxonomy - Requirements Traceability Tools lists a number of such tools. A very slight change in the introduction on that page could perhaps aid in the regulatory/legal field:

Requirement Traceability Tools enable the engineer to link requirements to their source, to changes in requirements, and to modeling elements that satisfy the requirements. They provide traceability among the successive documents that are used to review the system development.

These methods and similar tools might indeed allow us to more easily tie regulation to source law and provide traceability in the various levels of documentation we use. Of course, using precise numbered references instead of vague popular names would be a part of the process.

Considering the lack of cross discipline expertise in general and parochial interests within communities I'm reasonably sure this will never happen. It is nice to speculate on a more rational system.

John Ford  Posted on Sunday, July 13, 2003 - 04:20 pm:  

Eric, I think you need to recognize that the Assignment of Claims Act of 1940 is not an independent statute. Instead, it merely amended two pre-existing laws. Later, the two laws, as amended by the Assignment of Claims Act of 1940, were codified as 31 U.S.C. 3727 and 41 U.S.C. 15.
I think this makes Vern's point that relying on popular names for acts can be misleading if you are looking for the popular named act in the U.S. Code. Popular named acts frequently are found in several sections of the Code if they are codified at all. The two most recent procurement reform statutes are prime examples of this. FASA and FARA, which includes Clinger-Cohen, are spread throughout the Code as new sections, amendments to old sections and as notes to other sections, not to mention portions that are not codifed at all.

Eric Ottinger  Posted on Sunday, July 13, 2003 - 05:34 pm:  

John,

I don’t know what the phrase “independent statute” means. The Act states that it should be referenced as the “Assignment of Claims Act of 1940” and the FAR still references the “Assignment of Claims Act of 1940.” There was an “Assignment of Claims Act” before that, and it would appear from reading numerous cases that when this Act is currently referenced in a case, it is substantially the same as it was before 1940. It is an “Anti-Assignment” Act. The 1940 Act is an act which encourages assignments. That is a very fundamental difference.

Yes FASA and FARA are spread throughout the code. The Assignment of Claims Act of 1940 is spread over two titles, although the language is identical under both titles. If SARA passes and makes some changes to FASA, are we going to refer to FASA as SARA (formerly known as FASA.) I don’t think so.

Vern appears to think that the add-on paragraphs spread over Title 41 and Title 31 have somehow annexed the paragraphs which were in place before 1940.

Less,

The Title 15 Anti-Assignment Act applies to executory contracts. The Title 31 Anti-Assignment Act applies to claims but not to executory contracts. It prohibits the assignment of a claim. The 1940 Act applies to assignments to financial institutions. The 1940 Act encourages such assignments to facilitate the national defense.

If a lawyer doesn’t understand these distinctions, he has a great opportunity to make a fool of himself. This will only be a problem for you if you take your advice from chat room experts rather than competent legal counsel.

Eric

formerfed  Posted on Monday, July 14, 2003 - 08:20 am:

One frustrating thing I found is the FAR is full of individual subjects where multiple pieces of legislation are behind it. For example there are four different statutes behind the single FAR requirement to synopsize a new procurement action.

Eric,

Your last point is so right. The problem is most CO's don't have access to that kind of counsel.

I talked with someone a few weeks ago and he planned on contracting out for some specialized legal advice. I wonder if legal advice is on the FAIR Act inventory?

less patient Anonymous  Posted on Monday, July 14, 2003 - 01:06 pm:

Eric, it is quite clear to me what the Code states and where it applies. I think it is perhaps you who are confused and into circular thinking. I'll take one statement:

"The Act states that it should be referenced as the 'Assignment of Claims Act of 1940'
and the FAR still references the 'Assignment of Claims Act of 1940.'"

The Act states that it should be referenced as the 'Assignment of Claims Act of 1940'

Of course the Act does! That is what its sponsors titled it for purposes of debate and possible passage. Most sponsors hang a handy dandy title on a bill. They often strive for one that will catch some sort of supportive interest in the media and public.

For example, H.R.1263 was titled the Code Adam Act by Rep Acevedo-Vila, Anibal of Puerto Rico and the 23 cosponsors. It was last seen "Referred to House subcommittee. Status: Referred to the Subcommittee on Crime, Terrorism, and Homeland Security" according to results in a Thomas Bill Search and Status check. Neat name. The Act kind of got into law with amendment(s) to title 18, United States Code. Does "the Code Adam Act" have any current legal significance?

Not likely as "A modified version of H.R. 1263 was added to H.R. 1104 by H.Amdt. 24. The provisions of H.R. 1104 were inserted as a substitute in S. 151 and H.R. 1104 was laid on the table. For further action, see S. 151, which became Public Law 108-21 on 4/30/2003." And just look at the titles and "Acts" we have!

TITLE(S): (italics indicate a title for a portion of a bill)

POPULAR TITLE(S):
Enhance AMBER Alert bill (identified by CRS)

SHORT TITLE(S) AS INTRODUCED:
PROTECT Act
Prosecuting Remedies and Tools Against the Exploitation of Children Today Act of 2003

SHORT TITLE(S) AS PASSED HOUSE:
Child Abduction Prevention Act
Code Adam Act

SHORT TITLE(S) AS REPORTED TO SENATE:
PROTECT Act
Prosecuting Remedies and Tools Against the Exploitation of Children Today Act of 2003

SHORT TITLE(S) AS PASSED SENATE:
PROTECT Act
Prosecuting Remedies and Tools Against the Exploitation of Children Today Act of 2003

SHORT TITLE(S) AS ENACTED:
PROTECT Act
Prosecutorial Remedies and Other Tools to End the Exploitation of Children Today Act of 2003
SAFE ID Act
Illicit Drug Anti-Proliferation Act of 2003
Secure Authentication Feature and Enhanced Identification Defense Act of 2003
Code Adam Act of 2003

OFFICIAL TITLE AS INTRODUCED:
A bill to amend title 18, United States Code, with respect to the sexual exploitation of children.

OFFICIAL TITLE AS AMENDED BY HOUSE:
An Act to prevent child abduction and the sexual exploitation of children, and for other purposes.

and the FAR still references the 'Assignment of Claims Act of 1940.

Well shame on the FAR for using imprecise popular titles when precise Code cites are direct and unambiguous pointers to the effective law! For practical purposes I don't give a hoot about the "Act"--a rite of Congressional process--after it has been codified into law, except for historical purposes. Popular names may be useful in digging through documents in researching intent of Congress by specific professionals. Otherwise they are a poor shorthand for professional use, even if judges use them.

I stated above that I have no objection to assignment of descriptive subject matter titles to FAR sections or paragraphs. No confusion would be created by use of "'Assignment of Claims" as a topic heading followed by the appropriate cites of applicable Code sections. Continuing the dance you are involved with only demonstrates one possible confusion of attempting to tie a legislative process title to the specifics of law. We can only hope verbiage scattered about title 18, United States Code and regulation does not collect the bunch of possible "Act" names above!

I certainly do not take your "legal" thinking seriously. Neither do I care if you can collect a few more statements from lawyers falling into the shorthand trap of equating "An Act" with Code. We can always find examples of good people falling out of best practices to poor custom. There is no value in perpetuating the slips.

Eric Ottinger  Posted on Monday, July 14, 2003 - 01:19 pm:

Less,

Kindly address the real authorities that I have cited, Mr. Peckinpaugh and Ms. Manos.

You are cetainly under no obligation to take my legal thinking seriously.

Eric

Vern Edwards  Posted on Monday, July 14, 2003 - 08:01 pm:

Eric:

I happily acknowledge that the language in 31 U.S.C. §(a) and (b) and 41 U.S.C. § 15(a) did not appear in Public Law 76-811, as quoted by you. So what? The "Assignment of Claims Act of 1940," as originally enacted, and the "Assignment of Claims Act of 1940" that the FAR and other authorities refer to today are not the same. The law has been amended several times since 1940 and is of only historical interest.

When referring to the Assignment of Claims Act of 1940 these days the courts, boards and most legal authorities are referring to current law, not to the law as it existed in 1940. The historical Act of 1940 is of no interest today to anyone but legal scholars. Why would anyone cite it when discussing the current law about assignments?

You said: "It was Carl Peckinpaugh who stated that the Anti-Assignment Act and the Assignment of Claims Act [which predates 1940] are separate Acts." That is not true. Carl never mentions the Assignment of Claims Act of 1940. The name "Assignment of Claims Act" does not appear in the article by him to which you provided a link. The article does not discuss any distinction between an "Anti-Assignment Act" and the "Assignment of Claims Act of 1940" or any other assignment of claims act. You have either carelessly or shamefully mischaracterized his piece. All he was writing about was limitations on transfers of interest when one company acquires another, i.e., limitations on novations.

Several people are now trying to tell you that you are off the mark. Why don't we leave it like this: In addressing the Assignment of Claims Act of 1940, FAR cites both 31 U.S.C. § 3727 and 41 U.S.C. § 15, without citing specific paragraphs. If the originator of this thread wanted to read "the Act" as mentioned by FAR, he should read those two sections of the U.S. Code. However, the original Act did not include the limitations on assignments that now appear in 31 U.S.C. § 3727(a) and (b) and in 41 U.S.C. § 15; those limitations were carried over from earlier statutes. Which only goes to show that the use of popular names can be misleading.

Can you live with that?

Vern

Eric Ottinger  Posted on Monday, July 14, 2003 - 09:06 pm:   

Less,

It was Vern who wanted to argue that these are not separate acts. Vern certainly seems to think it is a matter of some importance If you want to
argue that there is no such thing as an Act, it is all Code. That is certainly an argument. Maybe you should start a separate thread.

Vern,

Here is the opinion of Watt, Tieder, Hoffar & Fitzgerald.

http://www.wthf.com/Newsletters/2003/gu_winter2003.htm

"The Anti-Assignment Act is a shorthand reference to two separate acts, the Anti-Assignment Act, 41 U.S.C. 15(a), and the Assignment of Claims Act, 31
U.S.C. 3727(a)(1)(b). The two Acts, when read together, invalidate the assignment of any Federal Government contract or unliquidated claim against the Federal Government."

Note that specific paragraphs are identified.

Here is Carl Peckinpaugh.

“Statutorily, there are two different Anti-Assignment Acts. The first, dating from at least 1853, prohibits transfers of any interests in claims against the United States (see 31 U.S.C. ¤ 3727). The second, which dates from 1862, prohibits transfers of any interests in a government contract (see 41 U.S.C. ¤ 15). Both statutes are subject to exceptions for bona fide financing arrangements.”

I expect most of the readers can connect the dots. There are two separate acts (or two separate provisions). That makes Peckinpaugh, Manos and WTH&F. Is there someone in this thread that you consider to be more authoritative.

All,

Vern is right when he says that I haven't been consistent. With benefit of better research, I have to say that my first post was flat wrong. I didn’t have a clue about “The Anti-Assignment Act of 1940” until I actually read it.

This is getting to be a silly argument. I may have to resort to the brute force approach yet. I will cite court and board cases which identify the Anti-Assignment Act (or the Assignment of Contracts Act) uniquely with 41 U.S.C. ¤ 15 until this silliness stops. I've read a bunch.

Eric

Eric Ottinger   Posted on Monday, July 14, 2003 - 09:38 pm:  

Vern,

First, the 1940 Act specifically says that the new paragraph should be added to existing statutes. Your suggestion that this might have happened at some other time is mind-boggling.

The new paragraphs are the “bona fide financing” arrangement exception to the Anti-Assignment rules. Where else would they possibly be or have been located.

We had a long three part thread on the subject of novations. It boggles my mind that you don’t immediately recognize that 41 U.S.C. ¤ 15 is the Anti-Assignment Act. Of course Peckinpaugh is discussing novations.

Eric

Patience Expired  Posted on Monday, July 14, 2003 - 10:57 pm:

I'll leave the patient rebuttal to Vern. He is doing it quite well. Eric just reminded me it was he making all those obtuse, endless and sometimes weird arguments full of off target cites about "operation of law" in that interminable novation discussion.

Patience Expired (formerly less patient Anonymous)

Vern Edwards  Posted on Monday, July 14, 2003 - 11:17 pm:

Eric:

I understand that the anti-assignment paragraphs of 31 U.S.C. § 3727 and 41 U.S.C. § 15 originated in different public laws than the assignment paragraphs. My point is that courts, boards and legal authorities commonly refer to the entire body of law in those sections of the U.S. Code as the "Assignment of Claims Act of 1940," despite the fact that there was more than one original statute.

I do recognize 41 U.S.C. § 15 as the "Anti-Assignment Act," as I have already said here several times. So do many others. However, I also recognize it as part of the "Assignment of Claims Act of 1940," as do many others, including the FAR Council. That is the problem, can't you see?

Yes, Carl Peckinpaugh was writing about novations, not about any difference between any anti-assignment act and the Assignment of Claims Act of 1940. You misrepresented his statements so grossly that you ought to be ashamed of yourself.

You've got a bee in your bonnet about this one. Goodness knows why. The things that I've been saying are in no way original or even controversial, except to the extent that they've provoked your ire.

Eric Ottinger  Posted on Tuesday, July 15, 2003 - 07:18 pm:  

Vern.

I am aware of maybe three legal authorities that “refer to the entire body of law in those sections of the U.S. Code as the ‘Assignment of Claims Act of 1940.’” One is the Briefing Paper Article cited above. I will not embarrass the other two. You are welcome to look for them.

It is easy to think that the “Assignment of Claims Act” and the “Assignment of Claims Act of 1940” must be one and the same. That was obviously my (incorrect) thought in my first post. I didn’t change my mind until I read the 1940 act and determined that it was an add-on paragraph, and explicitly a narrowly defined exception to the two categorical prohibitions expressed in paragraphs above.

As for the courts and boards, we have these wonderful tools called databases and searches. I put “Assignment of Claims Act of 1940” and “novation” into the CCH database to see what would turn up. There were no hits.

I don’t think you are ever going to see a court cite the 1940 act, which relates strictly to assignments to financial institutions, when the topic is the assignment of an executory contract or the assignment of a claim to a successor in interest. However, you are welcome to look. I know that you have access to much better databases than my CCH database.

As for the bee in my bonnet, the rules for the assignment of an executory contract are significantly different than the rules for assigning a claim. When Manos, Peckinpaugh et.al. tell you that these are two different acts, you should believe them.

Eric

Vern Edwards  Posted on Tuesday, July 15, 2003 - 11:01 pm:  

Eric:

JVAN, Inc., Comp. Gen. Dec. B-202357, 81-2 CPD ¶ 184::

"JVAN CONTENDS THAT IT IS IMPROPER FOR FORD TO QUALIFY FOR THE AWARD AND THEN, AFTER RECEIVING THE CONTRACT, HAVE ITS SUBSIDIARY, ASC, DO THE ACTUAL PERFORMANCE. JVAN SEES THIS AS A NOVATION (THE SUBSTITUTION OF ANOTHER PARTY FOR ONE OF THE ORIGINAL PARTIES TO A CONTRACT WITH THE CONSENT OF THE REMAINING PARTY) WHICH IS A VIOLATION OF THE ASSIGNMENT OF CLAIMS ACT OF 1940, 31 U.S.C. SEC. 203 (1976) AND 41 U.S.C. SEC. 15 (1976)... . WE HAVE HELD THAT NO VIOLATION OF THE ASSIGNMENT OF CLAIMS ACT OCCURS WHEN, AFTER ENTERING INTO THE CONTRACT, THE SUCCESSFUL CONTRACTOR FORMS A CORPORATION OR SUBSIDIARY TO PERFORM THE CONTRACT, BUT CONTINUES TO PERSONALLY SUPERVISE THE WORK. IN SUCH A CASE, THE NEWLY FORMED CORPORATION IS REGARDED AS THE AGENT RATHER THE ASSIGNEE OF THE CONTRACTOR."

Boldface added; capitalization in original.

joel hoffman  Posted on Tuesday, July 15, 2003 - 11:21 pm:

Eric, I believe that the first paragraph of 41 CFR 15 is what is referred to the "Anti-Assignment Act" (originating in 1862, according to the footnotes in the Code),not the "Assignment of Claims Act", as you assert. But, I may be wrong. Maybe some version of an Assignment of Claims Act re-codified it under 41 CFR 15. Puleeze, I don't know or care to know at this point!

Regardless, I think that what someone said earlier has merit. The acquisition regulations generally provide the necessary guidance to the acquisition team to implement the law.

Therefore, I'm still of the opinion that "original anonymous", not being a lawyer or a paralegal, nor having access to an attorney, was reasonable in asking for some advice at this resource. A week's worth of research and debate on this thread have convinced me that orig anon would have been wasting his/her time trying to quote the "Assignment of Claims Act of 1940". Next time, try the legal section of "Ask A Professor." No retributions there, for asking a legal question. happy sails! joel

Eric Ottinger  Posted on Wednesday, July 16, 2003 - 11:48 am:

Joel,

Puleeze, read my first post. July 10, 2003 - 11:17 am: “41 U.S.C. §15 is the Anti-Assignment Act.”

(Note that you are correct regarding 41 U.S.C. §15. The Comp. Gen. is incorrect in the JVAN case -- an obscure case which I can’t find on my CCH -- because the transfer of an executory contract falls under 41 U.S.C. §15. The remainder of my first post was incorrect, as was losing counsel in the JVAN case.)

Vern,

You searched all of the Federal Court cases and board cases and came up with nothing but a twenty-two year old GAO protest. Is this correct?

Eric

Eric Ottinger  Posted on Wednesday, July 16, 2003 - 07:06 pm:

Vern, Here is the Red Book. Note that the “Assignment of Claims Act of 1940” is merely the, “remainder of both statutes.”

http://www.cfo.doe.gov/budget/gao/Chapter%2012.pdf

"Since the early days of the Republic, the statutes of the United States have reflected a policy against the assignment of claims in transactions involving the federal government. At the present time, this policy is found in two statutes, 31 U.S.C. § 3727 and 41 U.S.C §15, which include the traditional prohibitions and a major exception. The authorities have used a variety of names to refer to these statutes, with no real consistency. As most courts, we will refer to them collectively as the Assignment of Claims Act."

"Subsection (b) of 31 U.S.C. § 3727 prohibits the assignment of claims against the United States except under fairly rigid conditions. It originated as section I of legislation enacted in 1853 entitled “An Act to prevent Frauds upon the Treasury of the United States” (10 Stat. 170). The anti-assignment concept was not new even then, however, having its roots in earlier anti-assignment statutes, 9 Stat. 41 (1846) and I Stat. 245 (1792)."

"Subsection (a) of 41 U.S.C. §15 prohibits the transfer of any government contract or interest therein. This provision derives from Civil War legislation, specifically the Act of July 17, 1862, ch. 200, §14, 12 Stat. 594, 596."

"From the contract perspective, 31 U.S.C. § 3727 “pertains to claims for work already done,” while 41 U.S.C. § 15, involving executory contracts, is more concerned with continuing obligations. … "

"The remainder of both statutes stems from the Assignment of Claims Act of 1940, Pub. L. No. 76-811, 54 Stat. 1029, designed to aid national defense contracting by authorizing the assignment of contract proceeds within limits. The 1940 legislation added identical provisions to both anti-assignment statutes. The authority granted by the 1940 amendments has become a very important element in the financing of government contracts. Pertinent provisions of the Federal Acquisition Regulation (FAR) are found in 48 C.F.R. Subparts 32.8 and 42.12."

Eric

Vern Edwards  Posted on Wednesday, July 16, 2003 - 09:28 pm:

Eric:

As I have amply demonstrated, in modern usage 31 U.S.C. § 3727 and 41 U.S.C. § 15 are cited together as "the Assignment of Claims Act of 1940," without reference to specific paragraphs, and both have been referred to as "the Anti-Assignment Act."

Jerry was not wrong in calling 41 U.S.C. § 15 "the Assignment of Claims Act of 1940," and Joel was off the mark in taking a pot shot at him for doing so, even if Joel's motives were pure. You are right that different parts of the two sections of the U.S. Code originated in different public laws, several actually, but that is beside the point, which is that the usage of popular names for legislation is misleading.

But I can see that I won't get my point across to you, so in the immortal words of the coyote to the town dog: So long, Bub. I don't have any more time to spend with you.

Vern

Eric Ottinger  Posted on Thursday, July 17, 2003 - 07:22 pm:

Don’t look down Wylie Coyote.

Back to the Red Book--

http://www.cfo.doe.gov/budget/gao/Chapter%2012.pdf

Like Ms. Manos, the Comp. Gen. identifies each “act” by title, section and specific paragraph. Further, the Comp. Gen. explicitly distinguishes each of the three “acts.” Anyone, who reads through this and concludes that the 1940 legislation is in the lead rather than being the exception bringing up the rear, wins the dyslexia prize and will not be allowed to program my VCR.

See page 12-182.

2. The Prohibitions

a. 31 U.S.C. § 3727(b): Assignment of Claims

“The portion of the statute prohibiting the assignment of claims is 31 U.S.C. § 3727(b): … “

See page 12-190.

c. 41 U.S.C. § 15: Transfer of Contracts

“Subsection (a) of 41 U.S.C. § 15 provides:
…
In one sense, the purposes of 41 U.S.C. § 15(a) are similar to those of 31 U.S.C. § 3727(b) …”

See page 12-192.

3. Contract Financing: The Assignments of Contract Payments

a. The Assignment of Claims Act of 1940: A Synopsis

“… The 1940 legislation was CAST AS AN EXCEPTION [highlighting added] to the existing prohibitions of 41 U.S.C. § 15 and what is now U.S.C. § 3727, and made identical amendments to both statutes. … 31 U.S.C. § 3727(c); 41 U.S.C. § 15(b); FAR 48 CFR § 32.802(a).”