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FEDERAL RESERVE BANK
OF DALLAS

Dallas, Texas, December 17,1940

NATIONAL DEFENSE PROGRAM

To All Banking Institutions in the
Eleventh Federal Reserve District:
In order that you may be informed as to suggested procedure with respect to assignments under
the Assignment of Claims Act of 1940, you will find printed on the following pages:
1. Circular No. 447, dated December 3,1940, addressed by the Director of Procurement
to The Heads of All Executive Departments and Independent Establishments, with refer­
ence to the filing of notices of assignments and copies of instruments of assignment.
2. Copy of a letter dated December 2, 1940 (No. B-13700), from the Comptroller Gen­
eral of the United States to the Federal Works Administrator, containing rulings with
regard to copies of instruments of assignment and payments under assigned contracts.
In the case of any contract entered into prior to 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. The Assistant Secretary of War is the proper head of department to give consent to
assignment of claims resulting from contracts entered into with the War Department prior to date
of approval of the Act (October 9, 1940) . To obtain such consent, the contracting company should
address the request for consent to the Chief of the Service concerned who will then transmit it to the
Assistant Secretary of War with recommendation that the consent either be given or withheld. The
following are the proper chiefs of service to be addressed, and they are all located at the War
Department, Washington, D. C.
Quartermaster General
The Chief of Ordnance
The Chief of the Air Corps
The Chief of Chemical Warfare Service

The Chief Signal Officer
The Chief of Engineers
The Surgeon General
The Chief of Coast Artillery

The Secretary of the Navy is the proper head of the department to give consent to the assign­
ment of claims resulting from contracts entered into with the Navy Department prior to October 9,
1940. To obtain such consent, the contracting company should make request to the “ Bureau of Sup­
plies and Accounts” , Navy Department, Washington, D. C.
The request in respect to contracts with either Department should include:
a.
b.
c.
d.

Name of contractor
Contract number, date and amount
Institution to which assignment is contemplated
Whether or not contract is secret, confidential or restricted.

There is enclosed a copy of the suggested form of notice of assignment (referred to in Circular
No. 447), with an appended form of receipt for execution by the addressee. Instructions for the use
of the form are printed upon the back thereof.
We shall be glad to furnish you with additional copies of this circular or of the enclosed notice
of assignment upon request.
Yours very truly,
R. R. GILBERT
president

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

PROCEDURE UNDER THE ASSIGNMENT OF CLAIMS ACT OF 1940

T reasu ry D e p a r t m e n t

Procurement Division
Washington, December 3, 1940

Circular No. 447

To the Heads of All Executive Departments
and Independent Establishments.
Following conference with representatives of interested Departments and independent
establishments, the following procedure is suggested in order to secure uniform compliance
with the requirements of the Act of October 9, 1940, Public No. 811, 76th Congress, Third
Session known as the Assignment of Claims Act of 1940.
In the event that any moneys due or to become due from the United States under any
contract are assigned pursuant to the terms of the Assignment of Claims Act of 1940, the
assignee is required to forward a true copy of the assignment, together with written notice
thereof, to each of the parties specified in proviso 4 of the Act. This notice of said assign­
ment in the form attached hereto should be furnished to each of such parties in quadrupli­
cate. Three of the four copies of each notice of assignment should be returned to the as­
signee under the contract with the receipt form at the end thereof properly executed. One
of these copies is for the assignee. The other two copies should be attached to the first
voucher, invoice, or other similar document submitted for payment. One copy of each
receipt should be furnished to the General Accounting Office with the first voucher and
the other copy of each receipt retained by the appropriate officer of the Department making
payment. Reference as to the previously filed receipts should be made on subsequent
vouchers.
This procedure is designed to afford the assignee and the appropriate officers of the
Government convenient evidence that there has been compliance with the requirements of
the statute with reference to the filing of notice of such assignments. However, rigid adher­
ence to this procedure should not be insisted upon if satisfactory evidence of compliance
with the statute is provided by other means.
For your further information there is attached a copy of a decision of the Comptroller
General of the United States (No. B-13700), dated December 2, 1940 and addressed to the
Federal Works Administrator, which quotes the full text of the Assignment of Claims Act
of 1940 and rules on two points arising thereunder.
It is suggested that copies of this circular be furnished as promptly as possible to all
contracting officers, purchasing officers, finance officers and disbursing officers in your
department or establishment.
( S ig n e d )

C l i f t o n E. M a c k

Director of Procurement

COMPTROLLER GENERAL OF THE UNITED STATES
WASHINGTON

December 2,1940.
B-13700
Federal W orks Administrator,
Federal W orks Agency.

Sir:
I have your letter of November 28,1940, as follows:
“ Reference is made to the ‘Assignment of Claims Act of 1940/ approved October 9,1940 (Public,
No. 811, 76th Congress), a copy of which is attached for your convenient reference.
“ Where moneys due under a contract have been assigned in accordance with this law, the ques­
tion arises as to the procedure to be followed in making payments under the contract with particular
reference to the matter of whether the assignee, as well as the contractor, is required to execute cer­
tificates on vouchers, invoices, or other similar documents submitted for payment. It will be appreci­
ated if you will advise this Agency as to whether such certificates must be signed by the assignee in
each case, and if so what form of certificate will be satisfactory to your office.
“ Referring to proviso No. 4 of the act, requiring that the assignee ‘shall file written notice of
the assignment together with a true copy of the instrument of assignment with’ the agencies speci­
fied, please advise whether the following instruction would be appropriate.
“ ‘To the original (but not the copies) of each notice of assignment there should be attached one
true copy of the instrument of assignment. This may consist of (a) a duplicate original containing
all the signatures, seals, acknowledgments, etc., which appear on the original, (b) a complete photo­
static copy of the original, or (c) a certified copy of the original, provided that such copy is accurate
and complete in all respects, including signatures, seals, acknowledgments, etc., which may be type­
written.’
“ With respect to the certification of a copy of the original assignment, do you consider it neces­
sary that such certificate be executed by a Notary Public or other officer authorized by law to admin­
ister oaths.”
The Assignment of Claims Act of 1940, Public, No. 811, 76th Congress, approved October 9,1940,
provides:
“ That sections 8477 and 8737 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 Assign­
ment of Claims Act of 1940, no claim shall be assigned without the consent of the head of the depart­
ment 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 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;
“ ‘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 pur­
poses.’
“ 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 con­
tract.
“ Sec. 2. This Act may be cited as the ‘Assignment of Claims Act of 1940’.”
It is to be observed that the assignment permitted by the said act relates to “the moneys due or
to become due” under a public contract. The act does not authorize assignment of the contract itself,
with the resultant shift of responsibility for its performance, etc., from the contractor to the
assignee, consequently, irrespective of an assignment by a contractor of “ the moneys due or to become
due” , the contractor is charged with the duty of performing the contract in accordance with its terms.
Such being the case, it is the responsibility of the contractor to execute certificates on vouchers, in­
voices, etc., as required by the contract or otherwise, such certificates having reference to material
facts incident to performance of the contract and as establishing the right to payment—matters
which, generally, would not be within the knowledge of the assignee— it being considered for all
practical purposes that no money is due and payable by the United States until such certificates are
executed by the contractor. Since it is the responsibility of the contractor to establish that an amount
is due and payable under a contract there would appear to be no necessity or requirement for a
certification in that respect from the assignee. As is indicated by your letter, however, once it is
established that an amount is due and payable under the contract, the question arises as to the pro­
cedure then to be followed, that is, whether the assignee should be required specifically to claim the
moneys due, whether payment should be made direct to the assignee on the contractor’s usual
certification, etc.
There would appear to be no necessity for a specific claim from an assignee under a valid assign­
ment for an amount established to be due and payable under a particular contract. However, it is to
be recognized that disputes unknown to the Government may exist between the contractor and its
assignee in connection with the assignment, the consideration or a condition of the assignment may
have failed, etc. Also, it is to be noted that the assignee, and not the contractor, is required to supply
to the Government information as to the assignment, and that a “ true copy” of the assignment is
required to be furnished. Having regard therefor, in order to insure that payments are properly
made, to prevent frauds upon the United States, and to protect the rights of all parties involved, it
would appear that the voucher, invoice, or other data in support of a payment direct to the assignee
should clearly indicate that the contractor recognizes the assignment, its validity, and the right of
the assignee to receive the payment. The form or means of indicating such recognition is not material
insofar as this office is concerned. For instance, the contractor’s certification on a voucher in which
the name of the assignee is shown would suffice for audit purposes.
There would appear to be no objection to the proposed instruction quoted in your letter with
respect to the “ true copy” of the instrument of assignment which the assignee is required to furnish
but, with respect to example (c), in order to establish clearly that the copy of assignment furnished
is a “ true” copy, it would seem desirable that the certificate to that effect be executed by a notary
public or other officer authorized by law to administer oaths.
Respectfully,
( Signed)

L in d s a y C. W

arren

Comptroller General
o f the United States.


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102