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FEDERAL RESERVE BANK OF NEW YORK Circular No. 2150, December 10, 1940. Reference to Circulars Nos. 2147 and 2149. NATIONAL DEFENSE PROGRAM To All Banking Institutions in the Second 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 reference 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 General of the United States to the Federal Works Administrator, containing rulings with regard to copies of instruments of assignment and payments under assigned contracts. 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. You will note that the suggested procedure may not be insisted upon if satisfactory evidence of compliance with the statute is provided by other means. We shall be glad to furnish you with additional copies of this circular or of the enclosed notice of assignment upon request. GEOEGE L. HARRISON, President. PROCEDURE UNDER THE ASSIGNMENT OF CLAIMS ACT OF 1940 TREASURY DEPARTMENT 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 assignment in the form attached hereto should be furnished to each of such parties in quadruplicate. Three of the four copies of each notice of assignment should be returned to the assignee under the contract with the receipt form at the end thereof properly executed. One of these copies is for the assignee. The other two copies should be attached to the first voucher, invoice, or other similar document submitted for payment. One copy of each 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 adherence 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. (Signed) CLIFTON E. MACK Director of Procurement COMPTROLLER GENERAL OF THE UNITED STATES WASHINGTON December 2, 1940. B-13700 Federal "Works Administrator, Federal Works 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 question 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 certificates on vouchers, invoices, or other similar documents submitted for payment. It will be appreciated 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 specified, 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 photostatic 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 typewritten.' '' With respect to the certification of a copy of the original assignment, do you consider it necessary that such certificate be executed by a Notary Public or other officer authorized by law to administer oaths." The Assignment of Claims Act of 1940, Public, No. 811, 76th Congress, approved October 9, 1940, provides: "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 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 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'." It is to be observed that the assignment permitted by the said act relates to "the moneys due or to become d u e " 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 tlie contract in accordance with its terms. Such being the case, it is the responsibility of the contractor to execute certificates on vouchers, invoices, 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 procedure 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 assignment 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 " t r u e " 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) LINDSAY C. WARREN Comptroller General of the United States. NOTICE OF ASSIGNMENT (Before filling out this notice, read c a r e f u l l y instructions on r e v e r s e side.) DATE To RE CONTRACT NUMBER MADE BY THE UNITED STATES OF AMERICA DEPARTMENT DIVISION WITH (Mane of (Address of Contractor) Contractor) FOR DATED PLEASE TAKE NOTICE that moneys due or to become due under the contract described above have been assigned to the undersigned pursuant to the provisions of the Assignment of Claims Act of 19U0 fPubl ic No. 811, 76th Congress), approved October 9, 19U0. A true copy of the instrument of assignment is attached hereto. Payments due or to become due under such contract should be made to the assignee. PI ease return to the undersigned the three enclosed copies of this notice with appropriate notations showing the date and hour of receipt and duly signed i>y the person acknowledging receipt on behalf of the addressee. truly yours, of Assignee) BY and title of signing officer) (Address of Assignee) Receipt is hereby acknowledged of t h e above notice and a copy of the above mentioned a.m. ment of a s s i g n m e n t . These were received at *'™' , 19 p. m. on (Date) instru- (Signature) ON BEHALF OF (Home and title of addressee of notice) INSTRUCTIONS In order to avoid delay, inconvenience, and possible impairment of the validity of assignments, these instructions should be followed carefully. 1. Under the terms of the Assignment of Claims Act of 1940, written notice of each assignment of moneys due or to become due from the United States or from any agency or department thereof, together with a true copy of the instrument of assignment must be filed 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. 2. All blanks should be carefully filled in and the original and three copies should be forwarded to each of the parties with whom notice is requi red to be fi1ed. 3. The addressee should acknowledge receipt of this notice on the three copies and return the same to the assignee. 4. One copy of each such receipt should be retained by the assignee for his own records and two copies of each such receipt should be attached to the first invoice, voucher, or other similar document submitted for payment. 5. It will not be necessary to forward additional copies of such receipts with requests for further payments, because the first copies will be duly recorded in the appropriate offices of the Government. 6. If there is no surety bond in connection with the contract giving rise to the claim which is assigned, it is not necessary to serve notice of assignment upon any surety. 7. If no disbursing officer is designated in such contract to make payment, it is not necessary to serve notice of assignment upon any disbursing officer. 8. 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 photostatic 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 typewritten, and provided that the certificate to the effect that it is a true copy be executed by a notary publ ic or other officer authorized by law to administer oaths. ©
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