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FE D E R AL R E SE R V E BANK OF N E W YORK r Circular No. 3 7 2 8 1 June 27, 1951 J L STA N D AR D PRO VISIO N IN M IL IT A R Y CONTRACTS P E R TA IN IN G T O ASSIGNM ENT OF CLAIMS To all Banks, Other Financing Institutions, and Others Concerned, in the Second Federal Reserve District: W e quote below from a m emorandum to the B oa rd o f G overnors o f the F ederal R eserve System from the Office o f the A ssistant S ecretary o f D efense, dated June 20, 1951: In furtherance o f the provisions o f the recent amendment to the Assignment o f Claims A ct o f 1940 (P u blic Law 30, 82nd Congress), the M ilitary Departments have adopted, fo r use in contracts to be made in the future, the follow ing standard provision pertaining to assignment o f claim s: (a ) Pursuant to the provisions o f the Assignment o f Claims A ct o f 1940, as amended (31 U.S. (Code 203, 41 U.S. Code 1 5), if this contract provides fo r payments aggregating $1,000 or more, claims fo r moneys due or to become due the Contractor from the Government under this contract may be assigned to a bank, trust com pany, or other financing institution, including any Federal lending agency, and may thereafter be further assigned and reassigned to any such institution. A n y such assignment o r reassignment shall cover all amounts payable under this contract and not already paid, and shall not be made to more than one party, except that any such assignment or reassignment may be made to one party as agent or trustee fo r two o r more parties participating in such financing. Not withstanding any other provision o f this contract, payments to an assignee o f any moneys due or to become due under this contract shall not, to the extent provided in said A ct, as amended, be subject to reduction or set-off. (b ) In no event shall copies o f this contract or o f any plans, specifications, or other similar docu ments relating to work under this contract, i f marked “ Top Secret,” “ Secret,” “ Confidential,” or “ R estricted,” be furnished to any assignee o f any claim arising under this contract or to any other person not entitled to receive the sam e; provided that a cop y o f any part or all o f this contract so marked may be furnished, or any inform ation contained therein may be disclosed, to such assignee upon the p rior written authorization o f the Contracting Officer. It has been concluded by the M ilitary Departments, with concurrence o f the General A ccounting Office, that it is not necessary to amend existing contracts, containing the standard assignment o f claims provisions, including the no set-off clause (as set forth in paragraph 7-103.8 o f the Arm ed Services Procurement R egu lation), in order fo r the assignee to obtain the benefits o f the new amend ment o f the Assignment o f Claims A ct. It is the position o f the M ilitary Departments that such con tracts not only need not be amended, but also— in the interests o f sim plicity and fo r the convenience o f all concerned— that they should not be amended in this respect. A dditional copies o f this circular w ill be furnished upon request. A llan S proul, P resident.
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