delivered the opinion of the court:
This is a suit on a Government contract brought by Beaconwear Clothing Company, a nominal plaintiff which is no longer in business, to the use and benefit of The Amal*43gamated Bank of New York, which disavows any financial interest in the action. The Bank has filed a third-party petition by reason of the fact that it is the record assignee from Beaconwear, the contractor, of all proceeds on the contract in question. Joseph Spiotta, trading as Spiotta & Company, a subcontractor which performed all the work on the contract, has also filed a third-party petition, claiming recovery by virtue of its alleged status: (a) as beneficiary of Beaconwear’s assignment to the Bank, and (b) as transferee on a second assignment of the proceeds from Beaconwear. Defendant has entered a counterclaim against Beaconwear arising out of an earlier and separate contract.
Beaconwear Clothing Company (hereinafter referred to as Beaconwear), a partnership composed of Lawrence B. Nasher and Joseph S. Nasher, was awarded contract no. DA30-352-TAP-2020 on May 29,1953, for the manufacture of 64,000 cotton overcoats for the Army. 32,000 coats were to be delivered by October 31,1953, and the remaining 32,000 by November 31 of the same year, with materials to be furnished by defendant. Beaconwear had. arranged for performance of the contract by a subcontractor, General Coat, Inc. of Brooklyn, New York, but this firm never performed any work on the project, and production did not effectively begin until the end of the year. No deliveries having been made as of November 10, 1953, Beaconwear requested permission to subcontract the entire contract, quantity to Joseph Spiotta, trading as Spiotta & Company, (referred to throughout as Spiotta). A copy of the proposed subcontract agreement was forwarded to the contracting officer, and approval was granted “within the terms and conditions of the contract,” upon the understanding that Beaconwear would remain liable for any loss or damage to Government furnished property. On November 21, 1953, pursuant to the terms of the subcontract agreement with Spiotta, Beacon-wear assigned all right and title to the proceeds of the contract to a financial institution of Spiotta’s designation — The Amalgamated Bank of New York, third-party plaintiff herein (to be referred to as the Bank). This assignment from Beaconwear to the Bank conformed in all respects to the Assignment of Claims Act of 1940 (31 U.S.C. §203 *44(1952)). Hence, at this stage Spiotta was the approved subcontractor under Beaconwear, charged with the manufacture and delivery of all the overcoats described in the contract, and the Bank was the authorized assignee of the proceeds of the contract. Although subsequent events and transactions have tended to complicate and confuse the factual pattern of the case, this essential relationship of Beaconwear as prime contractor, Spiotta as subcontractor, and the Bank as sole legal assignee, remained unaltered throughout the duration of the contract performance.
On January 18,1954, Beaconwear attempted a second assignment of all rights and title to the moneys receivable under the contract to “Joseph Spiotta, Charles Silverman, or Joseph Freda.” The document evidencing this transfer was phrased in the same language as, and made subject to, the prior assignment to the Bank. The three men (Silverman and Freda were employees of Spiotta at the time) were then given power of attorney to act for Beaconwear, to demand and receive all proceeds from the United States or the Bank, and to open a special account in the Bank in Beaconwear’s name. The practical result of this arrangement was that when deliveries of overcoats were ultimately received by defendant from Spiotta, payments on the contract were made to the assignee Bank, where they were deposited in the special Beaconwear account and subsequently withdrawn by Spiotta.
Because performance of the contract had been delayed and no deliveries tendered as of February 16, 1954, the contracting officer terminated Beaconwear’s right to manufacture and deliver 30,000 of the 64,000 overcoats called for. The remaining 34,000 units were eventually delivered 'by subcontractor Spiotta as of June 7, 1954, and accepted by defendant. Contract performance has thus been completed and the only matter outstanding concerns the question of compensation. Proper adjudication of this subject necessarily entails a determination: (1) as to what theory and facts form the basis of the cause of action; (2) as to what amount of recovery is allowable; and (3) as to which party, if any, is entitled to recover the said amount.
The claims asserted here'by plaintiffs arise out of certain deductions which it is alleged were improperly made by de*45fendant on the pertinent contract. These deductions fall into four general categories: (1) savings to the contractor on the substitution of an aluminum buckle for the originally specified phenolic one; (2) savings to the contractor for deviations in Operations 33C, 41C, 41L, and IOC of the contract; (3) loss of Government furnished property; and (4) the taking by defendant of unwarranted prompt payment discounts. Each of these subjects (to be referred to respectively as the Buckle, Deviations, Government Furnished Property, and Discount claims) will later be accorded separate and more specific treatment.
As to the matter of the amount of recovery, there has been Substantial uncertainty and confusion. Plaintiffs have claimed various sums on essentially the same items at different stages of the litigation. In the petition, amended petitions, and motion for summary judgment, the sums of $2,617.65, $3,638.61, $5,784.06, $4,595.18, $2,040.46, and $2,306.20 appear in the respective prayers for relief. Plaintiffs’ requested findings of fact claim entitlement in the amount of $2,028.04, and it was on the basis of this claim that findings of fact were made by our trial commissioner.'
Assuming for the moment that the cause of action is meritorious, there next arises the question of which party is entitled to recovery on the contract. The court has before it as parties-plaintiff the contractor, the subcontractor, and the assignee. This, of course, is not a singular occurrence. What complicates matters, however, is the fact that Beacon-wear, the contractor and normal plaintiff in such a case, is not suing in its own name, but for the benefit of the Bank. The Bank in turn has stated that it has no interest in the case. Spiotta is the real party in interest, having performed all the work on the contract and being the only party with a financial stake in the outcome of the action. It bases its primary claim to recovery here on either, or both, of the two assignments of the contract proceeds made by Beacon-wear, alluded to above. Spiotta argues secondarily that it acquired the status of de facto prime contractor by reason of: (a) its having assumed responsibility for manufacture and delivery of all the overcoats called for, and (b). its having received from Beaconwear a general power of attorney *46to perform the entire contract and collect tlie proceeds thereon.
The trial commissioner to whom this case was referred has made findings of fact on each of the four claims which form the basis of plaintiffs’ cause of action. On the BucHe and Deviations claims, he found that plaintiffs had already received full and reasonable compensation through a successful appeal to the Armed Services Board of Contract Appeals and that they have not established that they are entitled to any additional sum. We are in full accord with this determination and adopt it as part of our decision.
On the Government Furnished Property claim, defendant originally claimed that $3,173.75 in materials furnished by it under the terms of the contract had been unaccounted for, and it subsequently deducted from the final payment vouchers a total of $2,735.37 to cover the loss. An appeal was filed with the ASBCA in Beaconwear’s name, and at the administrative hearing Spiotta took the position that it was merely the subcontractor and disclaimed any liability on the item. The Board found as a fact that Spiotta had indeed accounted for all property sent to it and was consequently not responsible for any of the shortages. The Board decided, however, that Beaconwear as prime contractor was indebted to defendant in the sum of $1,694.95 for the missing Government property. Plaintiffs presented no proof on this issue to attack the findings of the administrative body, and in their requested findings of fact seek only the sum of $1,040.42, representing the difference between the amount found by the Board to be owing to defendant ($1,694.95) and the amount actually withheld by defendant from the payment vouchers ($2,735.37). Defendant accepts the Board’s finding and acknowledges that it improperly deducted $1,040.42 from Beaconwear’s account on this item. As a result, the commissioner found this sum to be due the legal owner of the claim. Again, we adopt the commissioner’s finding.
The Discount claim arises from the fact that defendant improperly took one percent prompt payment discounts on certain supplies which were not in fact paid for. within the 20 days called for in the discount clause of the contract. Plaintiffs allege that $987.62 was thus improperly deducted, *47while defendant concedes liability in the amount of $680.64, subject to the affirmative defense (originally reserved, and then asserted in its answer to plaintiff’s third amended petition) of failure to exhaust administrative remedies. The latter figure of liability in the amount of $680.64 is supported by the record, particularly the invoices and vouchers on the pertinent shipments, but plaintiffs are precluded from any recovery on this item by reason of their failure to seek administrative relief. United States v. Joseph A. Holpuch Co., 328 U.S. 234 (1946); Beacon Construction Co. v. United States, 161 Ct. Cl. 1, 314 F. 2d 501 (1963). Appeals were taken on the other three claims (Buckle, Deviations, and Government Furnished Property),. but administrative remedies on the Discount claim, which arose contemporaneously with the others, were not pursued.1 Summarizing plaintiffs’ cause of action, then, no recovery is warranted on Claims 1, 2, and 4, while $1,040.42 is due the legal owner of the cause of action on Claim 3.
Who the legal owner of the claim is has been a matter of dispute throughout the litigation. Various representations as to ownership have been made by the parties, and a brief review of the proceedings to date in this court will serve to illustrate this point and hopefully to clarify the posture of the case. The petition filed May 25, 1959, and the first two amended petitions filed October 12, 1959, and February 17, 1960, were filed in the name of Beaconwear to the use and benefit of the Bank. Although the first amended petition mentioned the fact that Spiotta was the approved subcontractor, all three papers asserted without reservation that Beaconwear as prime contractor was the party responsible for performance and that all dealings with defendant’s contracting officer were conducted in Beaconwear’s name. Ke-covery was sought in each of the respective pleadings for the benefit of the Bank as assignee of record of all contract proceeds. The fact that Spiotta is and has been the real party in interest was not indicated by any of the preliminary pleadings.
*48On November 9,1960, plaintiff moved for summary judgment again asking for recovery in the name of the Bank as assignee. Defendant cross-moved for summary judgment, partially on the ground that Beaconwear itself, and not the Bank, owned the claim. Both motions were denied in open court on January 8, 1962, and the case eventually scheduled for trial.
On January 30, 1962, plaintiff filed its third amended petition, in which it asserted for the first time the full extent of Spiotta’s participation in the contract. The simple statement contained in the first amended petition, to the effect that Spiotta was the duly authorized subcontractor, was replaced by a more detailed description of the arrangements among the parties, including the terms of Beaconwear’s subcontract with Spiotta and its subsequent assignment to the Bank. It was asserted at this time that the assignment from Beaconwear to the Bank was executed for the benefit of Spiotta and that it complied in all respects with the Assignment of Claims Act, which authorizes an assignment to one party (the Bank) as trustee for another party participating in the financing of the contract (Spiotta). It was noted that these two agreements anticipated that the Bank would, after deducting the interest on certain loans made to finance the contract, hold and pay over to Spiotta, as beneficiary of the described arrangements, all proceeds received from the Government. Shortly after submitting this third amended petition, plaintiff, on February 5, 1962, filed an amended answer to defendant’s counterclaim in which it then demanded recovery for the Bank as trustee for Spiotta.
As the details of these arrangements were progressively disclosed by plaintiff’s pleadings, defendant moved to bring in the Bank and Spiotta as third-party plaintiffs, for both appeared to be intricately involved in the matter. The motions were granted. On April 17, 1962, the Bank filed its petition and stated that Beaconwear had assigned all rights in the contract proceeds to it, and that all moneys collected from defendant after deducting interest on the notes had been paid to Beaconwear’s special account (the signators of which are Spiotta and his two employees). The Bank asserted that it has been paid in full, that it has “no interest whatsoever” *49in the litigation, and that any proceeds received in the future will be turned over to this special account for Spiotta. Spiotta then filed its third-party petition, on October 31, 1962, claiming that by the express terms of its subcontract agreement with Beaconwear, and Beaconwear’s subsequent assignment to the Bank, it is entitled to be recognized and treated by defendant as the beneficiary of the assignment. This type of trust arrangement is said not to violate the provisions of the Assignment of Claims Act on the grounds that Spiotta is allegedly a licensed bank under the laws of the State of New Jersey and has participated in the financing of the contract. Thus, as the case went to trial, plaintiffs’ position was that the Bank is entitled to recover as trustee for Spiotta, while defendant maintained that only Beacon-wear, the contractor, could prevail. At the trial the facts of Beaconwear’s attempted second assignment of the contract proceeds to “Spiotta, Silverman, or Freda” were disclosed. This January 18, 1954, transfer to Spiotta succeeded that from Beaconwear to the Bank by approximately 2 months and was designed to effectuate and formalize an agreement by which Spiotta was to succeed to all of Beaconwear’s residual rights in the contract proceeds so that these might be used as collateral by Spiotta for financing the contract through the Bank. Under the terms of this second assignment, Spiotta was expressly given power of attorney to collect all proceeds from either the United States or the Bank and to open the special account for this purpose in Beacon-wear’s name. The contracting officer had approved Spiotta as subcontractor and had received a copy of the subcontract agreement. Also, written notice of the original assignment to the Bank was filed as required by law. However, there is no evidence that defendant had any knowledge or notice of the purported second assignment.
Spiotta has acquired no rights against defendant as a result of either of the two assignments from Beaconwear. The Assignment of Claims Act of 1940 reads in part as follows:
All transfers and assignments made of any claim upon the United States, or of aaiy part or share thereof, * * * and all powers of attorney, * * * shall be aibso-lutely null and void, * * *
*50The 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,
* * * # *
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 as-signee thereof shall file written notice of the assignment together with a true copy of the instrument of assignment with (a) the contracting officer or the head of his department or agency; * * *
The second assignment of the contract proceeds from Beacon-wear to Spiotta is of no effect as far as the United States is concerned, for it fails to fall within the exception to the sweeping language of the statute which authorizes assignments to “a bank, trust company, or other financing institution.” Contrary to the allegations contained in Spiotta’s third-party petition and plaintiff’s third amended petition, the record clearly establishes that Spiotta was not a bank or authorized financial institution within the meaning of the statute at any time relevant to this contract. It cannot therefore claim immunity from the broad prohibition of the statute on this ground. Moreover, there is no merit to the contention that defendant waived any infirmity on Spiotta’s part in this regard, for its contracting officer did not have notice of the second assignment.
The second assignment to Spiotta was a voluntary assignment which the Assignment of Claims Act of 1940 renders void as to defendant. One of the purposes of that Act was to save to the United States defenses which it has to claims by the assignor by way of setoff and counterclaim that might not be applicable .to. an assignee. United States v. Shannon, 342 U.S. 288 (1952). As will appear hereinafter, the United States has a valid counterclaim against’ Beaconwear in an *51amount which exceeds the sum due on contract No. TAP-2020. The Government’s right to set off the amount of the counterclaim against the amount it owes on the contract is paramount to Spiotta’s rights and, as we shall show, paramount to the rights of the Bank under the circumstances present here.
Spiotta’s claim to recognition under provision 8 of the statute above as beneficiary of the first assignment from Bea-conwear to the Bank, is also without merit. Although one of the major purposes of the various transactions entered into by the parties here was to protect Spiotta’s interests by giving it a residual right to the contract proceeds, these private arrangements did not in fact create any rights on Spiotta’s part against the United States. Spiotta alleges that the first assignment, to the Bank, was made “to one party as agent or trustee for two or more parties participating in such financing” and that the Bank thus became trustee for Spiotta within the express language of the Act. See Chelsea Factors, Inc. v. United States, 149 Ct. Cl. 202, 181 F. Supp. 685 (1960). There is no proof, however, that Spiotta “participated in the financing of the contract.” The only manner in which it was involved in financing was to have borrowed money itself in Beaconwear’s name to underwrite its own performance as subcontractor, using the second assignment and power of attorney contained therein as collateral for its own debt. This is scarcely the type of “participation” required by the statute. Spiotta cannot take comfort from the decision in Chelsea Factors, where the plaintiff was a detached financing institution which lent money to an independent contractor in order to finance that contractor’s obligations with the Government. Plaintiff Spiotta in the case at hand did not act as such an independent financial institution, advancing money to a contractor in order to underwrite his performance of a contract. As noted above, Spiotta is not even an authorized financial institution: rather, it performed the contract itself and borrowed the money on its own behalf. Under such circumstances, it cannot be said that the arrangements among Beaconwear, the Bank, and Spiotta made the Bank a trustee for Spiotta of Beaconwear’s assignment to the Bank within the terms of the third proviso of the Assignment of Claims *52Act of 1940. Moreover, Spiotta is barred from suing the Government in its own right as subcontractor, for it has had no privity with the United States. Severin v. United States, 99 Ct. Cl. 435, 442 (1943), cert. denied, 322 U.S. 733 (1944). Nor can Spiotta rely upon the decision in G. L. Christian & Associates v. United States, 160 Ct. Cl. 1, 312 F. 2d 418 (1963), cert. denied, 375 U.S. 954 (1963), to establish that it had acquired the status of prime contractor. No contract was ever entered into directly between the Government and Spiotta for the furnishing of goods. Spiotta did assume responsibility, through its approved subcontract agreement with Beaconwear, for the supply of the entire contract quantity of overcoats, 'but defendant did not assent to Spiotta’s becoming prime contractor in fact. In all aspects and throughout the performance of the contract in question, the Government insisted on recognizing only Beaconwear as prime contractor. All correspondence from defendant’s contracting officer regarding the contract was addressed to Bea-conwear, and all correspondence in turn from plaintiffs to defendant was signed in the name of Beaconwear. As far as defendant was concerned, Spiotta was at all times merely Beaconwear’s subcontractor.
Nor is the Bank entitled to recover the amount due on contract No. TAP-2020. Although the Bank held a valid assignment, its only interest in the proceeds due on the contract was to secure the loans made to finance performance. By the Bank’s own admission, the loans have been discharged; the Bank has been paid in full, and it no longer has any financial interest in the litigation. Generally, an assignment made as collateral security for a debt gives the assignee only a qualified interest in the assigned chose, commensurate with the debt or liabilities secured, even though the assignment appears to be absolute on its face. Peterman Lumber Co. v. Adams, 128 F. Supp. 6, 13 (W.D. Ark. 1955). Since the Bank’s debt has been discharged in full, it no longer has a valid claim against the United States either for itself or as a trustee for Spiotta who, in any event, would have no greater rights than the Bank possesses under the first assignment. Berkeley v. United States, 149 Ct. Cl. 549, 276 F. 2d 9 (1960); United States v. Munsey Trust Co., 332 U.S. 234 (1947).
*53Beaconwear thus remains the only party which has a legal claim to the amount due under the contract. It alone signed the contract; all the arrangements and adjustments were negotiated and executed solely in its name and all administrative appeals were prosecuted in its name. It was the prime contractor on contract No. TAP-2020 and has been held responsible by defendant for performance at all times. Without more, therefore, judgment would be rendered in favor of Beaconwear for the $1,040.42 due on its contract, but under the provisions of 28 U.S.C. § 2508, the defendant is entitled to offset the amount due on its counterclaim against the amount due Beaconwear and the amount of the counterclaim exceeds the amount due Beaconwear.
DEFENDANT’S COUNTERCLAIM
Defendant’s counterclaim arises out of a separate and distinct contract which Beaconwear performed for the Government. That contract, No. DA30-352-TAP-1811, called for the manufacture of 250,000 woolen field jackets for the Army and was awarded to Beaconwear on May 20,1953. Spiotta was not involved in any manner in that undertaking.
As shown in our findings of fact, defendant’s counterclaim is based on the fact that, at Beaconwear’s request, it permitted the contractor to make ten deviations from the contract specifications. The changes resulted in substantial savings in the contractor’s costs. The contracting officer issued written findings of fact in which he determined that the amount due the Government under the Changes clause, as a result of the savings, amounted to $39,225.77. The findings were mailed to Beaconwear September 12,1957, but the evidence does not establish that Beaconwear, out of business at the time, received delivery of them. Although Beaconwear failed to file an appeal within the 30-day period required by the Disputes clause of the contract, we cannot in the absence of proof of delivery say that the contracting officer’s findings are final, conclusive, and binding. However, plaintiffs offered and there were received in evidence without limitation the affidavits of the contracting officer and the affidavits of Allen Berkowitz and Albert M. Greene, upon whose computations the contracting officer based 'his findings. Al*54though the affidavits are hearsay and might have been excluded upon a timely objection,- no objection was made and thus the affidavits are to be considered as evidence in support .of defendant’s counterclaim and given their natural probative effect, particularly since plaintiffs offered them in evidence. Diaz v. United States, 223 U.S. 442, 450 (1912). The weight ,to be given such evidence is a question for the court, Byars v. United States, 238 F. 2d 82 (6th Cir. 1956).
The books and records of Beaconwear are not in evidence and the amount of defendant’s counterclaim was not determined on the basis of Beaconwear’s actual cost experience in performing the contract. The affidavits referred to above show that the contracting officer based his determination with respect to the amount of direct labor savings upon an estimate made by Allen Berkowitz. Also, the contracting-officer’s finding as to the contractor’s savings in overhead and profit was based upon an estimate made by Albert M. Greene that the saving in overhead amounted to 80 percent of..the direct labor- savings- and that the saving in profit amounted to 6 percent of the direct labor and overhead saved. Mr. Berkowitz had had many years’ experience in the garment industry in both private employment and in Government service and was frequently called upon to calculate savings that resulted from deviations in the specifications for the manufacture of military clothing. Mr. .Greene is a college graduate who had been engaged in accounting work for many years and was frequently called upon by defendant to estimate savings realized by deviations in contract operations in the absence of actual cost experience. His estimates were in turn based upon median rates arrived at by the [Renegotiation Board, the Army Audit Agency, and other agencies in transactions involving the garment industry at the time the contract was performed.
Although the affidavits constitute some evidence of the amount due on defendant’s counterclaim, the affidavits must, as stated above, be weighed against the following countervailing evidence:
(a) With respect to Operation 41 A, involving a deviation concerning 190,000 woolen jackets, defendant in its counterclaim asserts that Beaconwear realized a saving of $21,751.20. *55However, the evidence shows that by an agreement entered into .between the contracting officer and Beaconwear on March 2, 1954, the actual reduction in the contract price as a result of that deviation was $5,225.
(b) With respect to the deviation in Operation 46J, defendant in its counterclaim maintains that Beaconwear realized a saving of $288.87, but by written agreement between the contracting officer and Beaconwear entered into about September 18,1958, the actual reduction in the contract price on account of this deviation which involved 3,028 jackets was $60.56.
(c). The opinion of the ASBCA in Appeal No. 3979, which involved contract No. TAP-2020, states that defendant’s accountant found that Spiotta’s overhead in the performance of that contract amounted to a total of 30.47 percent of his direct labor costs. The same opinion states that after the contracting officer had calculated the direct labor saving on one deviation, he added 50 percent of the direct labor savings as overhead savings and a profit of 6 percent of the total thereof in accordance with Quartermaster policy.
Upon a consideration of all the evidence of record relating to the counterclaim, we have determined that the fair and reasonable amount of the savings realized by Beaconwear, as a result of the deviations permitted on contract No. TAP-1811, was $5,269.70. The remaining counterclaims pleaded by defendant have been abandoned.
In summary, then, Beaconwear is due the sum of $1,040.42 on contract No. TAP-2020, and defendant is entitled to $5,269.70 on its counterclaim against Beaconwear. After offsetting the counterclaim against the amount due Beacon-wear, defendant is entitled to a net judgment on its counterclaim of $4,229.28. The Amalgamated Bank of New York and Joseph Spiotta, third-party plaintiffs, are entitled to recover nothing and their petitions are dismissed.
Findings oe Fact
The court, having considered the evidence, the report of Trial Commissioner Paul H. McMurray, and the briefs and argument of counsel, makes findings of fact as follows:
1. The claims by the three plaintiffs herein, Beaconwear, *56third-party plaintiff The Amalgamated Bank, and third-party plaintiff Joseph Spiotta, t/a Spiotta & Company (hereinafter referred to as “Beaconwear,” “the Bank,” and “Spiotta,” respectively, are for sums variously stated to be $2,617.65, $3,638.61, and $5,784.06 allegedly due under Contract No. DA30-352-TAP-2020, awarded on May 29, 1953, by defendant, acting through the Department of the Army, Armed Services Textile & Apparel Procurement Agency, to Beaconwear Clothing Company, a partnership composed of Lawrence R. Nasher and Joseph S. Nasher, 141 Malden Street, Boston, Massachusetts, for 64,000 overcoats, cotton, OG-107, with removable wool liner.
2. Plaintiffs’ claims represent deductions which it is alleged were improperly made by defendant because of (1) savings to the contractor on the substitution of an aluminum buckle for the originally specified phenolic one; (2) savings to the contractor for deviations in Operations 33C, 41C, 41L, and 10C under the contract; (3) loss of Government Furnished Property; and (4) discounts taken by defendant on payments to the contractor within a specified period after goods were delivered.
ft. The defendant has filed a qualified admission that there is due and owing under the contract to the legal owner of the claim the sum of $1,040.42 on the Government Furnished Property item and $680.64 on the discount claim. Defendant, however, alleges that the item of $680.64 is subject to the defendant’s affirmative defense of failure to exhaust administrative remedies. Defendant has also asserted a counterclaim in the sum of $27,293.92 against Beaconwear as a result of savings to the contractor because of permitted deviations from specification requirements under another contract, No. DA-30-352-TAP-1811.1 Defendant has affirmatively made the following allegations: (1) Spiotta is the real party in interest; (2) the assignment to The Amalgamated Bank of New York has been terminated by the full accord and satisfaction pleaded by the third-party Bank; (3) the Assignment of Claims Act of 1940 has been violated (i) by a second assignment by Beaconwear of all right, title, *57and interest in and to all money due or to become due under the subject contract to Joseph Spiotta, t/a Spiotta & Company, and (ii) by the transfer of all control over the performance of the contract from Beaconwear as prime contractor to Spiotta as subcontractor without defendant’s knowledge or approval; and that (4) plaintiffs failed to exhaust their administrative remedies with respect to the discount claim.
4. Various representations were made by the parties with respect to the ownership of this claim prior to the filing and during the pendency of cross motions for summary judgment. Both motions were denied in open court on January 8, 1962, and the case remanded to the commissioner for further proceedings. A trial has been held and proof closed. In view of the state of the record, it appears that a summary of the claims and defenses asserted in the pleadings will serve to clarify, to some extent at least, the posture of the case with respect to the factual situation and also delineate the issues now before the court.
5. The original petition, the first amended petition, and the second amended petition were filed in the name of Beacon-wear to the use and benefit of The Amalgamated Bank as assignee. The original petition and the first amended petition asserted the first three claims described in finding 2 and the second amended petition asserted the fourth claim for refund of discounts.
6. On November 9,1960, a motion for summary judgment was filed in the name of Beaconwear to the use and benefit of the Bank “in favor of the use-plaintiff, The Amalgamated Bank of New York.” The motion asserted in the statement of facts that (1) “there became due from defendant to the use-plaintiff, The Amalgamated Bank of New York, the sum of $3,146.93” by reason of the buckle claim; (2) under the Government Furnished Property claim “there became due to the use-plaintiff, The Amalgamated Bank of New York, from defendant the sum of $1,349.63”; and (3) under the discount claim “There became due to the use-plaintiff the amounts of $1,349.63 and $956.57 or a total of $2,306.20.” At page 5 of the motion, plaintiff stated that “This suit is brought by Beaconwear Clothing Co., a partnership composed of Law*58rence R. Nasber and Joseph S. Nasher, co-partners to the nse and benefit of The Amalgamated Bank of New York.” The motion for summary judgment further asked that “judgment [be] rendered in favor of the use-plaintiff, The Amalgamated Bank of New York.”
7. On November 23, 1960, in its objections to defendant’s request that plaintiff’s motion for discovery be held in abeyance, plaintiff used the phrase “use-plaintiff” many times in such expressions as “use-plaintiff’s purpose,” “use-plaintiff believes,” “use-plaintiff will file,” “use-plaintiff’s motion,” “use-plaintiff’s discovery,” “use-plaintiff’s claim,” “use-plaintiff asks,” etc.
8. On January 6, 1961, in a motion for an extension of time within which to respond to plaintiff’s motion for summary judgment, defendant raised the question of the ownership by the assignee bank of the claim here asserted. This issue arose because of counsel for plaintiffs’ failure to produce evidence of the Bank’s ownership of the claim during settlement negotiations between respective counsel in the summer of 1960 upon defendant’s offer to admit limited liability and dismiss its counterclaims, which would not be good against the Bank under the set-off provision of the Assignment of Claims Act. The defendant further set forth its position in this respect in opposition to plaintiff’s motion for summary judgment and its cross-motion for summary judgment filed February 8,1961. Defendant stated that its admission of limited liability or settlement of the claim was dependent on the Bank’s ownership of the claim since defendant could neither admit liability nor settle if the claim was owned by the original contractor Beaconwear against whom the defendant had outstanding claims, or by third parties in violation of the Assignment of Claims Act.
Defendant also reserved the right to assert the affirmative defense of failure to exhaust administrative remedies with respect to the discount claim should there be a formal trial, and subsequently asserted that defense in its answer to plaintiff’s third amended petition filed May 31,1962.
9. In a motion for call filed March 3,1961, plaintiff sought certain letters from the assignor-plaintiff (Beaconwear) to defendant, and indicated, for the first time, that Spiotta was *59.the real party in interest by its disclosure of the terms of a subcontract agreement between Beaconwear and Spiotta by which the Bank was to make payments to Spiotta. •
10. On March 14, 1961, a representation was made, in plaintiff’s objections to defendant’s response to plaintiff’s motion for call, that “the use-plaintiff, the Amalgamated Bank of New York, owns the claim in fact and in law.”
11. In plaintiff’s objections and response to defendant’s cross-motion for summary judgment filed June 29, 1961, the representation was again made that “This suit * * * is a suit by the assignee * * *. At page 3 of the same document, the statement was made that “Plaintiff-assignee’s right to judgment is clearly established,” “the Use-plaintiff’s right to recovery is established by the pleadings,” and at page 4 thereof, it was further asserted that “The evidence before the Court establishes that The Amalgamated Bank of New York is entitled to judgment in the amount of $2,040.46.”
12. On January 8, 1962, the motions for summary judgment were argued before the court, and the court in open session denied both motions and remanded the case to the commissioner for determination of the question of ownership of the claim.
13. On January 16,1962, defendant filed a motion for leave to file a motion to notify third party, the Bank, to come in and assert any interest it had in the claim.
14. On January 19,1962, plaintiff filed a motion for leave to file a third amended petition to assert inter alia that the Bank was trustee for Spiotta “who participated in * * * financing,” and that “said Joseph Spiotta’s financing of the performance of said subcontract was secured by Beacon-wear Clothing Co.’s assignment of the proceeds of such contract,” and that “Joseph Spiotta was a banker, duly licensed under the laws of the State of New Jersey.”
15. The motions described in findings 13 and 14 were allowed and filed on January 30, 1962. In defendant’s motion to bring in the third party, and as grounds for bringing in the Bank, it asserted that the Bank was the only real party in interest then named, since Beaconwear, on the basis of representations of counsel for plaintiff, was nonexistent.
16. On January 31, 1962, defendant filed a second motion *60to bring in as a third-party plaintiff Joseph Spiotta, t/a Spiotta & Company, to assert its interest in the matter in view of the allegations made in plaintiff’s third amended petition. Both this motion and the motion to bring in the Bank were allowed on February 13,1962, and notices issued on that date to the Bank and Spiotta.
17. On March 1, 1962, by letter to counsel for plaintiff, with copies to the Clerk, United States Court of Claims, and the Assistant Attorney General, the law firm of Szold, Brand-wen, Meyers & Blumberg, 30 Broad Street, New York 4, New York, advised as follows:
We are the attorneys for The Amalgamated Bank of New York.
Our client received from the Clerk of the United States Court of Claims a Petition, First Amended Petition, Defendant’s Answer and Counterclaim, Plaintiff’s Reply to Counterclaim, etc.
We assume that the reason for the notice having been sent to The Amalgamated Bank is due to the fact that it was the assignee of a contract which is the subject of this action. The Amalgamated Bank has received full payment of the loan which it made, under which the aforementioned contract was assigned as collateral. Consequently, our client has no interest in this proceeding.
18. On April 17,1962, the Bank filed a third-party petition and alleged that “all loans made by Beaconwear Clothing Company have been paid and all notes evidencing such loans have been marked paid and returned,” that “any monies received by * * * the Bank * * * pursuant to this action will be paid to the account of Beaconwear Clothing Company,” of which the signators are Joseph Spiotta, Charles Silverman, or Joseph Freda, and that the Bank “has no interest whatsoever in this action.”
The pleading was signed by Edwin J. McDermott, who has been counsel of record for Beaconwear and the Bank since the inception of this suit. The name of the firm of Szold, Brandwen, Meyers & Blumberg was also shown on the pleading as being “Of Counsel.”
19. On June 26,1962, in a motion for call, letters written by Beaconwear were again sought by plaintiff’s counsel, together with documents relating to defendant’s third counterclaim against Beaconwear.
*6120. On October 19,1962, service of notice by tbe defendant to Spiotta to appear as third party not having been served because of Mr. Spiotta’s absence from New Jersey, a motion was made on Spiotta’s behalf by plaintiff’s counsel for leave to file a third-party petition. The motion was allowed and Spiotta’s petition was filed on October 31, 1962. The petition alleged inter alia that Spiotta was a banker duly licensed under the laws of the State of New Jersey, that certain sums were due and payable by defendant to the Bank “for distribution to Spiotta” and asked judgment in Spiotta’s name.
21. A formal trial of the case was held in New York, New York, on May 14 and 15,1963. Proof presented at the trial revealed the following facts:
Contract No. DA30-352-TAP-2020 contained schedules calling for delivery of 32,000 overcoats by October 31, 1953, and the remaining 32,000 by November 30, 1953. No deliveries having been made by November 10, 1953, Beaconwear requested permission to subcontract the entire contract quantity to Spiotta & Company, with plants located at 105-111N. Arkansas Ave., Atlantic City, New Jersey, and 449 Central Ave., Newark, New Jersey. A copy of the agreement between Beaconwear and Spiotta was given to the contracting officer. Permission to subcontract to Spiotta & Company as requested by Beaconwear was granted by the contracting officer on November 10,1953, “within the terms and conditions of your contract” and “with the understanding that you will be liable for any loss or damage to Government Furnished Property during transit from its present storage plant to the plant of Spiotta & Co. in Atlantic City, N.J. and for any loss, damage or excess usage of Government Furnished Property during performance in the plants of Spiotta & Co.”
22. On November 21, 1953, Beaconwear, through its partners, Lawrence B. Nasher and Joseph S. Nasher, pursuant to the agreement between Beaconwear and Spiotta, by which Beaconwear promised to arrange for an assignment of the proceeds of the said Government contract to a bank or financial institution of Spiotta’s choosing, and in conformity with the Assignment of Claims Act of 1940, assigned all right, title, and interest in and to all moneys due or to become due under said contract to The Amalgamated Bank of New York, 11-15 Union Square, New York, New York.
*6223. On January 18, 1954, Beaconwear, through its partners Lawrence R. Nasher and Joseph S. Nasher, further assigned all right, title and interest in and to all moneys due or to become due under said contract, subject to the prior assignment of November 21, 1953, to Joseph Spiotta, Charles Sil-verman or Joseph Freda. Silverman and Freda were employees of Spiotta at the time in question.
24. The record in the case establishes that neither Joseph Spiotta nor Spiotta & Company was a bank, trust company, or financial institution within the meaning of the Assignment of Claims Act at the time of this second assignment.
A letter addressed to the Defense Clothing and Textile Supply Center, Philadelphia, Pennsylvania, dated March 1, 1962, signed by Raymond H. Wesner, Assistant Deputy Commissioner, Department of Banking and Insurance, State of New Jersey, Trenton, N.J., states as follows:
Mr. Spiotta is unknown to this Department. He is not a private banker, and under our Statutes he cannot be a trust company or a financial institution. The Private Banker Act (N.J. Statute 17: 5.1-10) was repealed prior to the effective date of The Banking Act ox 1948 under which we are operating at this time.
A certification dated March 20,1963, addressed “To Whom It May Concern,” signed by Charles R. Howell, Commissioner of Banking and Insurance of the State of New Jersey, states as follows:
THIS IS TO CERTIFY that neither JOSEPH SPIOTTA nor SPIOTTA & COMPANY is now, or from the records available, has ever been authorized to do business as a bank, trust company, or other financing institution in the State of New Jersey by the Commissioner of Banking and Insurance of the Department of Banking and Insurance, State of New Jersey.
25. Although Spiotta furnished all the goods and performed all the services incident to the contract, no agreement or contract was ever entered into between the Government and Spiotta. In all aspects and throughout the performance of the contract, the Government recognized no one but Bea-conwear as the prime contractor. As far as defendant was concerned, Spiotta &. Company was merely Beaconwear’s subcontractor, pursuant'to the approved agreement referred to in *63finding 21. All correspondence by defendant relevant to the contract was addressed to Beaconwear, and all correspondence from plaintiff was signed in the name of Beaconwear.
26. No deliveries having been made by February 16,1954, the contracting officer, in a letter dated February 24, 1954, confirming telegram of February 16, 1954, terminated Bea-conwear’s right to manufacture and deliver 30,000 units of the contract quantity, leaving 34,000 units to be delivered. Delivery of the remaining 34,000 overcoats required by the contract was made by June 7, 1954, and accepted by defendant.
Bttotct.tü Claim
27. On July 21, 1953, the contracting officer advised Beaconwear of certain permitted exceptions to military specifications with respect to the furnishing of buckles required under the contract and therein requested advice as to what type of buckle would be furnished by the contractor.
28. On April 9, 1954, not having received the requested advice from the contractor, the contracting officer notified Beaconwear that $3,200 would be withheld from its account pending receipt of the requested information. On April 15, 1954, the contracting officer advised Beaconwear that his prior statement concerning the withholding of $3,200 was erroneous and that a withholding would be instituted against its account prior to completion of performance in the event the information was not furnished.
29. On June 21, 1954, the contracting officer advised Beaconwear that the requested information had not been received and that a withholding of $3,200 was being instituted against its account to cover adjustment of the unit price for the buckles, but the actual amount withheld from partial payment voucher No. 6 was $2,720.
30. On July 29, 1954, the contracting officer again requested information concerning the type of buckle to be used, and on August 6,1954, replied to a letter from counsel for plaintiff, who had requested a decision with respect to the matter. On August 10, 1954, counsel for plaintiff responded that the information furnished by Spiotta & Company with respect to the buckles under a contract of its own *64should be incorporated by reference as the information needed in connection with contract TAP-2020.
31. On October 4,1954, counsel for plaintiff requested findings of fact in this disputed matter, and by findings of fact dated November 5, 1954, the contracting officer determined that the contract price should be reduced by $.078125 per unit (a total of $2,656.25) by reason of the substitution of an aluminum buckle for a phenolic buckle because of savings to the contractor.
32. An appeal was taken from the reduction instituted by the contracting officer in the name of Beaconwear, the appeal being signed by one Charles M. Silverman, who was designated thereon as “Authorized Representative.”
33. All correspondence by the defendant introduced into evidence at the administrative hearing was addressed to Bea-conwear Clothing Company and all correspondence by plaintiff in this record was signed in the name of Beaconwear Clothing Company.
34. The Armed Services Board of Contract Appeals, by decision dated December 29, 1955, ASBCA No. 2751, sustained the appeal and determined that no savings accrued to the contractor and that no reduction in the contract unit price could be made.
By partial payment voucher No. 13, dated June 3, 1955, the amount of $2,720 was refunded by defendant through payment to the Bank as assignee of Beaconwear. Plaintiffs have not established that they are entitled to recover from defendant on account of the buckle claim.
DeviatioNS Claim
35. Pursuant to Beaconwear’s request, the contracting officer on January 22,1954, granted permission to deviate from certain specification requirements, the pertinent one here being designated Operation 33C. On March 19, 1954, the contracting officer, by Modification No. 4, authorized certain further deviations from specifications, namely, Operations 41C, 41L and IOC. An adjustment reducing the contract price by $.0095833 per unit was made as a result of the three last mentioned authorized deviations. Deductions were accordingly made on partial payment vouchers 1-9, inclu*65sive, and there is now no controversy with respect to these deductions as a basis for reduction in the contract price.
36. By letter dated July 19,1956, to Beaconwear, the successor contracting officer requested evidence of savings to the contractor by virtue of certain permitted deviations. On August 20, 1956, the successor contracting officer addressed another letter (same as the one dated July 19, 1956) to Beaconwear. By letter of November 7, 1956, the successor contracting officer stated that $3,146.93 was due the defendant for savings derived from deviations permitted in Operations 33C, 41C, and 41L, and requested payment accordingly. No withholding from contract payments was ever made on this account.
37. On December 3, 1956, an appeal to ASBCA from the November 7,1956, decision was entered in the name of Bea-conwear by Mr. McDermott, counsel for Beaconwear.
By findings of fact dated January 15,1957, to Beaconwear, forwarded by registered mail return receipt requested, the contracting officer formalized his prior determination of November 7,1956.
In reply, the contracting officer received a handwritten letter postmarked Hollywood, Florida, dated February 5, 1957, signed by one Joseph Nasher, which stated as follows:
In reference to Q.M.D.P. CEA Tap 2020 (01-2078-C-53) Beaconwear Clothing Co.
In reference to the above contract the same was assigned legally and with approval of the Quartermaster General, and wish to state the [sic] when the [sic] was assigned all records and dealings was [sic] had between Spiotti [sic] & Co., Atlantic City, New Jersey and with the Quartermaster depot so that the Beaconwear had no further connection with same, and hence had no records or dealings in said contract.
If your department will get in touch with the above mentioned Spiotta, we believe this matter can easily be straightened out. This concern the Beaconwear went out of business on March 31-54 at which time same was foreclosed by the mortgagee. So that as far as the contract aforementioned is concerned no records or any other connection was had with it, by the Beaconwear. I trust this enlightens your department as to whom to deal with and obtain the necessary information in regard to adjustment of this matter. If there is anything fur*66ther that we can be of assistance we will be glad to help, even tho I am a very sick man.
38. The statement quoted in the preceding finding was the first advice or notice which the defendant received to the effect that Beaconwear had gone out of business and that' it had no connection with the contract after March 31, 1954.
39. By letter dated in February 1957, the successor contracting officer advised Mr. Joseph Nasher as follows:
¡Receipt of your letter dated 5 February 1957 is acknowledged.
You are advised that Beaconwear Clothing Company remains responsible and liable for the performance, of the above contract regardless of any sub-contracting agreements which may have been made. The Decision and Findings of Fact of the undersigned dated 15 January 1957 remains applicable under the contract in question.
40. At an administrative hearing on April 16, 1957, the parties agreed to the consideration by the Board of a deposition, among others, of one Charles Silverman, an employee of Spiotta & Co., who had previously testified in appeals by Spiotta & Co. on the same question of deviations in prime contracts of its own with the defendant. ' No employees of the Beaconwear Clothing Company were presented as witnesses at the administrative hearing or at the trial before this court.
41. At pages 4-5 of the transcript before the Board, the following appears:
Capt. Dickson [for Govt.] : * * * Now, this finding of fact was issued on 15 January 1957 and was sent to Beaconware [sic]. And, according to the registered receipt, the finding of fact was received by Beaconware [sic] on 31 January 1957. And, in reply to this finding of fact, the contracting officer received a letter from a Mr. Joseph McShire [Nasher].2
Mr. ¡McDermott: I don’t even know the gentleman. Captain Dickson : According to the contract, he is a partner of the Beaconware [sic] Company.
42. In the appellant’s brief before the ASBCA on the question raised by the Government as to whether there had *67been an effective appeal because no appeal had been taken from the January 15, 1957, decision of the contracting officer, the following pertinent statements appear:
* * * Mr. Nasher thereupon wrote to the successor contracting officer and informed him that the notice should have been given to Spiotta & Company, Atlantic City, N.J. to whom the contract had been turned over.
# * * ❖ *
* * * it is submitted that the document dated 15 January 1957 was never effectively delivered to appellant. On and since that date Beaconwear Clothing Co. was no longer at 141 Malden Street, Boston 18, Mass. It was out of business. Its affairs had been wound up and the partnership dissolved subsequent to the completion of deliveries under the instant contract. * * *
* * * When Joseph Nasher replied to the successor contracting officer’s letter of 15 January 1957 he informed him that this whole contract had been taken over by Spiotta & Company.- * * *
It is accordingly submitted that there is an effective appeal * * * for the * * * reason that the supplemental (although identical) decision of 15 January 1957 was never delivered to appellant.
43. Since the facts show that the decision of January 15, 1957, was delivered to one of the Beaconwear partners, it appears reasonable to find that the designation “appellant” in the brief referred to Spiotta and that he was a party in interest. This conclusion is further strengthened by the Bank’s obvious lack of knowledge of the litigation until it was brought into the case by defendant, the lack of appearance of either of the Beaconwear partners at the trial, and the fact that Spiotta was made a party to this litigation long after the suit was filed in this court.
44. The ASBCA, by decision No. 3979, sustained the appeal to the extent of $2,911.82, but found that the appellant had incurred savings to the extent of $235.11, which was found to be an equitable adjustment in favor of defendant. That sum was subsequently deducted by an adjustment on final payment voucher No. 14.
45. All correspondence by the defendant introduced in evidence at the administrative hearing was addressed to Bea-conwear Clothing Company and all correspondence by the *68plaintiff introduced, in evidence at that hearing was signed in the name of .Beaconwear Clothing Company.
46. Although the first amended petition filed herein alleged that the administrative decision was erroneous, plaintiff has presented no proof on this issue, and the requested findings seek only the sums of (1) $1,040.42, the amount the defendant admitted is due the legal owner of the claim on the Government Furnished Property item, and (2) $987.62 on the discount claim.
GOVERNMENT FtJRNISHED PROPERTY CLAIM
47. Subsequent to the Board’s decision in ASBCA No. 8979, concerning the claim for savings because of deviations, request was made by plaintiff on August 19,1957, for release of funds allegedly due Beaconwear, but the successor contracting officer advised plaintiff’s attorney by telephone that there were amounts due the Government for unaccounted for Government-furnished property, and for other costs and expenses not involved or contested here.
48. The unaccounted for Government property had been the subject of prior correspondence with Beaconwear under dates of August 10, 1954, October 26, 1954, November 16, 1954, and November 14, 1955. - The August 10, 1954, communication was a standard form requesting a “Return of Property Certification” and was returned signed by Joseph Spiotta, but a second such request;, dated November 16,1954, was sent to Beaconwear marked “Must be signed by owner, partner or officer (give title) ” and was thereafter, on December 7,1954, returned signed by Lawrence R. Nasher, Partner, with the penned notation “As per subcontractor, Spiotta & Co., claims all gov’t merchandise has been returned.”
49. On October 8,1957, request was made for a finding of fact on the subject of the Government furnished property item, and on November 13,1957, the contracting officer issued findings of fact and decision that Government furnished property valued at $3,173.75 remained unaccounted for by the contractor. An appeal was taken to the ASBCA on November 27, 1957, and a hearing was held on November 19,1958, in Washington, D.C.
*6949(a). Appellant’s Exbibit 2 introduced at the hearing was a letter dated June 16,1954, signed “Beaconwear Clothing Co., Charles M. Silverman, Agent,” and stated, after listing certain property still in the contractor’s possession:
The above are located at our subcontractor Spiotta & Co., 23 North Arkansas Avenue, Atlantic City, N.J., and we would appreciate your sending them the necessary documents for the return of the above, inasmuch as shipping has been completed on this contract.
49(b). Defendant’s Exhibit 10 in the record before this court is a letter on Beaconwear letterhead signed for Beacon-wear by Charles M. Silverman. The address of the Beacon-wear Company, 141 Malden Street, Boston, Massachusetts, is x’d out and the address of Spiotta & Company is typed in.
50. At the administrative hearing, therefore, representatives of Spiotta took the position that Spiotta was a subcontractor and disclaimed any responsibility as a subcontractor for the loss of the Government furnished property. The Board found as a fact that Spiotta was not responsible for the shortage in the material and had accounted for everything sent to them, but that Beaconwear was indebted to the defendant in the sum of $1,694.95 for unaccounted for Government furnished property. In its petition in this court, however, Spiotta did make claim to all amounts asserted, including any sum due under the Government furnished property claim.
51. Although the first amended petition herein alleged that the decision of the ASBCA in connection with the Government furnished property claim was erroneous, plaintiffs have presented no proof on this issue and in its requested findings seeks only the sum of $1,040.42, the sum the Government has admitted is due the legal owner of the claim on this item. It is found from a review of the administrative record that the Board’s decision that there was due defendant on this account the sum of $1,694.95 is correct. Since only $2,735.37 of the originally claimed $3,173.75 was deducted from the final voucher by the Government, the difference between $2,735.37 and $1,694.95, or $1,040.42, is the amount due the legal owner of this claim, (finding 46)
*70Discount Claim:
52. Paragraph 3 of the conditions of contract TAP-2020 specified as follows:
(a) Prompt payment discounts will be included in the evaluation of bids, provided the period of the offered discount is sufficient to permit payment within such period in the regular course of business under the delivery, inspection, and payment provisions of the Invitation and Bid.
(b) In connection with any discount offered, time will be computed from date of delivery of the supplies to carrier when delivery and acceptance are at point of origin, * * * or from date correct invoice or voucher (properly certified hy the Contractor) is received in the office specified by the Government if the latter date is later than the date of delivery.
Discounts will be allowed by bidder for prompt payment as follows:
1% — 20 calendar days
Terms 10% — 20 days
53. Plaintiffs claim that prompt payment discounts were erroneously taken by defendant in the sum of $987.62. As noted in finding 3 above, defendant has conceded that it did in fact take such improper discounts, but only in the amount of $680.61. Review of the record, including the invoices and vouchers on the pertinent shipments, indicates that $680.64 is the correct figure. Defendant alleges, however, that this sum is not recoverable because of plaintiff’s failure to exhaust its administrative remedies.
54. The record shows that both the plaintiff Bank as-signee and the plaintiff Spiotta received copies of the payment vouchers forwarded by the defendant during the course of the contract. No question was ever raised by any of the plaintiffs herein concerning the discounts taken by the defendant on these payments until the filing of the second amended petition on February 17,1960.
55. It is found as a fact that no administrative remedies were pursued with respect to the discount claim.
defendant’s counterclaim
56. Defendant’s counterclaim arises out of a separate and distinct contract which Beaconwear performed for the Gov-*71eminent. That contract, No. DA30-352-TAP-1811, called for the manufacture of 250,000 woolen field jackets for the Army and was awarded to Beaconwear on May 20, 1953. Spiotta was not involved in any manner in that undertaking.
At Beaconwear’s request, the Government permitted ten separate deviations in the contract operations. All of the deviations were effected and resulted in savings to the contractor. Thereafter, the contracting officer determined that the savings amounted to $39,225.77, and he issued findings of fact stating that under the Changes clause of the contract that amount was due the Government. Although the findings were mailed to Beaconwear on September 12,1957, the evidence does not establish that Beaconwear, which had long since ceased to operate as a business, received them. Beacon-wear failed to file an appeal from the decision of the contracting officer within the 30 days required by the Disputes clause of the contract.
57. The evidence of record in support of the counterclaim consists of the affidavit of the contracting officer, the affidavit of Allen Berkowitz, and the affidavit of Albert M. Greene, all of which affidavits were offered in evidence by plaintiffs and admitted without limitation. The affidavits show that the contracting officer determined the amount due the Government by computing savings realized by Beaconwear in direct labor, savings of overhead computed at 80 percent of the direct labor savings, and profit computed at 6 percent of the direct labor and overhead savings. The following table shows the savings to Beaconwear and the amount due the Government as found by the contracting officer:
Operation:
46 J_ $288.87
27 O and D_ 3, 813.48
7E_ 150.89
11A_ 603.54
37 S and T_ 1,207.09
35_ 3, 621.23
41 O and F_ 2, 860.11
41A _21, 751.20
61_ 2,558.57
61 material savings_ 93.48
48(D_ 1,364.57
48D material savings_ 947.62
39,260.65
Less discount due contractor_ 34.88
Amount due the Government_ 39,225.77
*7258. The direct labor savings, as found by the contracting officer, were estimated by Allen Berkowitz. His affidavit shows that he was employed in a responsible position by defendant and has had over 20 years’ experience in the garment industry in both private employment and Government service. His affidavit further states that he was frequently called upon to calculate savings in direct labor and material that resulted from operational deviations in the manufacture of military clothing and that the estimates he used are based upon unit price rates and material costs in producing the same item by a clothing manufacturing division of defendant.
59. The contracting officer’s determinations of the savings in overhead at 80 percent of direct labor and in profit at 6 percent were based upon estimates made by Albert M. Greene. Mr. Greene’s affidavit states that he is a college graduate with a major in accounting; that he has been engaged in accounting work since 1937; that he had held responsible accounting positions with defendant and is familiar with methods used to determine costs, overhead and profit. His affidavit further states that he is regularly called upon to participate in evaluations of savings realized from deviations in contract operations and that in the absence of the actual cost experience of Beaconwear, he estimated the overhead savings to be 80 percent of direct labor and the savings in profit to be 6 percent of the direct labor and overhead savings. His rates of 80 percent and 6 percent were based on .estimates arrived at by the Renegotiation Board, the Army Audit Agency, and other agencies as being the median rate of overhead and profit utilized in the garment industry at the time the contract was performed.
60. Beaconwear’s books were not offered in evidence and, as stated, there is no evidence as to what its actual cost experience on the contract was. However, with respect to the deviation in Operation 41A, for which the defendant in its counterclaim claims Beaconwear saved $21,751.20, the evidence shows that by an agreement between the contracting officer and Beaconwear under date of March 2,1954, the contract price involving 190,000 woolen jackets was reduced by $5,225..
With respect to the deviations in Operation 46J under *73which defendant in its counterclaim claims Beaconwear saved $288.87, the evidence shows that by an agreement between the contracting officer and Beaconwear on or about September 18, 1953, the contract price was reduced by the sum of $60.56 as a result of this deviation involving 3,028 woolen jackets.
61. The total amount withheld by defendant on Beacon-wear’s contract is $11,931.85. The amount includes unpaid invoices and the reductions in contract price accomplished through the agreements made with respect to Operations 41A and 46J.
62. After deducting the amount withheld by defendant and making allowances for the agreements made by the parties with respect to Operations 41A and 46 J, the net amount that would be due defendant if it is entitled to recover the amounts claimed on the remaining deviations included in the counterclaim is the sum of $10,539.41, as shown in the following tabulation:
Total counterclaim_ $39,225. 77
Less:
Operation 41A_$21,751.20
Operation 46J_ 288.87
- 22> 040,07
17,185. 70
Less amount withheld by defendant_ 11, 931.85
5,253.85
Plus: Amount to which defendant is entitled on:
Operation 41A_$5,225.00
Operation 46J_ 60.56
- 5, 285.56
Net amount of defendant’s counterclaim_ 10,539.41
63.In ASBCA No. 3979, an appeal of Beaconwear under contract No. TAP-2020, the ASBCA made a decision as to the equitable and reasonable adjustment in the contract price that should be allowed because of a deviation permitted in one contract operation. The Board’s opinion recited that a Government cost accountant testified that the contractor’s operations showed a percentage of overhead to direct labor of 30.47 percent. The opinion also stated that after the contracting officer had calculated the savings in direct labor, he added 50 percent of the direct labor savings for overhead savings and a profit of 6 percent of the total thereof in accordance with Quartermaster policy.
*7464. Upon a consideration of all the evidence of record relating to the counterclaim, it is found that the fair and reasonable amount of the savings realized by Beaconwear. as a result of the ten deviations allowed by defendant in contract No. TAP-1818, was the sum of $5,269.70.-
CONCLTTSION 0E LAW
Upon the foregoing findings of fact, which are made, a part of the judgment herein, the court concludes as a matter-of law that defendant is indebted to Beaconwear Clothing. Co. in.the sum of $1,040.42 for the balance due on contract No. TAP-2020; that defendant is entitled to. recover $5,269.70 on its counterclaim against Beaconwear Clothing Co., and that after offsetting.the counterclaim against the amount due the Beaconwear Clothing Co., defendant is entitled to judgment on its, counterclaim in the net amount of $4,229.28. The court further concludes as a matter of law that The Amalgamated Bank of New York and Joseph Spi-otta, third-party plaintiffs, are not entitled to recover and their petitions are dismissed.
In tie present action, the original petition and the first amended petition asserted only the first three claims. The Discount claim was asserted for the first time in the second amended petition.
Two other counterclaims asserted' by defendant, In the sums of $18.32 under another contract DA— 30-280-QM — 8731 and $101,402.66 for an Internal Revenue indebtedness, have been abandoned.
Since tie letter was signed by Joseph Nasher, it appears obvious that either the reporter or the defendant’s representative misstated the name.