Respondent brought this suit in the District Court for Eastern Pennsylvania to recover on a bond given by petitioner, as surety, to secure the performance of a government construction contract as provided by the Heard Act, which requires the contractor to furnish a surety bond to the government as obligee, conditioned upon satisfactory performance of the contract and payment by the contractor for labor and material furnished by subcontractors for the construction. Act of August 13, 1894, 28 Stat. 278, as amended. Act of February 24, 1905, 33 Stat. 811, and March 3, 1911, 36 Stat. 1167, 40 USCA § 270. In authorizing suits on the bond, the Heard Act provides:
'If no suit should be brought by the United States within six months from the completion and final settlement of said contract, then the person or persons supplying the contractor with labor and materials shall * * * have a right of action: * * * Provided, That * * * it * * * shall be commenced within one year after the performance and final settlement of said contract, and not later. * * *'
The contract was for materials for use in the construction of an irrigation project, and was entered into on behalf of the United States by the Department of the Interior under the provisions of the Reclamation Act of June 17, 1902, 32 Stat. 388, 389, 43 USCA §§ 391, 419. By letter of June 16, 1927, the First Assistant Secretary of the Department of the Interior forwarded the claim of the contractor to the General Accounting Office 'for direct settlement,' by a letter which stated that the contract had been completely performed and that, after deducting a stipulated amount as liquidated damage for delay in performance, the balance due was $8,889.30. The letter concluded: 'The claim has received administrative examination, is approved for $8,889.30 and I recommend that the amount found due be paid' from a designated appropriation. Four months later, on October 26, 1927, the General Accounting Office issued its formal certificate of settlement confirming the balance found due by the Department of the Interior. The claim was paid by the Treasurer of the United States on November 5, 1927.
The defense to the present suit on the bond was that it had been begun October 17, 1928, more than one year after performance and final settlement of the contract. The sole question presented is whether 'final settlement,' within the meaning of the Heard Act, was effected by the action of the Interior Department of June 16, 1927, or only by the certificate of the General Accounting Office of October 26th. Judgment for the petitioner by the District Court was reversed by the Court of Appeals for the Third Circuit, 66 F.(2d) 302, which held that the Budget and Accounting Act of 1921, 42 Stat. 23, 31 USCA § 41 et seq., had transferred the authority to make settlements of such contracts from the Department of the Interior to the General Accounting Office, that consequently final settlement did not occur until the action of the General Accounting Office upon the contractor's claim, and that the suit brought within a year was in time. Certiorari was granted. 290 U.S. 618, 54 S.Ct. 100, 78 L.Ed. --, to resolve an alleged conflict between this decision and that in Consolidated Indemnity & Insurance Co. v. W. A. Smoot & Co. (C.C.A.) 57 F.(2d) 995; compare Lambert Lumber Co. v. Jones Engineering & Construction Co. (C.C.A.) 47 F.(2d) 74.