With no explanation, chose the best option from "A", "B", "C" or "D". In United States Fidelity & Guaranty Co., a payment-bond surety and twenty-three subcontractors with unpaid claims sued the United States for a progress payment which they alleged the government had improperly paid after receiving notification of the subcontractors’ claims. The Court of Claims dismissed the subcontractors for lack of standing, but did not dismiss the surety. The court stated that “[t]he surety is ... subrogated to the rights of the laborers and materialmen who might have superior equitable rights to the retainage but no right to sue the defendant.” Id. at 10, 475 F.2d at 1382. Hence, the case cited by USPS in fact supports the proposition that a surety does have standing in this situation. See also Balboa Ins. Co. v. United States, 775 F.2d 1158, 1160-61 (Fed.Cir.1985) (<HOLDING>); United Elec. Corp. v. United States, 227

A: recognizing that the gjovernment as obligee owes no equitable duty to a surety  unless the surety notifies the government that the principal has defaulted under the bond  notice by the surety is essential before any governmental duty exists
B: holding that a surety has standing to sue for a progress payment released by the government after notification by the surety of unpaid subcontractors
C: holding that there is no privity of contract between the government and a surety since the government is not a party to the agreement between the surety and the contractor the government never undertakes an obligation to the surety
D: holding that the surety was not released to the extent of improper ly paid funds because the contractor had applied the released funds to progress on the contract
B.