Government Novation Contract Agreement

Did you know that The Anti-Assignment Act prohibits the sale of government contracts?

If you are looking to buy a business or sell a business that involves existing government contracts, there are certain nuances about novating contracts  that you should be aware of. Failure to understand government contract novation rules can be problematic.

At Watson & Associates, LLC our government contract lawyers help clients to develop and propose a more acceptable contract novation agreement package to the contracting officer. FAR 42.12 has specific requirements for novation of government contracts.

Our federal government procurement attorneys can help with assessment of asset purchase sales and prepare our clients to ultimately get through the buying and selling process.

Help Through the FAR Novation Agreement Process

Depending on what type of business sale you are involved with, Watson’s government contract attorneys help clients from the beginning of the business sale all the way through approval of the novation agreement by the contracting officer. The law firm helps transferors or transferees with:

  • Assessing the overall business sale for potential problems under FAR 42.12
  • Working with client’s corporate attorneys to validate and resolve potential novation contract problems.
  • Preparation of government contract novation agreement
  • Reviewing asset purchase agreements to make sure that our client is not simply selling government contracts.
  • Overseeing the entire process if requested

To speak with a FAR novation agreement attorney, call Watson & Associates at 1-866-601-5518.

Novation Definition and Meaning?

Under federal procurement laws, the novation definition and meaning may be somewhat different that in the commercial sector. A novation contract is appropriate when the party to contract somehow assigns their obligations under a current federal contract to a new party. In government contracting, the agency refers to the new part as a successor in interest.

The Anti-Assignment Act prohibits the sale of government contracts. In other words, unless the contracting officer decides that it is in the government’s best interest to novate a contract, then the government is not obligated to accept a novation agreement. 

  • If the only asset purchased is a government contract, there could be problems.
  • Contractors fail when the contracting officer is suspect of the actual assets sold.

Government Contract Novation Agreement Requirements in Asset Purchase Sales

Under FAR 42.12, the contracting officer can entertain a government contract novation when asset purchase sales arise. When novating government contracts, the government will scrutinize the asset purchase agreement to make sure that there are true assets being transferred.

  • Generally, a novation agreement is not required in a stock purchase sale.

At Watson & Associates, our contract novation law lawyers will weigh in and provide insight to transferors or transferee’s and advise on the potential legal issues that can arise. See additional information about government contract novations.

Government Novation Contract Documents FAR 42.12

When government contractors seek approval of contract novations, they must provide the following:

  • Three signed copies of the proposed novation agreement
  • One copy each of the following:
    • The document describing the proposed transaction, e.g., purchase/sale agreement or memorandum of understanding.
    • A list of all affected contracts between the transferor and the Government
    • Evidence of the transferee’s capability to perform.
    • Any other relevant information requested by the responsible contracting officer.

Under FAR 42.12, there are several other compliance issues required for novation  law transactions.  This is where Watson’s government contract lawyers can help.

Contact Our Government Contracts Law Firm

For help with federal government contract novation agreements under FAR 42.12, call Watson’s law firm at 1-866-601-5518 for immediate help.