NOVATION OF CONTRACT HELP FOR FEDERAL CONTRACTORS IN ALL STATES.
Avoid Unnecessary Headaches with the FAR Novation Agreement Government Contracts Process. Increase the Chance of Your Deal Going Through And Avoid Violating the Anti-Assignment Act When Executing a Government Contract Novation.
- We Help Federal Contractors in All States Handle the Unique Nuances in Assignment of Contract Issues in Federal Contracting.
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The Federal Acquisition Regulations (FAR) do not Mandate that the Government is always obliged to approve your novation agreement. The last thing you want to experience is that after substantial negotiations with the buyer or seller, the contracting officer disapproves the novation agreement.
With law offices in Washington, DC and in Denver Colorado, At Watson & Associates, LLC experienced federal attorneys frequently help clients nationwide to navigate through the confusing process. The goal is to help make the buying or selling transition a lot smoother while satisfying the contracting officer’s needs.
Get Detailed Help Through FAR 42.12 Government Contract Novation Agreement Process
Depending on what type of business sale you are involved with (stock purchase or asset purchase), the government contract novation process under FAR 42.12 can have its ups and downs. As the buyer or seller, you want to make sure that you understand what the government’s interests are. Only then can you intelligently move forward. By understanding the novation process, you can minimize unnecessary delays while getting the contracting officer to buy off on your plans. Watson’s federal attorneys will help you from the beginning of the business sale all the way through approval of the novation agreement by the contracting officer. Our law firm can help 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
Get Prepared to Process Your Novation of Contract or Assignment of Contract Rights
If you are the buyer or seller of a business and want to novate a contract, then you should make sure that the contracting officer (CO) is aware of your plan. You may even want to ask the contracting officer whether there are any specific requirements that he or she wants to see when it comes to assignment of contract rights. Remember, that the only has to approve a contract novation if it is the government’s interest.
Therefore, you may very well have additional points to prove to the CO.
Under the FAR 42.1202 novation clause, if you want to get the contracting agency to recognize a successor in interest to government contracts or a name change, you have to submit a written request to the responsible contracting officer (RCO).
What Can You Do to Minimize the Possibility of the Contracting Officer’s Disapproval of Request for Novation of Contract?
As stated before, if your novation does not fall within the purview of what is in the Government’s interest, then the CO does not have to approve government contract novation agreement requests. This can create a problem if you have already executed the buy-sell agreements with no protections in place. Under FAR novation contract law, regardless of the private execution of the novation agreement, your company is still obligated to perform the contract. If you do not perform, then you are subject to termination for default. Things that you can do to increase the chances of getting your novation agreement approved include:
- Keeping the CO involved in the initial stages of your negotiations with the buyer or seller. CO’s don’t want to be surprised with a request for contract novation approval.
- When you submit your , you may want to explain how the transfer of your contract to the buyer or seller would arguably be in the government’s interest.
- What past performance does the new owner have that the agency should consider
- Consider talking about the reduction of risk of non-performance
As federal government contract novation law attorneys, we help in all aspects of the process.
What is the Process When There is a Potential Conflict of Interest?
One of the things that the CO must do when deciding whether to approve your novation agreement government contracts request is to assess whether there is a potential conflict of interest under FAR 9.5. If there is, and it cannot be resolved, and there is a still a decision that it is in the best interest of the government to approve the novation of contract, then you would want to submit a request for a waiver under FAR 9.503 .
Can Your FAR Novation Agreement Impact Your Small Business Status?
Yes, it can. Did you know that if you are purchasing a division of one company, the past revenues can actually hurt your small business status? These are all areas where our contract novation law attorneys can help. Having the best professional help as you go through the novation process can be of benefit. Part of your obligations under FAR 42.12 when submitting a contract novation request is to certify that you or the buyer is and would be a small business.
- How your novation impacts your small business status is one of the most commonly missed areas when assessing FAR novation agreements.
- Even if immediately after you get your novation agreement approved, you are awarded a government contract, it can be challenged in an SBA size protest.
Discover Potential Pitfalls in the Government Contract Novation Process and Avoid Them
There is more to the government contract novation process than simply filling out forms. We help with the following:
- Making sure that your small business status is still in place
- Assessing whether your asset purchase and transfers are really true assets in the government’s eyes (this is one area where government attorneys scrutinize novation contracts.
At Watson & Associates, LLC our government contract novation 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.
- Get help from beginning to end
- We work with state attorneys to make FAR novation agreement rules are in order
- Avoid costly mistakes with asset transfers and Anti-Assignment Act violations
- Prompt turnarounds
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.
- Understand that the contracting officer is not obligated to approve your novation agreement
What is a Novation Agreement?
Under the federal procurement context, a contract novation agreement is a contract between the original parties to contract to substitute one of the parties. FAR 42.12 governs novation of contracts for federal projects. The contracting officer must approve the agreement before it is binding. If you are buying or selling a business with federal contracts, you should be familiar with the process and the nuances involved with novation of government contracts.
Novation of Contract Definition and Meaning?
Under federal procurement laws, the novation definition and meaning may be somewhat different than 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 responsible 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.
When you are involved in a purchase and sale of a business, it is important to assess the possibility that option years to existing contracts may not be extended. This is a risk for the buyer of a stock purchase novation contract. When there is such a potential problem, the value of the sale of the business may be impacted.
What happens of the buyer’s small business status expires? Would the small business status be gone? Generally no. The rule has been that once you were a small business at the initial bidding and award stage, then you should be fine. The contract novation should not impact your status as a small business.
Does Your Stock Purchase Sale Mean that The Government Has to Approve Your Novation Agreement?
Obviously, FAR 42.12 suggests that your novation agreement is unnecessary when there is a change in the ownership of a contractor as a result of a stock purchase, with no legal change in the contracting party, and when that contracting party remains in control of the assets and is the party performing the contract. However, under FAR novation contract law, when you execute stock purchase agreement, you should, by all means, seek approval of the contracting officer ahead of time.
- The key to any approval of a FAR novation agreement is to get the contracting officer involved as soon as possible. Arguably if the government’s interest in jeopardy, there may be an exception.
- Remember that approval of your novation agreement depends on what is in the best interest of the government.
The FAR 42.1204 novation clause does not establish any timeline or schedule for the novation process. However, you should plan ahead and speak to the responsible contracting officer. The closing deadlines should contemplate the approval process and the fact that there may be additional requirements from the CO.
Understand that in an asset purchase, the government’s attorney may not agree with how the deal is structured and what constitutes an asset. The goal here is not to approve a business transaction that violates the Anti Assignment Act.
To speak with a FAR novation contract law attorney, call Watson & Associates at 1-866-601-5518.
Does Your Executed Business Sales Documents Bind the Federal Government? When you executed a buy-sell agreement or an asset purchase agreement, the executed agreement does not automatically force the contracting officer to approve the novation? The agency will only approve your private sale or purchase when it is in the best interest of the government.
- You should always include the contracting officer in the loop from the beginning
- There are a few ways to reduce risk if the contracting officer does not approve your contract novation
FAR 42.12 Novation Clause :: N Requirements in Asset Purchase Sales
Under FAR 42.12 novation of contract law requirements, 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.
Required Government Contract Novation Documents FAR 42.12o4
When government contractors seek approval of novation of contract agreements 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 contract novation clause, there are several other compliance issues required for novation law transactions. This is where Watson’s government contract lawyers can help balance the interest of the contractor and the government.
WE HELP CLIENTS INVOLVED WITH FAR NOVATION CLAUSE PROBLEMS REGARDLESS OF STATE
Contact Our Government Novation Contract Law Firm
For help with novation agreement government contracts under FAR 42.12, call Watson’s government contract novation law firm at 1-866-601-5518 for immediate help.