Difference between revisions of "Novation and Change-of-Name Agreements"
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Revision as of 10:17, 20 August 2014
Novation and Change-of-Name Agreements[1]
Contents |
Definition
General
This FAR subpart prescribes policies and procedures for— (a) Recognition of a successor in interest to Government contracts when contractor assets are transferred; (b) Recognition of a change in a contractor’s name; and (c) Execution of novation agreements and change-of-name agreements by the responsible contracting officer.
42.1204 Applicability of novation agreements
(a) 41 U.S.C. 15 prohibits transfer of Government contracts from the contractor to a third party. The Government may, when in its interest, recognize a third party as the successor in interest to a Government contract when the third party’s interest in the contract arises out of the transfer of—
- (1) All the contractor’s assets; or
- (2) The entire portion of the assets involved in performing the contract. (See 14.404-2(l) for the effect of novation agreements after bid opening but before award.) Examples of such transactions include, but are not limited to—
- (i) Sale of these assets with a provision for assuming liabilities;
- (ii) Transfer of these assets incident to a merger or corporate consolidation; and
- (iii) Incorporation of a proprietorship or partnership, or formation of a partnership.
(b) A 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, whether there is a purchase of assets or a stock purchase, there may be issues related to the change in ownership that appropriately should be addressed in a formal agreement between the contractor and the Government (see 42.1203(e)).
42.1205 Agreement to recognize contractor’s change of name
(a) If only a change of the contractor’s name is involved and the Government’s and contractor’s rights and obligations remain unaffected, the parties shall execute an agreement to reflect the name change. The contractor shall forward to the responsible contracting officer three signed copies of the Change-of-Name Agreement, and one copy each of the following:
- (1) The document effecting the name change, authenticated by a proper official of the State having jurisdiction.
- (2) The opinion of the contractor’s legal counsel stating that the change of name was properly effected under applicable law and showing the effective date.
- (3) A list of all affected contracts and purchase orders remaining unsettled between the contractor and the Government, showing for each the contract number and type, and name and address of the contracting office. The contracting officer may request the total dollar value as amended and the remaining unpaid balance for each contract.
References and Notes
- ↑ FAR 42.12
