Overview
This section defines the scope of FAR Subpart 32.8, establishing the regulatory framework and policies for the legal transfer of a contractor's right to be paid by the government to a third party. It specifically implements the statutory requirements of the Assignment of Claims Act of 1940.
Key Rules
- Statutory Foundation: The subpart is governed by the Assignment of Claims Act of 1940, specifically codified at 31 U.S.C. 3727 and 41 U.S.C. 6305.
- Regulatory Purpose: It prescribes the mandatory policies and formal procedures that both contractors and government agencies must follow to effectuate a valid assignment of claims.
- Defined Authority: Establishes "the Act" as the primary legal reference point for all subsequent rules regarding the transfer of payment rights within this subpart.
Practical Implications
- Financing and Liquidity: This section enables contractors to use their government contracts as collateral to obtain working capital or loans from financial institutions.
- Risk Mitigation: By following these prescribed procedures, the government ensures it pays the correct party and is protected from potential double-liability or conflicting claims for the same contract funds.