Overview
This section defines the terms "designated agency" and "no-setoff commitment" to clarify the scope and protections available under the Assignment of Claims subpart.
Key Rules
- Designated Agency: Limited specifically to departments or agencies within the executive branch of the United States Government.
- No-setoff Commitment: A contractual promise where the government agrees not to reduce payments to an assignee (such as a bank) in order to settle debts the contractor owes to the government.
- Statutory Compliance: The "no-setoff" commitment is governed by and subject to the limitations established by the Assignment of Claims Act.
Practical Implications
- The "no-setoff" commitment makes government contracts more "bankable" by providing financial institutions with the assurance that their repayment stream will not be interrupted by the contractor’s unrelated liabilities or debts to the government.
- These definitions ensure that only executive branch agencies can offer these specific financial protections to assignees under this FAR subpart.