Overview
FAR 42.1200 defines the scope of the subpart, which establishes the specific policies and administrative procedures for managing legal changes to a contractor’s identity or corporate structure. It focuses on the formal recognition of new entities after asset transfers and the official processing of name changes.
Key Rules
- Successor in Interest: Establishes the framework for the government to recognize a third party as the new holder of a contract when the original contractor transfers its assets.
- Name Changes: Provides the procedures for updating contract records when a contractor undergoes a legal name change without transferring assets to another entity.
- Formal Agreements: Mandates the use of specific legal instruments—Novation Agreements and Change-of-Name Agreements—to document these transitions.
- CO Responsibility: Assigns the execution of these formal agreements to the responsible contracting officer.
Practical Implications
- Continuity of Payment: Contractors must strictly follow these procedures to ensure the government’s financial systems are updated; failure to execute these agreements properly can lead to a suspension of progress payments or invoices.
- Due Diligence: During mergers and acquisitions, both the buyer and seller must prioritize the novation process to ensure the government legally recognizes the buyer as the successor in interest.