Prepare the federal-contract novation file before a business transfer closes

Identify the legal contractor before and after the transaction and who will own the assets used to perform. FAR 42.1204 describes circumstances in which the government may recognize a successor following an asset transfer. It separately says novation is unnecessary for a stock purchase when the contracting party remains legally unchanged, retains control of the assets and performs the contract, while other ownership issues may still need an agreement.

Give counsel the actual transaction documents and contract list. An asset acquisition, merger and stock purchase should not be treated as interchangeable because they share a closing date. Ask counsel and the responsible contracting officer to confirm the process and coordination required for this deal.

FAR 42.1204 calls for a list of affected government contracts with specified contract and financial information. Reconcile the contract register to the legal contractor's records and include modifications. Ask the contracting officer how to handle unsettled items and any uncertain inclusion.

Assign a person to verify each contract number, type and contracting-office contact. Finance should supply the required values and unpaid balances through its reviewed records. Preserve the as-of date used so a later change in the portfolio does not make the original submission appear inconsistent.

The FAR identifies the proposed transaction document and evidence of the transferee's ability to perform, followed by other applicable documents as they become available. Those can include transfer instruments, corporate approvals, legal opinions, financial statements and evidence concerning clearances or sureties. Use the actual regulatory list and contracting officer's instructions to build the checklist.

Mark which items can be prepared before closing and which require the completed transaction. Give each item a responsible professional and acceptance criterion. Do not have an administrative provider substitute a management summary for a required legal opinion or independent-accountant deliverable.

Ask counsel and the contracting officer for the approved instructions governing performance, communications and administrative changes during the transition. The FAR does not promise that the government will concur in every transfer. It describes continuing obligations of the original contractor when the government does not concur.

Avoid releasing a blanket announcement that all federal contracts have moved merely because the business sale closed. Keep the transaction's legal effective date and the government's recognition status visible as separate facts. Route questions from program teams through the assigned contract owner.

Retain the executed novation agreement, its contract schedule and the underlying transfer evidence. Reconcile the final schedule with the submitted population and document any exclusions or later additions. Assign any subsequent contract-system changes through the agency's process.

Give operational teams an approved statement of what changed and when. The file should support the specific contracts recognized in the agreement and preserve unresolved matters separately. A submitted request, even a complete one, should remain labeled pending until the government's required action is documented.