Novation agreement

FAR 2.101 defines the term and FAR 42.12 sets the process; the model agreement is at FAR 42.1204(i), and the simpler change of name agreement in FAR 42.1205 covers a contractor that only renamed itself. The Anti-Assignment Act normally bars transferring a government contract, so a novation is the government's consent to an exception it finds in its own interest. The buyer sends a package to the responsible contracting officer with the sale documents, evidence that the transferee can perform, and audited or certified financial statements, and one contracting officer handles the request for all affected contracts.

What to check, if you are buying or selling a firm with government contracts: whether each contract can transfer at all (set-aside and 8(a) awards carry SBA rules), how long the novation may take, and the schedule and price risk if the agency declines. Keep performing under the old name until the agreement is signed.

What it is not: an assignment of claims, which transfers only the right to be paid to a lender under FAR 32.8.