Government contractor acquisitions present unique regulatory hurdles, and one major challenge is the preparation, submission, and execution of a novation package with the U.S. government. While the novation package itself is a hurdle, there are additional factors that impact its success. Below are ten questions government contractors should ask, which can spell the difference between a successful and unsuccessful novation.
Novation Package Documentation
Novation is required for the transfer or assignment of a federal government contract from one entity to another. Novation requirements appear at FAR Subpart 42.12. Even a quick glance of this regulation reveals that the government requires a host of documents to complete the novation process, which can be a complex and time-consuming endeavor. Some requirements are vague, such as providing evidence of the transferee’s capability to perform or proof that security clearance requirements have been met. Other requirements mandate executed documents in triplicate and legal opinions from both parties. Without familiarity with these regulations, it can be easy to get caught in the weeds.
Key Questions and Considerations
While the regulations provide for the required documents, government contractors need to consider a number of other questions when preparing and submitting a successful novation package, such as the following:
- Should I inform my client of the pending acquisition? If so, when? For many novations, keeping the government client informed prior to submission of the novation application is a critical aspect of a successful novation.
- What else could the government request? The regulations grant the government discretion to ask for a broad array of documents.
- When should I begin preparing the novation package? Planning for a novation and starting early on is critical.
- If acquiring multiple government contracts, where should I submit the novation package? Determining who needs to receive the package is not as easy to determine as one would think. The regulations cover a number of different scenarios that could apply. Typically, the package should be addressed to the agency with whom the contract’s highest remaining funded value is held.
- When do I submit the novation package? Sequencing the events that need to occur involves a number of steps and a coordinated effort among various parties.
- Will the government waive any of the requirements? This can occur on a case-by-case basis, which is why engaging the government early in the process can be helpful.
- Will the government accept electronic signatures? This changes depending on the contracting officer, but many require wet-ink signatures.
- What happens after the deal closes but the novation of the government contract has not yet been approved? This waiting period can last months, so it is important to have procedures in place to handle contract performance while things remain in flux.
- How are proposal submissions handled when the novation remains pending? And, of course, how should corresponding awards made during this transition period be dealt with? There are a few options available for parties to bridge this gap.
- How long will it take the government to approve the novation? Some novations take months to process, but the standard range is 3-6 months.
Attorneys in PilieroMazza’s Business & Transactions and Government Contracts groups are uniquely qualified to answer these questions and assist with the novation process from start to finish. This includes structuring a deal, drafting the acquisition documents, putting together a novation package, and the various other ancillary matters that arise during a government contract acquisition. PilieroMazza has streamlined procedures for efficiently preparing and submitting a novation package, which reduce the risk of delay or disrupted business operations.
If you have questions regarding government contracts novations or need assistance with preparing a novation package, please contact Timothy Valley, the author of this blog, an Associate in the Firm’s Government Contracts Group.