With Sequester, Government Contracting Officers May Insist on Strict Compliance
With the sequester taking place on March 1, 2013, there may be an uptick in workouts involving loans to government contractors, particularly with contractors who rely on bank lines of credit to fund daily operations. Recently, we have experienced significant push-back by government contracting officers, who have begun to insist on strict compliance with both the Assignment of Claims Act of 1940, 31 U.S.C. § 3727, 41 U.S.C. § 15 (Act), and with relevant provisions of the Federal Acquisition Regulations (FAR) implementing the Act.
To ensure strict compliance with the requirements of the FAR, any entity involved in government contract lending should be aware of the provisions found in Subpart 32.8 of the FAR. A few key provisions are highlighted below:
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An assignee of a claim under a government contract must send “a written notice of assignment together with a true copy of the assignment instrument to the:
(1) Contracting officer or the agency head;
(2) Surety on any bond applicable to the contract; and
(3) Disbursing officer designated in the contract to make payment.” -
The form and content of a Notice of Assignment and the accompanying assignment must: (i) be attested by a corporate secretary/assistant secretary and (ii) affixed with the corporate seal. In cases where the corporation has no seal, a true test copy of a corporate resolution authorizing the person signing the assignment may be substituted. Please note that while Section 32.805(c) contains a “suggested format” for notices of assignment, the suggested form does not indicate that a corporate seal or secretary’s attestation is required.
Subpart 32.8 of the FAR contains other requirements and conditions for the effectiveness of an assignment of claims.
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