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50 Procurement Law. 1 (2014-2015)

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The Novation of Government Contracts and the Unreliable and Unpredictable Operation of Law Exception BY WILwUw A. RoBERs, III AND KAY TATuM William A. Roberts, III Kay Tatum It is no wonder government contractors seek to structure transactions to legally avoid the necessity of undertaking a novation. Collecting the information and documents required for a novation is a significant task for the con- tractor, and reviewing them and assessing if it is in the government's interest to grant the requested novation add greatly to the administrative duties of the contracting offi- cer. By its nature, a novation occurs at a time when a busi- ness is in transition and faced with numerous uncertain- ties that can undermine efficient operations. A novation, which can take anywhere from several weeks to many months, extends and compounds the uncertainties of transition at a time when managers need to be focused on achieving the business goals the transaction was designed to accomplish. So why should any government contractor consider undertaking a novation if there is a solid argu- ment a novation is not required? The answer is that the William A. Roberts, III and Kay Tatum are partners at Wiley Rein, LLP. Roberts is co-chair of the firm's Government Contracts practice and Tatum is chair of the firm's Corporate practice group. case law and industry practices surrounding when a nova- tion is required, especially in circumstances that implicate a transfer by operation of law, are not consistent, and the consequence of miscalculating when a novation is re- quired could be the loss of the most significant assets and source of revenue of the business. Backgon Companies holding federal government contracts face spe- cial obstacles to assignment of contracts under the Anti- Assignment Act. The Anti-Assignment Act refers to two statutory provisions: the Assignment of Contracts Act,' which prohibits assignment of government contracts, and the Assignment of Claims Act,2 which bars assignment of claims against the United States. Under the Assignment of Contracts Act, [tlhe party to whom the Federal govern- ment gives a contract or order may not transfer the contract or order, or any interest in the contract or order, to another continued on page 11 STATE & LOCAL: Public Improvement Districts 7 Pensive Poser: Who Doesn't Like Bid Protests? 9 Section Honors Section Director 16 Committee News 19 Published in The Procurement Lawyer, Volume 50, Number 1, Fall 2014. © 2014 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

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