Required documentation needed before novating a subcontract
Started by LeighHar · Nov 18, 2022 · 6 replies
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LeighHar
Nov 18, 2022 · 3y ago
If you novated a subcontract, what documentation did you require before doing so? If you had a contract novated, what did your prime contractor asked of you before doing so?
FAR subpart 42.12 lays out the requirements for the government to novate an agreement from the original contractor to a successor, and specifically, as per the list of items at 42.1204(e) and (f). In the case of the need to novate an agreement between you (as the prime contractor) and a subcontractor who has been bought and absorbed (merger situation) by the successor in interest, what documentation does your organization/entity require in order to process the novation? I'm assuming the extensive list required for government Contracting Officers to novate contracts (as per FAR 42.12) with their direct prime contractor is not necessary at the prime/first-tier subcontactor level but I'm curious to hear from others.
I recently was advised by an entity that they did not require any supporting documentation before novating a subcontract agreement, which seems extremely irresponsible to me, but look forward to hearing from those who have such experience. Novations are brand new to me so I'm excited to hear others' experiences.
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LeighHar
Nov 22, 2022 · 3y ago
I'm hoping this follow-up will help. I understand that novations usually occur between the government and the prime contractor. In this case, we are the prime contractor and a subcontractor (who was named in our proposal) has been bought by another entity and will be entirely absorbed by the new entity. We will need to modify their subcontract to recognize the new entity. The FAR details out what COs need to obtain from prime contractors undergoing a buy-out, but I am wondering what documentation we should be requesting to modify the agreement and ensure we are conducting due diligence and have sufficient documentation on file. Our contract also does not contain, 52.244-4. As I mentioned, the subcontractor was named at proposal phase though. Based on this, should I just inform the CO of the change in subcontractor and the circumstances of that change? Should I provide the CO with any documentation provided by the original subcontractor/new subcontractor?
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Vern Edwards
Nov 22, 2022 · 3y ago
Hire an attorney to handle the subcontract novation for you. That's not an amateur-hour do-it-yourself task.
Ask the CO what if any information they want you to provide concerning a subcontract novation.
See this: https://www.rocketlawyer.com/gb/en/quick-guides/novating-a-contract
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LeighHar
Nov 23, 2022 · 3y ago
Thank you for the response, Vern.
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Patrick Mathern
Nov 23, 2022 · 3y ago
LeighHar - reach out to me directly via email. I have someone on my team with experience in this and should be able to help quickly and won't likely cost you anything unless you want us to do the work for you. We are currently building novations into SpendFile, a SpendLogic module that deals with electronic procurement files...the shared insights here would be beneficial to all.
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Retreadfed
Nov 23, 2022 · 3y ago
On 11/22/2022 at 10:46 AM, Vern Edwards said:
Hire an attorney to handle the subcontract novation for you. That's not an amateur-hour do-it-yourself task.
LeighHar, remember that a subcontract is essentially a commercial transaction between the prime and sub. Therefore, state laws are implicated by a novation of a subcontract so you need to be advised by someone familiar with the applicable state law so you will wind up with an enforceable subcontract.
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joel hoffman
Nov 24, 2022 · 3y ago
LeighHar, you mentioned FAR clause 52.244-4. Is this an A/E contract? Just curious.
I have no disagreement with the previous responses.