Government Business Reorganization

A contractor is reorganizing it's government business into a separate LLC company with a novation.

The contractor has received a request from the government for a general dollar magnitude proposal with identification of any increase/decrease cost to the government and supporting rationale for the reorganization.

The contractor has an established labor and overhead rate structure.

Therefore seek input of lessons learned from similar business ventures and constructive guidance/suggestions of potential issues/concerns.

Reference material previously consulted are FAR 31.205-7, 30.603-2, and 42.12.

Thank you.

The list of areas to be verified is quite long. Seeking the general $ magnitude was a good idea.

Financial capability and Corporate guarantee should be evaluated

Assets transferred (and pension valuation if a closing has occured) and step up would be a concern

Liabilites transferred - legal proceedings, environmental, being dis-associated from causing entity

Once the Novation is executed much of the bargaining for special protections/agreements will be lost.