A recent bid protest decision examines the effect of a novation on a pending procurement. After a complicated procedural history, GAO said that an agency must take into account a corporate transaction and novation, even if the agency wasn’t aware of the novation at time of proposal submission.
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GAO Confirms that Novations Work: Agency Properly Recognized Buyer of Contract as Awardee
The Anti-Assignment Act (41 U.S.C. § 6305) prohibits the transfer of a government contract or interest in a government contract to a third party. However, government agencies recognized that contractors are on occasion bought, sold, merged, or simply encounter circumstances upon which it becomes desirable or necessary for them to assign a government contract to a third party.
To address this issue, the Federal Acquisition Regulation (FAR) provides for a novation process to give contractors a method to transfer government contracts and not run afoul of the prohibitions in the Anti-Assignment Act. The ultimate goal of the novation process is to successfully transfer the contract and have the government recognize a new contractor as the successor-in-interest to the transferred contract.
Continue readingGAO: Protester Identity Must Match Offeror Identity
In order to protest a procurement at GAO, the protester must be an “interested party.” An interested party is an “actual or prospective bidder or offeror whose direct economic interest would be affected by the award of the contract or by the failure to award the contract.”
But does the identity of the protester have to be the same as the offeror under the procurement? GAO recently offered some guidance on that question.
Get Your Novation Before Filing a Bid Protest with GAO
Only an “interested party” can bring a GAO bid protest. This generally means that a protester must be “an actual or prospective bidder or offeror” with a “direct economic interest” in the contract’s award.
You might ask: is there such a thing as an offeror without a direct economic interest in the outcome of the contract award? It can happen–and a novation may be relevant. In a recent case, GAO held that a pending novation meant that the protester didn’t meet the standard necessary to file a protest.