18.123
Assignment of claims
The no-setoff provision can be used during emergencies to help contractors obtain financing by allowing assignment of claims without government offsets.
Overview
FAR 18.123 addresses the use of the no-setoff provision in assignment of claims during national emergencies or natural disasters. This provision allows contractors to assign their right to be paid by the government to a financing institution without the government offsetting the payment for debts owed by the contractor to the government. The intent is to ensure contractors have access to necessary financing to support national defense or emergency response efforts. Contracting officers are directed to consider this provision when it would facilitate contract performance in urgent situations. Reference is made to FAR 32.803(d) for further procedural details.
Key Rules
- No-Setoff Provision
- The no-setoff provision may be used to prevent the government from withholding payments due to contractor debts, specifically to facilitate national defense or emergency response.
- Applicability in Emergencies
- This flexibility is intended for use during national emergencies or natural disasters to ensure contractors can secure financing.
Responsibilities
- Contracting Officers: Evaluate and include the no-setoff provision when it supports national defense or emergency response; reference FAR 32.803(d) for procedures.
- Contractors: May request the no-setoff provision to facilitate assignment of claims for financing purposes.
- Agencies: Ensure oversight and proper application of the provision in qualifying situations.
Practical Implications
- This section exists to expedite contractor access to financing during emergencies, supporting continuity of operations.
- It impacts contract administration by allowing more flexible payment arrangements.
- Common pitfalls include failing to properly document the need for the provision or misunderstanding its limited applicability to emergencies.