Subpart 32.8
Assignment of Claims
FAR Subpart 32.8 provides the framework and requirements for contractors to assign payment claims under government contracts, enabling financing while ensuring proper protections and procedures are followed.
Overview
FAR Subpart 32.8, "Assignment of Claims," establishes the rules and procedures for contractors to assign their rights to be paid under government contracts to a third party, typically a financing institution. This subpart defines key terms, sets forth the conditions under which claims may be assigned, outlines the policies governing such assignments, and details the protections afforded to assignees. It also provides step-by-step procedures for both contractors and contracting officers, and prescribes the required contract clauses to ensure compliance. The subpart is essential for contractors seeking to use their government receivables as collateral for financing, and for agencies to ensure proper handling and notification of assignments.
Key Rules
- Scope and Definitions
- Defines the applicability of assignment of claims and clarifies key terms used throughout the subpart.
- Conditions for Assignment
- Specifies when and how claims under government contracts can be assigned, including necessary documentation and limitations.
- Policies and Protections
- Outlines agency policies on recognizing assignments and the extent of legal protection provided to assignees.
- Procedures and Clauses
- Details the procedural steps for effecting an assignment and prescribes mandatory contract clauses.
Responsibilities
- Contracting Officers: Must verify assignments, ensure proper documentation, and include required clauses in contracts.
- Contractors: Must comply with assignment conditions, provide necessary notifications, and use correct procedures.
- Agencies: Must recognize valid assignments and protect the rights of assignees as specified.
Practical Implications
- This subpart enables contractors to secure financing by assigning payment rights, but only under strict conditions and procedures.
- Failure to follow the prescribed steps can result in invalid assignments or payment delays.
- Both contractors and agencies must be diligent in documentation and communication to ensure compliance and protect all parties’ interests.