32.803
Policies
FAR 32.803 sets clear rules for assigning contract claims to financing institutions, balancing contractor financing needs with the Government’s right to restrict assignments and offset debts.
Overview
FAR 32.803 outlines the policies governing the assignment of claims under government contracts. It specifies the conditions under which claims can be assigned or reassigned to financing institutions, the circumstances in which contracts may prohibit such assignments, and the rules for assigning claims under requirements or indefinite quantity contracts. The section also details when a no-setoff commitment may be included in contracts and the implications if such a commitment is absent. These policies are designed to balance the contractor's ability to secure financing with the Government's interests and rights regarding contract payments and offsets.
Key Rules
- Assignment and Reassignment of Claims
- Claims assigned to financing institutions can be further reassigned if original conditions are still met.
- Prohibition of Assignment
- Agencies may prohibit assignment of claims if it serves the Government’s interest.
- Assignment Under Certain Contracts
- For requirements or indefinite quantity contracts, claims for individual orders of $1,000 or more may be assigned.
- No-Setoff Commitment
- No-setoff commitments may be included only with agency head determination, publication in the Federal Register, and in accordance with Presidential and OFPP guidance.
- Setoff Rights Without No-Setoff Commitment
- If no-setoff is not included, the Government may offset contractor liabilities existing at the time of assignment notice against payments to the assignee.
Responsibilities
- Contracting Officers: Ensure assignments and reassignments comply with FAR 32.802 conditions, determine when to prohibit assignments, and consult on no-setoff commitments.
- Contractors: Ensure assignments are made to eligible institutions and understand the implications of setoff provisions.
- Agencies: Make and publish determinations for no-setoff commitments and provide oversight on assignment prohibitions.
Practical Implications
- This section enables contractors to obtain financing by assigning claims but protects the Government’s interests through assignment restrictions and setoff rights. Contractors must carefully follow assignment procedures and be aware of when setoff provisions may impact payments. Failure to comply can result in delayed or reduced payments, especially if contractor debts exist.