42.901
General
Contract administration offices must act quickly to assess and protect the Government’s interests when a contractor files for bankruptcy.
Overview
FAR 42.901 requires the contract administration office to act quickly when a contractor files for bankruptcy. The primary goal is to assess how the bankruptcy may affect the Government’s interests and to take necessary steps to protect those interests. This section establishes the importance of timely evaluation and response to contractor bankruptcy situations as part of contract administration responsibilities.
Key Rules
- Prompt Assessment of Bankruptcy Impact
- The contract administration office must immediately evaluate the potential effects of a contractor’s bankruptcy on Government contracts.
- Protection of Government Interests
- Actions taken should focus on safeguarding the Government’s contractual and financial interests during bankruptcy proceedings.
Responsibilities
- Contracting Officers: Must coordinate with legal counsel and other relevant offices to assess and mitigate risks to the Government.
- Contractors: Should notify the Government promptly if bankruptcy is filed, as required by contract clauses.
- Agencies: Must ensure contract administration offices are prepared to respond to bankruptcy notifications and protect Government interests.
Practical Implications
- This section exists to minimize disruption and financial loss to the Government when a contractor declares bankruptcy.
- It impacts daily contract administration by requiring vigilance and readiness to respond to bankruptcy events.
- Common pitfalls include delayed response, inadequate assessment of risks, and failure to coordinate with legal or financial experts.