52.232-23
Assignment of Claims
FAR 52.232-23 enables contractors to assign payment rights to financing institutions but requires strict compliance with assignment procedures and protection of classified information.
Overview
FAR 52.232-23, Assignment of Claims, allows contractors to assign their rights to receive payment under a government contract to a financing institution, such as a bank or federal lending agency, in accordance with the Assignment of Claims Act. This clause outlines the conditions under which such assignments can be made, including restrictions on the number of assignees and the handling of classified information. The clause also provides for an Alternate I version, which addresses no-setoff commitments, ensuring that payments to an assignee are not subject to reduction or setoff, unless otherwise specified.
Key Rules
- Assignment to Financing Institutions
- Contractors may assign payment rights to banks, trust companies, or other financing institutions, including federal lending agencies.
- Scope and Limitations of Assignment
- Assignments must cover all unpaid amounts and cannot be made to more than one party, except when acting as agent or trustee for multiple financing parties.
- Disclosure of Classified Information
- Contractors must not disclose classified documents or information to an assignee without written authorization from the Contracting Officer.
- No-Setoff Commitment (Alternate I)
- If included, payments to an assignee are protected from reduction or setoff to the extent specified by law.
Responsibilities
- Contracting Officers: Must authorize in writing any disclosure of classified information to assignees and ensure proper clause inclusion.
- Contractors: Must ensure assignments comply with the Act and clause requirements, and must not disclose classified information without authorization.
- Agencies: Oversee compliance with assignment procedures and protection of classified information.
Practical Implications
- This clause facilitates contractor financing by allowing assignment of payment rights, but imposes strict procedural and security requirements.
- Contractors must carefully structure assignments and avoid unauthorized disclosures, as violations can jeopardize contract payments or security.
- Common pitfalls include improper assignment to multiple parties or unauthorized release of sensitive information.