52.232-23 Assignment of Claims
Source: FAR 52.232-23 on acquisition.gov
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.
As prescribed in 32.806(a)(1), insert the following clause:
Assignment of Claims (May 2014)
(a) The Contractor, under the Assignment of Claims Act, as amended, http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title31-section3727&num=0&edition=prelim" target="_blank">31 U.S.C.3727, http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section6305&num=0&edition=prelim" target="_blank">41 U.S.C.6305 (hereafter referred to as "the Act"), may assign its rights to be paid amounts due or to become due as a result of the performance of this contract to a bank, trust company, or other financing institution, including any Federal lending agency. The assignee under such an assignment may thereafter further assign or reassign its right under the original assignment to any type of financing institution described in the preceding sentence.
(b) Any assignment or reassignment authorized under the Act and this clause shall cover all unpaid amounts payable under this contract, and shall not be made to more than one party, except that an assignment or reassignment may be made to one party as agent or trustee for two or more parties participating in the financing of this contract.
(c) The Contractor shall not furnish or disclose to any assignee under this contract any classified document (including this contract) or information related to work under this contract until the Contracting Officer authorizes such action in writing.
(End of clause)
Alternate I (Apr 1984). If a no-setoff commitment is to be included in the contract (see 32.801 and 32.803(d)), add the following sentence at the end of paragraph (a) of the basic clause:
Unless otherwise stated in this contract, payments to an assignee of any amounts due or to become due under this contract shall not, to the extent specified in the Act, be subject to reduction or setoff.