Mister Sister

The two would be merged. Company B would no longer exist. Can the CAGE codes be merged under Company A's segment without novating contracts; changing CAGE Codes etc.

No they have one corporate identify post close of the deal. But my question remains - can Company A bill under Company's A structure without a formal novation of the contracts?

All of the assets and liabilities now are part of Comany A.

Great question. I'll answer it with another question - what is ment by "assets"? (assets of the program of the business operations?). All assets of Company B have been acquired by Company A as part of the stock purchase. The people performing the work are the same. They are just badged as Company A employees.

I've contemplated where to post this question in the forum - it's a combination of Contract Admin, M&A and CAS. I'm not looking for a theoretical dissertation on External Restrucuting (DFARS 231.205-70). Nor am I looking for guidance on the novation process or CAS GDMs. My question is more operational regarding CAS, CAGE Codes, and a post integration Day One model. Scenario below: Company A acquires Company B as a stock purchase (acquired an entire entity not just its contracts). Because it is a stock purchase - there is no novation required. (FAR 42.12) Company A and Company B have their own CAGE codes (obviously). Can Company A integrate Company B (and its contracts) into it's CAS Structure (common overheads and G&A - not as a separate segment), without a formal novation of the contract? Sub scenario A : if there is an external restructuring proposal and advance agreement in place? Sub scenario B : If there is no external restructuring proposal and advance agreement in place? Our CACO is saying that without a novation agreement Company B must be treated as a separate CAS segment, with its own rates. However, I see nothing within CAS, FAR or DFARS or even DCMA guidance that would indicate this is the case. Are there any case-laws that would suggest this is not permissable? If you're wondering why I would do this: Under this scenario, since there is no novation - the provision in the novation agreement that prohibits increased costs does not kick in. Under sub-scenario A - I would still be on the hook for the GDM and prohibition on increased costs resulting from the CAS cost accounting practices changes. However, under sub-scenario B - assuming there is an external restructuring proposal and an approved adance agreement, (after a determination of > 2:1) savings, the prohibition on CAS increased costs would not apply. It makes more business sense for me not to novate if I don't need to.