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Philtd

Pushback on the Assignment of Claims Act

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I work for a company that finances receivables and have been noticing a tremndous resistance from Contracting Officers when discussing the Assignment of Claims Act with them on behalf of my clients many have told me they will not accept an assignment of claims at all. Many of the clients involved are primarly 8A small businesses who specialise in government contracting and are in a situation where they are refraining from going after new business because of the cash crunch involved in ramping up on a new contract. My corporate council has gone over FACA and has researched it and wants to take a very aggrssive stance that I don't agree with because as a third party I don't want to jeapordize a potential clients relationship with their contracting officer.

This leaves us in a catch 22 as the client needs the financing, and we want to do it yet without the assignment we are unable finance the receivable at all. Does anyone have any suggestions for a good way to work with this so everyone including the Contracting Officers needs are met ?

Our problem is we need to secure our interest in the dbt and I am also looking at other ways to deal with this. I am thinking a joint venture or teaming agreement where our role is financing and receivable mangement might work if the government would award a contract to an entity set up that way..

I have seen a lot of great information on these forums and any and all input is greatly appreciated

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If the agency intended not to allow an assignment of claims, it would have made sure not to include the contract clause at FAR 52.232-23, Assignment of Claims. The agency is allowed to make that decision -- see FAR 32.803( b ). But if the contract includes the clause, then the contracting officer does not have the discretion to accept or not accept the assignment of claims -- the contractor has a right to it; it becomes a ministerial act for the contracting officer.

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Fascinating situation. What are the reasons the Contracting Officers are giving for not accepting it? I cannot imagine refusing to do an Assignment of Claims just because...

Couple of thoughts...is it possible that your client needs to be dealing directly with the Contracting Officer instead of you/your firm? Are they refusing the client as well? If there are no legitimate reasons on behalf of the Government, have you sought assistance from the Small Business Specialist from the agency, or even the SBA since the firm is 8(a).

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I will try the Agency SBA officer

One of the worst cases is the Veterans Administration but this actually runs through a large variety of agencies I am having this issue everywhere from the Department of Defense to the State Department. I usually don't get involved untill the agency refuses the client. FAR 52.232-23, Assignment of Claims was not included on any of the ones I am looking at as that is the first thing we look at. I am finding that this issue is far more widespread than I ever could have imagined. One of my biggest problems is most contractors are very afraid of alienating their CO. According to our understanding of FACA and the FAR clauses it is the contractors right to receive and Assignment of Claims and is the reasons for our corporate councils aggressive stance. His attitude is if they are not going to help us and we can not board the client because of this we might as well make the the CO's life miserable.

The 2 main problems are we are having:

1.. Just out right refusal and in the case of the VA it was the CO and his supervisor

2.. Many have come back with the statement that their would not be enough time to get it in place

We are a company that has a very aggressive marketing platform so I am speaking with a lot of contractors on a daily basis many who had tried factoring in the past andbeen unsuccessfull and given up on it because of this. I am finding this to be a more common issue than it should be and part of the issue is many contractors are afraid to fight for their rights for fear of repercussions.

I really think the answer is going to be finding a way to do it outside FACA..

By the way thank you for the responces

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Remember FAR 32.803( b ) -- "A contract may prohibit the assignment of claims if the agency determines the prohibition to be in the Government's interests." The agency might be within its rights not to include the clause in its contracts.

Be aware also that the clause FAR 52.232-23 is not required for purchase orders (you have to think of purchase orders as different from contracts for this purpose -- see FAR 32.806( a )( 1 )). If the contract does not include the clause FAR 52.232-23, then the contract does not allow assignments.

The solution might be simple: When a solicitation is released not including the clause at FAR 52.232-23--

  • if a competitive solicitation, have your 8( a ) client send a letter to the contracting officer asking if that omission was an oversight and asking that it be included by solicitation amendment, amenable to FAR 32.806( a )( 1 ); if the answer is no or a response is not forthcoming, have your 8( a ) client file a protest before the date and time set for receipt of proposals;
  • if a sole-source solicitation, have your 8( a ) client include the clause as a material (but negotiable) part of its offer in response to the solicitation.

In the business world, relationships are important. Professionalism is important.

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It is DoD policy that only contracts for personal services may prohibit the assignment of claims. See DFARS 232.803. The DoD COs that you have dealt with probably don't know this

I don't know what the VA's policy is, the VAAR didn't say anything. For other agencies, see agency supplements.

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Are you sure the agencies know what is being proposed? Is it possible that they believe you are asking for an assignment of the contract, i.e., a novation under FAR 42.12?

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Retread they did understand we were asking for an Assignment of Claims and did know that it was a financing vehicle.

jj20874 I agree 100% that in business that relationships and professionalism are crucial. Are you saying that if its a purchase order than FACA doesn't apply at all?

Our midsize to larger clients don't get us involved when this happens as they have no issues pushing back against resistance from a CO as they are used to fighting for any and every contractual right they are due and understand that filing a protest is no big thing and part of government contracting. It's really the smaller guys afraid of making waves in the first place who has the biggest problem.

I am a solutions kind of guy and am just trying to find a way to make this work. I need to find a way to secure my companies interest in the event the government were to pay my client instead of myself after funding. Is there any other way that if we were listed as a payee on a government contract we could make it so that if the client tries to get a modification of the contract changing it that we would be notified ahead of time and be able to protect our interest?

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Philtd,

You need to read FAR 32.806( a )( 1 ). That's right -- the contract clause at FAR 52.232-23 Assignment of Claims is never required in a purchase order.

You need to read all of FAR Subpart 32.8. Forget FACA -- even that term won't be recognized by contracting officers -- they can read about the Assignment of Claims Act of 1940 in FAR 32.800, but the FACA acronym will have no meaning -- so forget FACA -- if you want to convince contracting officers, you need to read and quote the FAR. The FAR converts statute into working instructions for contracting officers.

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I do not dispute the fact that FAR clause 52.232-23 is not required in purchase orders per FAR 32.806 ( a ) ( 1 ). However, if the purchase order is for commercial items assignments are covered under FAR 52.212-4 paragraph b.

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We have found a powerpoint for the CO's that seems to help with people who don't understand the concept of assigning receivables but we are still getting hard pushback especially in a couple of agencies. My goal is to try and come up with some sort of solution to the pushback that works for everyone.. Most of our clients are 8A contractors who need financing due to the rapid growth that government contracting tends to provide do you think enlisting the help of the SBA would be a good idea?

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