Matter of Engility Corp. was concerned with a MATOC for logistics support services to support the U.S. military. Like Wyle, the HOLDER of MATOC entered into a sales contract that transferred all assets and liabilities related to the contract to another contractor and filed an application to rearmize the contract. A few weeks later, the seller and buyer worked together to submit a proposal for a new mandate under the contract. (1) The document describing the proposed transaction, for example.B. purchase/sale contract or letter of intent. b) An innovation agreement is not necessary if the ownership of a contractor is changed as a result of a share purchase without legal change to the contractor, and if the contractor has control over the assets and if the contracting party executes the contract. Whether it is an asset acquisition or a share purchase, there may be problems related to change of ownership that should be dealt with appropriately in a formal agreement between the contractor and the government (see item 42.1203 (e)). Experience shows that companies that associate their agent at an early stage with the procurement process are rewarded with a faster innovation process.
While FAR identify specific elements that should be included in innovation, many contract agents have different practices and preferences when it comes to innovation. Hiring contract agents before presenting the real documents to get an idea of their expectations – or giving you the ability to explain why certain documents are included or not in the package – is usually a smart approach. Look closely at the transferred contract. If you understand expectations and timelines, you reduce the likelihood of penalties resulting from a longer-than-expected innovation process. The appropriate point of contact can be changed depending on whether it is one or more takers. In cases where only one assignee is involved, the FAR provides that if a CAO has been awarded to one of the contracts, the „novation package“ of that ACO or ACO responsible for the business establishment should be presented (if the contracts are in more than one plant or division). FAR 42.1202 (a) (1)-2. If the ACO has not been awarded to one of the contracts, the „novation package“ should be presented to the OC with the highest uncompensated dollar balance (not billed anymore but not paid). FAR 42.1202 (b). Before you create unnecessary work for yourself, you mandate the ACO (Administrativecontracting: ACO), which supports innovation. When you discuss your particular circumstances, you may be able to agree on a smaller or different set of documents that satisfy this government`s process.
Each contract, contract and transaction of M-A is different and no solution eliminates all the risks associated with the innovation of a MATOC. However, until there are significant changes in the current innovation process to reflect economic realities, government contractors and their advisors would be well advised to act with caution. They should continue to monitor the GAO`s decisions regarding contracts subject to renewal authorization and be prepared to implement mitigating measures, such as those described above, in an asset transaction. State contractors who enter into an asset transaction are all too familiar with the peculiarities and uncertainties associated with the transfer of a U.S. government contract through the necessary innovation process. In two recent decisions, the Government Accountability Office examined the impact of these transactions and the novation process on monitoring new U.S. government missions, with disappointing results for affected contractors. The GAO`s decisions highlight some of the challenges associated with the innovation process and indicate the possibility of even greater complexity.