nothing in this Part 1-20 shall be construed as:

(a) Authorizing the destruction or other disposition of any records where, for any reason, the Comptroller General of the United States, the contracting officer, or their representative, requests the contractor or subcontractor to retain the records for a longer period than would otherwise be required; or

(b) Requiring the contractor or subcontractor to destroy or make other disposition of any records he may desire to retain for his own purposes (for example, in connection with submitting to the Government claims or requests for adjustments).

§ 1-20.204 Costs of certain retentions under cost-reimbursement contracts. With respect to cost-reimbursement type contracts, reimbursement for costs incurred by the contractor in retaining for his own purposes any records beyond an applicable time period designated in this Part 1-20 shall be governed by the appropriate cost principles set forth in Part 1-15.

§ 1-20.205 Examination of records in special situations.

Where the contractor or subcontractor retains any records identified in § 1-20.301 beyond the retention periods applicable thereto (a) because of other records retention requirements, or (b) at the request of the Comptroller General of the United States, the contracting officer, or their representatives, or (c) for his own purposes, such records shall be available for examination by the Comptroller General of the United States or the contracting officer, respectively, or their representatives, for the extended period of retention up to the expiration of 3 years after final payment under the contract or subcontract.

§ 1-20.206 Identification of records.

Records are identified in this Part 120 primarily in terms of their purpose or use, and not by specific name or form number. The descriptive identifications may or may not conform to contractor or subcontractor usage or individual filing practices. Nevertheless, these identifications apply to all

records kept by the contractor or subcontractor which come within the description.

§ 1-20.207 Interfiled records.

If two or more of the record categories described in § 1-20.201 are interfiled and screening for disposal is not practical, the contractor or subcontractor shall retain the entire record series for the longest period prescribed for any category of records filed within the series.

§ 1-20.208 Calculation of records retention periods.

(a) The prescribed retention periods for the records described in § 1-20.201 shall be calculated from the end of the contractor's or subcontractor's fiscal year in which an entry is made charging or allocating a cost to a Government contract or a subcontract thereunder. Where there is a series of such entries involving a specific record, the retention period shall be calculated from the end of the contractor's or subcontractor's fiscal year in which the final entry is made. To apply these retention periods, the contractor or subcontractor should cut off the records in annual blocks and retain them for block disposal in accordance with the prescribed retention periods under the related contract or subcontract.

(b) An exception to the foregoing starting time for the retention periods shall be made where records generated during a prior contract are relied upon by a contractor for cost and pricing data in negotiation of a succeeding contract; here the 2- and 4-year periods shall run from the date of the succeeding contract.

§ 1-20.209 Duplicate copies of records and intermediate data.

(a) Duplicate copies of records or supporting documents need not be retained. However, if a duplicate copy contains significant information not shown on the record copy maintained by the contractor or subcontractor, it shall be retained as if it were the record copy.

(b) Intermediate data records consisting of punched cards, electronic tape, or comparable media need not be retained if printouts or listings are

prepared and maintained showing the details of the transactions charged or allocated to individual Government contracts and identifying the supporting source documents.

Subpart 1-20.3-Retention Requirements

§ 1-20.301 Retention periods.

The records listed in this Subpart 120.3 shall be retained by contractors and subcontractors for the periods designated, provided retention is required under § 1-20.201. The designated retention periods shall be calculated as shown in §§ 1-20.207 and 120.208.

§ 1-20.301-1 Financial and cost accounting records.

(a) Accounts receivable invoices, adjustments to the accounts, invoice registers, carrier freight bills, shipping orders, or other documents which detail the material or services billed on the related invoices: Retain 4 years.

(b) Material, work order, or service order files, consisting of purchase requisitions or purchase orders for material or services, or orders for transfer of material or supplies: Retain 4 years. (c) Cash advance recapitulations, prepared as posting entries to counts receivable ledgers for amounts of expense vouchers prepared for employees' travel and related expenses: Retain 4 years.

Paid, canceled,

ac

and voided

(d) checks, other than those issued for the payment of salary and wages: Retain 4 years.

(e) Accounts payable records to support disbursements of funds for materials, equipment, supplies, and services, containing originals or copies of the following and related documents; remittance advices and statements, vendors' invoices, invoice audits and distribution slips, receiving and inspection reports or comparable certifications of receipt and inspection of material or services, and debit and credit memoranda: Retain 4 years.

(f) Labor cost distribution cards or equivalent documents: Retain 2 years. (g) Petty cash records showing description of expenditures, to whom

paid, name of person authorizing payment, and date, including copies of vouchers and other supporting documents: Retain 2 years.

§ 1-20.301-2 Pay administration records.

(a) Payroll sheets, registers, or their equivalent, of salaries and wages paid to individual employees for each payroll period; change slips; and tax withholding statements: Retain 4 years.

(b) Clock cards or other time and attendance cards: Retain 2 years.

(c) Paid checks, receipts for wages paid in cash, or other evidence of payments for services rendered by employees: Retain 2 years.

§ 1-20.301-3 Procurement and supply records.

(a) Stores requisitions for materials, supplies, equipment, and services: Retain 2 years.

(b) Work orders for maintenance and other services: Retain 4 years.

(c) Equipment records, consisting of equipment utilization and status reports and equipment repair orders: Retain 4 years.

(d) Expendable property records, reflecting accountability for the receipt and use of material in the performance of a contract: Retain 4 years.

(e) Receiving and inspection report records, consisting of reports reflecting receipt and inspection of supplies, equipment, and materials: Retain 4 years.

(f) Purchase order files for supplies, equipment, materials, or services, to be used in the performance of a contract or subcontract: Retain 4 years.

(g) Production records of quality control, reliability, and inspection: Retain 4 years.

Sec.

1-26.403 Agreement to recognize change of name of contractor.

1-26.404 Processing novation and change of name agreements.

AUTHORITY: Sec. 205(c), 63 Stat. 390 (40 U.S.C. 486(c)).

SOURCE: 38 FR 32808, Nov. 28, 1973, unless otherwise noted.

Subparts 1-26.1-1-26.3 [Reserved]

Subpart 1-26.4-Novation and Change of Name Agreements

§ 1-26.400 Scope of subpart.

This subpart prescribes the policies and procedures for (a) recognition of a successor in interest to a Government contract or contracts when such interests are acquired as the result of a transfer of all the assets of a contractor or of such part of his assets as may be involved in the performance of the contract or contracts, and (b) a change of name of a contractor.

§ 1-26.401 [Reserved]

§ 1-26.402 Agreement to recognize a successor in interest.

(a) The transfer of a Government contract is prohibited by law (41 U.S.C. 15). However, the Government may, if it is in its best interest, recognize a third party as the successor in interest to a Government contract when the third party's interest in the contract arises out of the transfer either of all the assets of the contractor or of all of that part of the contractor's assets involved in the performance of the contract (see § 12.404-2(h) regarding the effect of novation agreements after bid opening but before award). Examples include, but are not limited to:

(1) Sale of such assets, with appropriate provision for assumption of liabilities;

(2) Transfer of such assets pursuant to a merger or a consolidation of a corporation; and

(3) Incorporation of a proprietorship or partnership, or formation of a partnership.

The portion of the Act which prohibits the transfer of contracts is intend

ed for the Government's protection, thus giving an agency discretion in acting to ensure that protection. The Government is generally not so much interested in what assets are transferred or in what manner the transfer of property or interest therein is accomplished. When requested to concur in a novation agreement, the Government's main concerns are (1) whether the proposed transferee is, in fact, a successor in interest to the Government contract, and (2) whether it is consistent with the Government's interest to concur in the novation agreement. Accordingly, the Government has the discretion to either (i) treat the contract as annulled by the assignment or (ii) recognize the assignment if it is in the Government's best interests (see Comptroller General decision B-174314, August 28, 1973).

(b) A novation agreement is the legal instrument executed by the contractor (transferor), the successor in interest (transferee), and the Government by which, among other things, the transferor guarantees performance of the contract, the transferee assumes all obligations under the contract, and the Government recognizes the transfer of assets. The Government's recognition of a third party as the successor in interest to a Government contract is signified by the contracting officer's execution of the novation agreement which sets forth the obligations of the parties as the result of transferring the assets related to the Government contract. The transferee's assumption of the obligation to perform a given contract is further set forth in a supplemental agreement to that contract.

(c) When a contractor requests that the Government recognize a successor in interest, the contractor shall be required to provide three signed copies of the proposed novation agreement to the agency and one copy of any of the following that the contracting officer deems appropriate:

(1) A properly authenticated copy of the instrument by which the transfer of assets was effected; for example, bill of sale, certificate of merger, indenture of transfer, or court decree;

(2) A list of all affected contracts and purchase orders which have not been finally settled between the trans

feror and the Government, showing the contract number, the name and address of the procuring activity involved, the total dollar value of each contract as amended, the type of contract involved, and the balance remaining unpaid;

(3) A certified copy of the resolutions of each of the boards of directors of the corporate parties authorizing the transfer of assets;

(4) A certified copy of the minutes of any stockholders' meetings of the corporate parties necessary to approve the transfer of assets;

(5) A properly authenticated copy of the certificate and articles of incorporation of the transferee if such corporation was formed for the purpose of receiving the assets involved in the performance of the Government contracts;

(6) Opinion of legal counsel for the transferor and transferee that the transfer was properly effected in accordance with applicable law and the effective date of transfer;

(7) Evidence of the capability of the transferee to perform the contracts;

(8) Balance sheets, reflecting independent certifications of accuracy, of the transferor and the transferee as of dates immediately prior to and after the transfer of assets;

(9) Evidence of security clearance requirement;

(10) Consent of sureties on all the contracts listed under paragraph (2) of this paragraph (c) where bonds have been furnished or a statement from the transferor that no bond is required; and

(11) In the case of construction contracts, releases and waivers of liens by subcontractors.

(d) When it is consistent with the Government's interest to recognize a successor in interest to a Government contract, the contracting officer concerned shall execute an agreement with the transferor and the transferee which shall ordinarily provide in part that:

(1) The transferee assumes all the transferor's obligations under the contract;

(2) The transferor waives all rights under the contract as against the Government;

(3) The transferor guarantees performance of the contract by the transferee (a satisfactory performance bond may be accepted in lieu of such guarantee); and

(4) Nothing in the agreement shall relieve the transferor or the transferee from compliance with any Federal law.

(e) A form for such an agreement for use when the transferor and transferee are corporations and all the assets of the transferor are transferred is set forth in this paragraph (e). This form may be adapted to fit specific cases and may be used as a guide in preparing similar agreements for use in other situations.

AGREEMENT

This Agreement entered into as of (date upon which the transfer of assets became effective pursuant to applicable State law), by and between the ABC CORPORATION, a corporation duly organized and existing under the laws of the State of --with its principal office in the City of (hereinafter referred to as the "Transferor"); the XYZ CORPORATION, (add, if appropriate, "formerly known as the EFG Corporation") a corporation duly organized and existing under the laws of the State of with its principal office in the City of (hereinafter referred to as the "Transferee"); and the UNITED STATES OF AMERICA (hereinafter referred to as the "Government").

WITNESSETH THAT

1. WHEREAS, the Government, represented by various Contracting Officers of (insert name of agency) has entered into certain contracts and purchase orders with the Transferor namely (insert contract or purchase order description or "as set forth in the attached list marked 'Exhibit A' to this Agreement") and herein incorporated by reference; and the term "the contracts" as hereafter used means the above contracts and purchase orders, and all other contracts and purchase orders, including modifications thereto, heretofore made between the Government, represented by various Contracting Officers of the above-named agency and the Transferor (whether or not performance and payment have been completed and releases executed, if the Government or the Transferor has any remaining rights, duties, or obligations thereunder), and including modifications thereto hereafter made in accordance with the terms and conditions of such contracts and purchase orders between the Government and the Transferee;

2. WHEREAS, as of -, 19, the Transferor assigned, conveyed, and transferred to the Transferee all the assets of the Transferor by virtue of a (term descriptive of the legal transaction involved) between the Transferor and the Transferee;

3. WHEREAS, as of -, 19, the Transferee, by virtue of said assignment, conveyance, and transfer, has acquired all the assets of the Transferor;

4. WHEREAS, by virtue of said assignment, conveyance, and transfer, the Transferee has assumed all the duties, obligations, and liabilities of the Transferor under the contracts;

5. WHEREAS, the Transferee is in a position fully to perform the contracts and such duties and obligations as may exist under the contracts;

6. WHEREAS, it is consistent with the Government's interest to recognize the Transferee as the successor party to the contracts;

7. WHEREAS, there has been filed with the Government evidence of said assignment, conveyance, or transfer.

(Where a change of name is also involved, such as prior or concurrent change of name of the Transferee, an appropriate recital shall be used, for example:

8. WHEREAS, there has been filed with the Government a certificate dated 19-, signed by the Secretary of the State of to the effect that the corporate name of EFG CORPORATION was changed to XYZ CORPORATION on 19-;) NOW THEREFORE, in consideration of these premises, the parties hereto agree as follows:

1. The Transferor hereby confirms said assignment, conveyance, and transfer to the Transferee and does hereby release and discharge the Government from, and does hereby waive, any and all claims, demands, and rights against the Government which it now has or may hereafter have in connection with the contracts.

2. The Transferee hereby assumes, agrees to be bound by, and undertakes to perform each and every one of the terms, covenants, and conditions contained in the contracts. The Transferee further assumes all obligations and liabilities of and all claims and demands against the Transferor under the contracts, in all respects as if the Transferee were the original party to the contracts.

3. The Transferee hereby ratifies and confirms all actions heretofore taken by the Transferor with respect to the contracts with the same force and effect as if the action had been taken by the Transferee.

4. The Government hereby recognizes the Transferee as the Transferor's successor in interest in and to the contracts. The Transferee hereby becomes entitled to all right, title, and interest of the Transferor in and to the contracts in all respects as if the

Transferee were the original party to the contracts. The term "Contractor" as used in the contracts shall be deemed to refer to the Transferee rather than to the Transferor.

5. Except as expressly provided herein, nothing in this Agreement shall be construed as a waiver of any rights of the Government against the Transferor.

6. Notwithstanding the foregoing provisions, all payments and reimbursements heretofore made by the Government to the Transferor and all other actions heretofore taken by the Government pursuant to its obligations under any of the contracts shall be deemed to have discharged pro tanto the Government's obligations under the contracts. All payments and reimbursements made by the Government after the date of this Agreement in the name of or to the Transferor shall have the same force and effect as if made to said Transferee and shall constitute a complete discharge of the Government's obligations under the contracts, to the extent of the amounts so paid or reimbursed.

7. The Transferor and the Transferee hereby agree that the Government shall not be obligated to pay or reimburse either of them for, or otherwise give effect to, any costs, taxes, or other expenses, or any increases therein, directly or indirectly arising out of or resulting from (a) said assignment, conveyance, and transfer or (b) this Agreement, other than those which the Government, in the absence of said assignment, conveyance, and transfer, or this Agreement, would have been obligated to pay or reimburse under the terms of the contracts. 8. The Transferor hereby guarantees payment of all liabilities and the performance of all obligations which the Transferee (a) assumes under this Agreement or (b) may hereafter undertake under the contracts as they may hereafter be amended or modified in accordance with the terms and conditions thereof, and the Transferor hereby waives notice of and consents to any such amendment or modification.

9. Except as herein modified, the contracts shall remain in full force and effect. IN WITNESS WHEREOF, each of the parties hereto has executed this Agreement as of the day and year first above written. UNITED STATES OF AMERICA,

By

Title

ABC CORPORATION,

By Title

[CORPORATE SEAL]

XYZ CORPORATION,

By Title

[CORPORATE SEAL]