§ 9-1.5300 Scope of subpart.

This subpart prescribes the policy and procedures for (a) recognition of a successor in interest to contracts when such interests are required incidental to transfer of all the assets of a contractor or such part of his assets as is involved in the performance of the contract, and (b) a change of name of a contractor.

§ 9-1.5301 Agreement to recognize a successor in interest.

(a) The transfer of a Government contract by a contractor is prohibited by law (41 U.S.C. 15). However, the Government may recognize a third party as the successor in interest to a Government contract where the third party's interest is incidental to the transfer of all the assets of the contractor, or all that part of the contractor's assets involved in the performance of the contract. Examples include, but are not limited to:

(1) Sale of such assets;

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

(3) Incorporation of a proprietorship or partnership.

(b) A contractor who requests that a successor in interest be recognized shall be required to furnish the AEC office concerned (see § 9-1.5303(a)) one copy of each of the following documents as appropriate:

(1) A properly authenticated copy of the instrument by which the transfer of

assets is to be effected, as, for example, a bill of sale, certificate of merger, indenture of transfer, or decree of court;

(2) A list of all contracts and purchase orders which have not been finally settled between the Atomic Energy Commission and the transferor, showing the contract number, the name and address of the purchasing office 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 the Board 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 counsel for the transferor and transferee that the transfer is 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 of the transferor and the transferee as of dates immediately prior to and after the transfer of assets;

(9) Evidence of security clearance requirements; and

(10) Consent of sureties on all contracts listed under subparagraph (2) of this paragraph where bonds are required.

(c) If it is consistent with the Government's interest to recognize a successor in interest to a contract, an agreement will be executed with the transferor and the transferee, which shall ordinarily provide in part that:

(1) The transferee assumes all the transferor's obligations and liabilities 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, State,

or local law. All agreements, prior to execution, shall be reviewed by the Office of the General Counsel or the Office of the Chief Counsel, as the case may be, for legal sufficiency. A sample 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 herein. This sample 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

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This Agreement, entered into as of (date upon which the transfer of assets became effective pursuant to applicable State law) 19, by and between ABC Corp., 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 Corp., a corporation duly organized and existing under the laws of the State with its principal office in the (hereinafter referred to as the "Transferee"); and the United States of America (hereinafter referred to as the "Government"), represented by the U.S. Atomic Energy Commission (hereinafter referred to as the "Commission”).

of

city of

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;

8. Whereas, 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 Commission evidence of said assignment, conveyance, or transfer, as required by AECPR 9-1.5301 (b);

(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 Commission a certificate dated

19

signed by the Secretary of the State of to the effect that the corporate name of LMN Corp. was changed to XYZ Corp. on 19 --;

Now, therefore, in consideration of the premises, the parties hereto agree as follows: 9. 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.

10. 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.

11. 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.

12. The Commission 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.

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

14. Notwithstanding the foregoing provisions, all payments and reimbursements heretofore made by the Commission to the Transferor and all other action heretofore taken by the Commission, pursuant to its obligations under any of the contracts, shall be deemed to have discharged protanto the Government's obligations under the contracts. All payments and reimbursements made by the Commission 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.

15. 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 (1) said assignment, conveyance, and transfer, or (ii) 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.

16. The Transferor hereby guarantees payment of all liabilities and the performance of all obligations which the Transferee (1) assumes under this Agreement, or (11) may hereafter undertake under the contracts as they may hereafter be amended or modifiled in accordance with the terms and conditions thereof; and the Transferor hereby waives notice of and consents to any such amendment or modification.

17. Except as herein modified, the contracts shall remain in full force and effect.

18. The term "the contracts" as used in this agreement means the contracts and purchase orders listed above [or in an attached exhibit]; and all other contracts and purchase orders, including modifications thereto, heretofore made between the AEC and the Transferor (whether or not performance and payments have been completed and releases executed, if the Government or the Transferor has any remaining rights, duties, or obligations thereunder), and modifications to such contracts and purchase orders hereafter made in accordance with their terms and conditions.

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

§ 9–1.5302

day of

Agreement to recognize change of name of contractor.

(a) A contractor who requests only that a change of name be recognized and states that the rights and obligations of the parties remain unaffected shall be required to furnish the AEC office (see § 9-1.5303(a)) concerned one copy of each of the following:

(1) A copy of the instrument by which the change of name was effected, authenticated by a proper official of the State having jurisdiction;

(2) Opinion of counsel for the contractor as to the effective date of the change of name and that it was properly effected in accordance with applicable law; and

(3) A list of all contracts and purchase orders which have not been finally settled between the Atomic Energy Commission and the transferor, showing the contract number, the name and address of the procuring activity involved, the total dollar value of each contract as amended, and the balance remaining unpaid.

(b) A format for such an agreement which shall be adapted for specific cases is set forth below.

ment and of the contractor under the contracts are unaffected by said change; and

4. Whereas, there has been filed with the Commission documentary evidence of said change in corporate name;

Now, therefore, in consideration of the foregoing, the parties hereto agree, that the contracts covered by this agreement are hereby amended by deleting therefrom the name "XYZ Corporation" wherever it appears in the contracts and substituting therefor the name "ABC Corporation."

The term "the contracts" as used in this agreement means the contracts and purchase orders listed in clause 1 above, and all other contracts and purchase orders, including modification thereto, entered into between the AEC and the contractor (whether or not performance and payment have been completed and releases executed, if the Government or the contractor has any remaining rights, duties, or obligations thereunder).

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

in

(a) A contractor who wishes recognition of a successor in interest or of a change in name shall notify the AEC office with which it has the largest dollar amount of unliquidated obligations, and shall furnish that office with the pertinent documentation enumerated §§ 9-1.5301 and 9-1.5302, as required. (b) The AEC office (see par. (a) of this section) will take all necessary and appropriate action with respect to either recognizing or not recognizing a successor in interest or recognizing a change of name, including without limitation the following:

(1) Obtaining from the contractor a list of the affected contracts, the names and addresses of the procuring activities responsible for those contracts, and the required documentary evidence;

(2) Contacting other AEC offices concerned to determine whether there is any objection to recognizing a successor in interest;

(3) Drafting and executing a supplemental agreement to one of that office's contracts affected but covering all applicable outstanding and incomplete contracts affected by the transfer of assets or change of name; and

(4) Instituting and monitoring procedures for security clearance.

The supplemental agreement will contain a list of the contracts affected and, for distribution purposes, the names and addresses of the procuring activities having contracts subject to the supplemental agreement.

(c) The agreement and supporting documents will be reviewed for legal sufficiency by the Office of the General Counsel or the Office of the Chief Counsel, as the case may be.

(d) After execution of the supplemental agreement, the AEC office shall:

(1) Forward an authenticated copy of the supplemental agreement to the Director, Division of Contracts; and

(2) The Director, Division of Contracts will advise each of the AEC offices of the consummation of the supplemental agreement and request a letter referring to such supplemental agreement to be included in each affected contract.

(e) The contracting officer for each such affected contract shall prepare a letter which references the supplemental agreement (and cite the number of the contract with which the original relevant documents and supplemental agreement are filed) and acknowledges the change in name or successor in interest. Such letter will be given the same distribution as the affected contract. Subpart 9-1.54-General Policy for the Avoidance of Organizational Conflicts of Interest

conflicts of interest. (See § 9-59.006 and 9-12.54.) The Report to the President on Government Contracting for Research and Development (generally known as the Bell Report) proposed that each department and agency head develop a "Code of Conduct" for organizations in the research and development field. This subpart has been developed in accordance with that instruction.

[39 FR 18647, May 29, 1974]

§ 9-1.5402 Scope and applicability.

(a) (1) This subpart identifies various organizational conflicts of interest which might come into being and methods for avoidance of such conflicts. It provides that action must be taken to avoid placing a contractor in a position where his judgment might be biased or where he would have an unfair competitive advantage within the scope and intent of this subpart.

(2) If a contracting officer determines that a proposed procurement does involve a situation covered in § 9-1.5407, all prospective contractors shall be advised of the extent of restrictions on follow-on or other work by notice in solicitations and by a clause in resulting contracts. Such notice and contract clause shall spell out the specific extent of any future restrictions on the contractor which are imposed by the contract This, of course, does not require contract awards in circumstances that demonstrate a clear conflict of interest of a kind not specifically enumerated herein. Section 9-1.5408 shall be implemented by including in cost-type contracts, where appropriate, a provision requiring the approval of the contracting officer for the private use of information or data developed or obtained by employees of such contractor in the performance of cost-type contracts. A standard form of notice for use in solicitations or contract clause is not prescribed in this subpart since such notices and clauses must be especially adapted to apply the principle of these rules to the specific facts of each contractual situation.

(b) Except in unusual or specific situations identified by contracting officers, those parts of the rules which pertain to unfair competitive advantage are not applicable to contracts with educational institutions, or with not-for-profit organizations which conduct education and training activities, or whose facilities are used in joint programs with educational institutions for such purpose.

A Manager of a Field Office, or Headquarters Division Director, may waive the applicability of this subpart in specific cases if he determines that such waiver will not be prejudicial to the best interests of the Government.

§ 9-1.5405 Definition.

The term "organizational conflict of interest" means a situation where a contractor, normally a corporation, has interests, either due to its other activities or its relationships with other organizations, which place it in a position that may be unsatisfactory or unfavorable (a) from the Government's standpoint in being able to secure impartial, technically sound, objective assistance and advice from the contractor, or in securing the advantages of adequate competition in its procurement; or (b) from industry's standpoint in that unfair competitive advantage may accrue to the contractor in question.

§ 9-1.5406 General policy.

(a) In order to assist in deciding what, if any, steps should be applied to avoid organizational conflicts of interest, there are two paramount principles to be considered. These are: (1) Preventing conflicting roles which might bias a contractor's judgment in relation to its work for AEC, and (2) preventing unfair competitive advantage. The ultimate test should always be: Is the contractor placed in a position where his judgment may be biased, or where he has an unfair competitive advantage?

(b) Final program decisions, such as the determination of projects or programs and their scope, which are required to meet AEC missions and objectives, are of course the responsibility of Government personnel and cannot therefore be delegated to contractor personnel. Program decisions must be based on impartial, disinterested, and the best available technical and other judgments. The effective and formal power to make such decisions must remain in the hands of full-time AEC officials. Outside technical and other advice may be weighed