(a) In order to qualify as responsible, when costs incurred are to be a factor in determining the amount payable under the contract, or if advance or progress payment terms are to be included, a prospective contractor must, in the opinion of the contracting officer, meet the following standard in addition to those set forth in FPR 1-1.310-5:

(1) Have an accounting system and financial controls that are adequate for proper administration of the contract. Subpart 24-1.7-Small Business Concerns

SOURCE: The provisions of this Subpart 24-1.7 appear at 33 F.R. 10725, July 27, 1968, unless otherwise noted.

Subpart 24-1.50-Novation
Agreements

AUTHORITY: The provisions of this subpart issued under sec. 7(d) of the Department of Housing and Urban Development Act, 42 U.S.C. 3535 (d); Secretary's delegations of authority published at 33 F.R. 4593, Mar. 15, 1968, as amended at 33 F.R. 11099, Aug. 3, 1968; and at 31 F.R. 10754, Aug. 12, 1966.

SOURCE: The provisions of this Subpart 24-1.50 appear at 33 F.R. 12735, Sept. 7, 1968, unless otherwise noted.

§ 24-1.5000 Scope of subpart.

This subpart prescribes the policy and procedures for (a) recognition of a successor in interest to Government contracts when such interests are acquired incidental to a transfer of all assets of a contractor or part of his assets involved in the performance of the contracts; and (b) a change of name of a contractor. § 24-1.5001 Definition.

For the purpose of this subpart, the following definition applies: A novation agreement is a contractual amendment by which the Government recognizes a successor in interest to a Government contract or a change of name of a contractor. The successor in interest assumes all the obligations under the contract and the transferor guarantees the performance of the contract by the transferee. Where only a change of name is made the rights and obligations of the parties remain unaffected. § 24-1.5002

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 recognize a third party as the successor in interest to a Government contract when the third party's interest is incidental to the transfer of all the assets of the contractor, or all of 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 corporations; and

(3) Incorporation of a proprietorship or partnership.

(b) When it is consistent with the Government's interest to recognize a successor in interest to a Government contract, the contracting officer 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 from either the transferor or the transferee 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. The agreement shall have the concurrence of the Office of General Counsel, prior to execution. A format 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 § 24-1.5005-1. This format may be adapted to fit specific cases and may be used as a guide in preparing similar agreements for use in other situations.

(c) Prior to the execution of such agreement, one copy of each of the following, as applicable, shall be submitted by the contractor to the contracting officer:

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

(2) A list of all contracts which have not been finally settled between the Department and the transferor, showing for each contract the contract number the total dollar value of the contract as amended, the type of contract, and the balance remaining unpaid;

(3) A certified copy of the resolutions 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) An opinion of 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 of the transferor and the transferee as of dates immediately prior to and after the transfer of assets;

(9) Evidence of security clearance requirements (if applicable); and

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

§ 24-1.5003

Agreement to recognize change of name of a contractor. (a) When only a change of name is involved, so that the rights and obligations of the parties remain unaffected, an agreement between the contracting officer and the contractor shall be executed effecting the amendment of all existing contracts between the parties so as to reflect the contractor's change of name. A format for such an agreement, which shall be adapted for specific cases, is set forth in § 24-1.5005-2 of this chapter.

(b) Prior to the execution of such agreement, one copy of each of the following shall be submitted by the contractor to the contracting officer:

(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) An opinion of counsel for the contractor that the change of name was properly effected in accordance with applicable law; and

(3) A list of all contracts, including the contract numbers, which have not been finally settled between the Department and the contractor.

(c) Each agreement shall have the concurrence of the Office of General Counsel, prior to execution.

(a) The Department contracting officer, upon being notified of a successor in interest to, or change in name of, a contractor, shall promptly take all necessary and appropriate action with respect to recognizing or not recognizing a successor in interest, or recognizing a change of name, including without limitation:

(1) Preparing a list of all affected contracts; and

(2) Drafting and executing a supplemental agreement to one of the contracts affected.

(b) A supplemental agreement number need not be obtained for contracts other than for the one under which the supplemental agreement is written. Each supplemental agreement will contain a list of the contracts affected. Supplemental agreements shall be prepared using Standard Form 30, Amendment of Solicitation/Modification of Contract.

(c) The agreement and supporting documents shall be reviewed for legal sufficiency by the Office of General Counsel.

(d) After execution of the supplemental agreement, the contracting officer shall prepare a change order acknowledging the change in name or successor in interest. The change order shall receive the same distribution as the affected contract. The change order will indicate the nature of the transaction, the result attained, and will cite the number of the contract with which the original relevant documents and supplemental agreement are filed. Change orders shall be prepared using Standard Form 30, Amendment of Solicitation/ Modification of Contract.

§ 24-1.5005 Novation agreement formats and related documents.

§ 24-1.5005-1 Successor in interest agreement format.

The following form shall be used to recognize a corporate successor in interest, in accordance with § 24-1.5002 of this chapter:

[as set forth in the attached list marked "Exhibit A" to this Agreement and herein incorporated by reference] and the term "the contracts" as hereinafter used means the above contracts, letter contracts, and purchase orders, and all other contracts, letter contracts, and purchase orders, including amendments and change orders thereto, heretofore made between the Government, represented by the Contracting Officer of the Department of Housing and Urban Development, 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 amendments and change orders thereto hereafter made between the Government and the Transferee;

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;

Whereas, the Transferee, by virtue of said assignment, conveyance, and transfer, has acquired all the assets of the Transferor;

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;

Whereas, the Transferee is in a position fully to perform the Contracts, and such duties and obligations as may exist under the Contracts;

Whereas, it is consistent with the Government's interest to recognize the Transferee as the successor party to the Contracts;

Whereas, there has been filed with the Government evidence of said assignment, conveyance, or transfer (add if desired, in the form of a certified copy of the list of the documents required by HUDPR 24-1.5002);

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

Now, therefore, in consideration of the 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 action 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 (i) 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.

8. The Transferor hereby guarantees payment of all liabilities and the performance

by the Department of Housing and Urban Development (hereinafter referred to as the "Government");

WITNESSETH

Whereas, the Government, represented by the Contracting Officer of the Department of Housing and Urban Development, has entered into certain contracts, letter contracts, and purchase orders with the XYZ Corporation [namely:. -------] 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 hereinafter used means the above contracts, letter contracts, and purchase orders, and all other contracts, letter contracts, and purchase orders, including amendments and change orders thereto, entered into between the Government, represented by the Contracting Officer of the Department of Housing and Urban Development, 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); Whereas, the XYZ Corporation, by an amendment to its certificate of incorporation, dated 19--, has changed its corporate name to the ABC Corporation;

Whereas, a change of corporate name only is accomplished by said amendment, so that rights and obligations of the Government and of the Contractor under the Contracts are unaffected by said change; and

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

Now, therefore, in consideration of the premises, 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".

In witness whereof each of the parties hereto has executed this Agreement as of the day and year first above written.

-----

Pursuant to the provisions of Modification No. of Contract No. (This referance will be to the Modification actually recognizing the transfer.)

The following shall be used in Block 12 of the Standard Form 30:

It is hereby acknowledged that said Contract Modification (insert, as appropriate, "effecting recognition of XYZ Corporation as a successor in interest applies in accordance with all of its terms and conditions to this contract," or "effecting recognition of a change of the contractor's name from ABC Corporation to XYZ Corporation applies in accordance with all of its terms and conditions to this contract").

24-2.202-1

24-2.202-4

24-2.202-50

24-2.203-3

Preparation of invitations for bids.

Miscellaneous rules for solicita

tion of bids.

Bidding time.

Bid samples.

Extension of time for bid opening.

Publicity in newspapers and trade journals.

Subpart 24-2.3-Submission of Bids

24-2.303-6 Notification to late bidders.

Subpart 24-2.4-Opening of Bids and Award of

Contract

Receipt and safeguarding of bids.

24-2.401

24-2.402 24-2.406

Opening of bids.

Mistakes in bids.

24-2.406-3

Other mistakes disclosed before

award.