What the noun is allowed to mean
A package to the contracting officer. Evidence that the transfer happened. Evidence the successor can perform. A change-of-name agreement when only the name changed. Acquisition.gov hosts the subpart (Source: FAR 42.12). Selling with government contracts is the seller companion. Customer contract assignment is the commercial sibling — different law.
What novation will not do
It will not satisfy ITAR notice. It will not file CFIUS. It will not keep an 8(a) or other set-aside if the successor fails the status test. SBA 7(a)’s $5 million box does not novate a vehicle (Source: SBA). Census CBP 2023’s establishment file does not decide whether your contract is assignable (Source: Census CBP).
| Path | Typical novation friction |
|---|---|
| Asset sale | High — successor is a new contractor |
| Stock sale | Lower on the vehicle, other work remains |
| Change of name only | Change-of-name agreement, not a full novation |
| Commercial PO | Often consent, not FAR 42.12 |
When should the LOI mention it?
On day one if any material revenue is a federal vehicle. Do not discover the anti-assignment statute in week twelve. Jason Taken is a business broker. Educational information only. Government-contracts counsel runs the package.
What a manufacturing CIM should disclose before anyone tours
List the vehicles: agency, contract type, remaining period of performance, set-aside status, and whether the work is being performed at the plant that is for sale. Say whether the contractor is the selling entity. Say whether any novation is already in process from a prior deal. Buyers who see “government work” as a single adjective will miss a GSA schedule that does not novate like a DoD cost-plus vehicle.
Asset buyers need a longer exclusive if novation is the path, because the contracting officer is not on the seller’s payroll. Stock buyers still need a change-of-name or responsibility update and still need to watch set-aside status. Selling with government contracts walks those forks. This page only names the recognition.
Commercial purchase orders are not FAR 42.12. They are consent and assignment problems. Mixing them in one exhibit is how a CIM lies. Split the revenue. Split the process.
A Phase I can stale in 180 days while a novation package is still sitting with the government (Source: EPA / 40 C.F.R. Part 312). Time both clocks. Do not let environmental freshness die because someone thought “the Army is the long pole.”
Employees who hold facility clearances or who are the only people who can sign a traveler are key-person risk, not novation risk. Keep those lists apart. The glossary exists so novation does not become a dumping ground for every government-adjacent fear.
Isolation
The glossary keeps novation off CFIUS and off a commercial consent. The FAQ holds the question. When the vehicles are real, book a confidential intro call.
Residual commercial work that is not FAR 42.12
Distributor agreements, toolmakers, and blanket commercial POs use consents. Do not put them in the novation package. Split the Gantt chart. An 8(a) or other set-aside can fail on the successor even if FAR 42.12 eventually recognizes them. That status test is a different statute and belongs on its own line.
A CIM should list vehicles by agency, remaining period of performance, and whether the contractor is the selling entity. Those three facts decide whether FAR 42.12 is on the calendar. Commercial blankets stay on a consent list. Government contract novation under FAR 42.12 is the walk-through. Government-contracts counsel runs the package. After the recognition noun is straight, a confidential intro call is the conversion path.
What novation will not finish
It will not satisfy ITAR notice. It will not file CFIUS. It will not keep an 8(a) or other set-aside if the successor fails the status test. A change-of-name agreement is not a full novation. A handshake and an APA do not assign the vehicle. SBA 7(a)’s $5 million box does not novate anything (Source: SBA).
How it shows up: on day one of the letter if any material revenue is a federal vehicle. List agency, contract type, remaining period of performance, set-aside status, and whether the contractor is the selling entity. Asset buyers need a longer exclusive because the contracting officer is not on the seller’s payroll. A Phase I can stale in 180 days while a package is still sitting with the government (Source: EPA / 40 C.F.R. Part 312). Time both clocks.