Bass, Berry & Sims attorneys Todd Overman and Richard Arnholt authored an article in Bloomberg Law discussing the impact mergers, acquisitions, spin-offs, and restructuring transactions can have on pending bids for government contracts. The article overviews recent bid protest decisions and provides practical guidance on diligence, deal timing and communications with government customers regarding transactions.
The effect of transactions on pending government contract bids is largely governed by the Anti-Assignment Act, which generally prohibits the transfer of a government contract to another party without a government waiver or post-closing novation. “However, transfers ‘incident to the sale of an entire business or sale of an entire portion of a business,’ i.e., transfers occurring ‘by operation of law’ are excepted from the statute,” Todd and Richard clarified.
When evaluating whether a transaction will materially affect a bidder’s ability to perform the contract, the authors recommend that parties to the transaction consider the following:
- Whether the resultant entity will have access to the same corporate and technical resources.
- Whether past performance references remain relevant.
- Whether the resultant company has retained management and key personnel referenced in the bid.
- The type of contract involved (fixed price versus cost-plus-fixed-fee).
The full article, “Transactions Involving Government Contractors Impact Pending Bids,” was published on April 20 by Bloomberg Law and is available online.