Reference · Contract vehicles & pricing
Novation agreement
Recognition of a successor in interest
A novation agreement is the government's formal recognition that a contract has been transferred from one company to another — for example after an asset sale or merger. It lets the successor take over the contract and be paid under it.
What it is
When a contractor transfers the assets tied to a government contract, the government isn't automatically bound to the new party. A novation is the agreement, executed with the responsible contracting office, recognizing the successor in interest.
Why it exists
Contracts are not freely assignable; novation gives an orderly, approved path so mergers and asset sales don't strand active federal work.
Who it applies to
Companies buying or selling a business with federal contracts. The transferee must show it has the assets and capability to perform.
Frequently asked
What is a novation agreement in government contracting?
A novation agreement is the government's formal recognition that a contract has been transferred to a successor company — typically after an asset sale or merger. It lets the new company take over performance and payment, because federal contracts cannot simply be assigned without approval.
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