Novation

When a business that holds a federal contract gets sold, merges, or restructures, the contract itself does not automatically move to the new entity; the government has to agree to it through a novation agreement. Until that agreement is signed, the original company technically remains responsible for performance, even if the new owner is actually doing the work. If you are buying or selling a business with federal contracts attached, budget real time for this process; it is a paperwork-heavy negotiation, not a formality that clears itself.

In a sentence

"The parties request the government's consent to a novation agreement transferring all rights and obligations to the successor entity." Nothing officially transfers until the government signs off, so treat a pending novation as unfinished business, not a done deal, when you are evaluating either side of an acquisition.