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Anti-Assignment Act Did Not Bar Successor's Claim for Costs

The Anti-Assignment Act did not prohibit an offeror's successor-in-interest from pursuing bid and proposal preparation costs, because the successor obtained the right to assert the claim by operation of law. Seeking bid and proposal preparation costs, the protester alleged a procurement for aircraft modernization was tainted by a senior acquisition official who improperly assumed selection duties and changed evaluation ratings to justify the selection of the awardee's higher cost proposal. The protester did not submit a proposal for the contract, but rather obtained ownership of the unsuccessful offeror's business through an Asset Purchase Agreement. The government moved to dismiss, arguing the cause of action was barred by the Anti-Assignment Act's provisions at 31 USC 3727, which prohibit the assignment of claims.
Operation of Law

However, transfers incident to the sale of an entire business or the sale of an entire portion of a business occur by operation of law, and transfers effected by operation of law fall outside of the Act's prohibition. Here, the business unit transferred to the protester was the same business unit that incurred the bid and proposal costs, and the transfer included all of the unit's "actions, claims, causes of action, rights of recovery, choses in action, rights of setoff of any kind" arising before the closing of the purchase agreement. Further, an official from the offeror testified the offeror would not assert a claim for the bid and proposal costs at issue and admitted the claim belonged to the protester, thus eliminating the risk of multiple claims. The Act does not restrict assignments where there is no probability that the government could suffer injury, and the sale here was "precisely the type corporate transfer which is not deleterious to the [g]overnment's interest."(L-3 Communications Integrated Systems, L.P. v. U.S., et al., FedCl, 53 CCF 79,043)


(The news featured above is a selection from the news covered in the Government Contracts Report Letter, which is published weekly and distributed to subscribers of the Government Contracts Reporter. )


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