What is the Assignment of Claims Act?

Answer 1

The Assignment of Claims Act of 1940, 31 U.S.C. § 3727, 41 U.S.C. § 15 (the "Act"), permits a company to assign monies due or to become due under a contract, but only if certain conditions are met. The Act and implementing regulations, 48 C.F.R. sub-part 32.8, lay out the procedures. A contractor may assign monies due or to become due under a contract if all the following conditions are met, "

(1) the contract specifies payments aggregating $1,000.00 or more;

(2) the assignment is made to a bank, trust company, or other financing institution, including any federal lending agency;

(3) the contract does not prohibit the assignment;

(4) unless otherwise expressly provided for in the contract, the assignment---

a) covers all unpaid amounts payable under the contract;

b) is made only to one party, except that any assignment may be made to one party as agent or trustee for two or more parties participating in the financing of the contract; and

c) is not subject to further assignment.

Answer 2

The Assignment of Claims Act allows government contractors to assign their rights to receive payment to a third party, such as a bank or finance company. This can help contractors obtain financing by using their accounts receivable as collateral. The Act is governed by specific rules and restrictions to protect against fraud and abuse.

Answer 3

Does the Assignment hold in court should a federal agency decide not to pay: in the case of a Lender using to perfect its position when making a loan to holder of Claim (account receivable) from a federal agency?