October 25, 2019 Public Contract Law Journal

Including a Definition of “Operation of Law ” in the Federal Acquisition Regulation : A Roadmap for Government Contractors Engaging in Merger & Acqisition Transactions

by Yingzhi Li

Yingzhi Li (yli5@law.gwu.edu) is a J.D. candidate at The George Washington University Law School and a member of the Public Contract Law Journal. She would like to thank Professor Collin Swan of The George Washington University Law School for his support and feedback. She would also like to thank her family for their unconditional love and support.

I.  Introduction

On February 22, 2013, a Delaware Chancery Court’s decision significantly affected the discussion regarding the assignment of government contracts. In Meso Scale Diagnostics, LLC v. Roche Diagnostics GMBH., Roche Holding Ltd. (“Roche”) acquired BioVeris Corporation (“BioVeris”) through a reverse triangular merger, in which a wholly-owned subsidiary of Roche merged into BioVeris, making BioVeris the surviving company with Roche as the sole shareholder.1 At the time of the merger, BioVeris had a contractual agreement with the plaintiff containing an anti-assignment clause prohibiting the assignment of certain intellectual property rights without the consent of the plaintiff.2 When confronted with the question of whether an assignment occurred during the transaction, the court concluded that a reverse triangular merger does not result in the assignment of the target’s contractual rights by operation of law.This decision raises a serious question as to whether reverse triangular mergers will be exempted from the Anti-Assignment Act (AAA) in the government contracts context.

In the current market environment, merger and acquisition transactions still retain popularity with most corporations. In 2018, the announced global merger and acquisition transaction volume reached $4.1 trillion, which is the third highest ever recorded.4 Many corporations focusing on strengthening existing capabilities, expanding current markets, or looking for innovations would consider mergers and acquisitions as an appealing approach.5 Government contractors also actively participate in the merger and acquisition market in order to grow and diversify their business.6 With government contract services transactions up twenty percent for the two year period ending 2016,7 this trend will likely continue as a business tactic in a competitive market.

As for government contractors, several specific considerations must be accounted for when structuring and executing a merger and acquisition transaction.8 One of the most important issues relates to the assignment of government contracts, which is governed by the AAA.9 The AAA refers to two statutory provisions: the Assignment of Contracts Act10 and the Assignment of Claims Act.11 The general rule under the AAA is that companies holding federal government contracts and claims are prohibited from assigning these contracts and claims to other parties.12

However, there are several exceptions to the assignment prohibitions. The Federal Acquisition Regulation (“FAR”) establishes that companies may be waived from the prohibition if (1) the government accepts the assignment of the government contract by signing a novation agreement with the contractor and the assignee of the contract;13 or (2) “there is a change in the ownership of a contractor as a result of a stock purchase, with no legal change in the contracting party, and when that contracting party remains in control of the assets and is the party performing the contract.”14 In addition, federal case law has created an “operation of law” exception, which allows that if the assignment occurs by “operation of law,” then no consent from the government is required.15 Therefore, when structuring a merger and acquisition transaction, the first important consideration for companies is whether the transaction structure they choose to conduct would require a novation agreement from the government, or whether the transaction falls within the scope of the “operation of law” exception.

Unfortunately, the FAR does not provide any statutory definition or scope of the “operation of law” exception. Instead, the exception is generally established by case law.16 Due to the absence of regulatory instruction, case law has created significant confusion over whether a novation agreement is required in certain corporate transactions.17 Thus, companies are forced to consider whether the transaction structure they prefer is exempt from the AAA.18

A popular type of corporate transaction in the mergers and acquisitions market is the reverse triangular merger.19 However, no federal court has addressed the issue of whether an assignment of a contract that results from a reverse triangular merger is within the scope of the “operation of law” exception. Besides, contracting officers have discretionary authority on whether to execute a novation agreement to the contractors or not.20 Without a statutory definition of the “operation of law” exception, contracting officers will be more inclined to comply with the FAR, which requires consent for a transfer of assets “incident to a merger or corporate consolidation” instead of defer- ring to judicial decisions.21

This Note suggests that reverse triangular mergers should fall within the scope of the “operation of law” exception. Furthermore, the FAR Council should amend the FAR to specify the scope of the “operation of law” exception and include reverse triangular mergers within the scope. This Note first presents the history and the development of the AAA followed by an introduction to novation agreements and the “operation of law” exception. Next is a discussion of the effect of reverse triangular mergers in commercial transactions. This is followed by analysis explaining why the assignment from reverse triangular mergers should fall within the scope of the “operation of law” exception by comparing reverse triangular mergers with other transactions that fall within the exception. After that discussion, this Note provides a solution to the issue, namely, that the FAR Council should amend the FAR to specify the scope of the “operation of law” exception and include reverse triangular mergers in that scope.

II.  A Brief Historical Background of the Anti-Assignment Act and an Introduction to Novation Agreements

A.   The History, Background, and Purpose of the Anti-Assignment Act

A general understanding of the historical background of the AAA and its intent is vital in understanding why the FAR Council should amend the FAR to specify the scope of the “operation of law” exception. This section first introduces the general historical development of the AAA, before discussing the congressional intent behind the Act.

1.   The Historical Background of the Anti-Assignment Act

An assignment is the transfer, by one person to another person, of any legal right to property, real or personal, or of any estate or right therein.22 Generally, it is permissible to assign contracts among private contractual parties.23 The contractual parties may freely assign their rights and duties unless the assignment would materially change the duty of the other party, materially increase the burden or risk on the other party, or the other party has a substantial interest in maintaining the relationship with the original contractual party.24 However, the assignor still remains liable for performance of the contract if the assignment is precluded by contract.25

By contrast, the government has chosen a different path to regulate the assignability of federal government contracts.26 Government contractors are prohibited from freely assigning their government contracts because Congress enacted the AAA which prohibits assignment of government contracts.27 The AAA refers to two statutory provisions: the Assignment of Contracts Act28 and the Assignment of Claims Act.29 Under the Assignment of Contracts Act, “[t]he party to whom the Federal Government gives a contract or order may not transfer the contract or order, or any interest in the contract or order, to another party.”30 The Assignment of Contracts Act prohibits the assignment of government contracts, except for the assignment of amounts due under a federal government contract to a financing institution, like a bank or a trust company.31 Similarly, the Assignment of Claims Act prohibits assigning claims or interests against the government to another party with the exception of certain “financing institution[s].”32

The history of the AAA can be traced back to 1853 when, in order to avoid a fraudulent claim against the government, Congress first enacted “An Act to Prevent Frauds upon the Treasury of the United States.”33 That Act prohibited the assignment of a government contract by private parties, ensuring that the government would deal exclusively with the original contracting party instead of multiple or assignee parties.34 The 1853 Act was the predecessor to the AAA.35

However, even without a fraudulent act in the procurement process, the government could still suffer from a poorly performed contract. The contractor that the government originally contracted with could enter into an agreement with another manufacturer or supplier who would actually perform the government contract, then that sub-contractor could manufacture or supply the cheapest items possible and turn a profit.36 This side-deal would leave the government with poor-quality goods and supplies.37

To prevent such a problem, Congress, in 1862, enacted “An Act to define the Pay and Emoluments of certain Officers of the Army, and for other Purposes” that later became the Assignment of Claim Act, and prohibited the private contractor party from transferring contracts to another party.38 The Act was enacted to ensure that the contract would be performed by the contractor that originally got the award from the government, and not by a non-contractor assignee.39

2.   The Purpose and Congressional Intent of the Anti-Assignment Act

The courts generally recognize that the main purpose of the AAA is to minimize the number of claimants that can bring claims against the government under any government contract.40 Multiple transactions under a government contract could result in multiple claimants, including both the assigner and the assignee bringing the same claim against the government, which raises the dan- ger that the government may have to pay for the claim twice.41 Under the AAA, the government is protected from being “harassed by multiplying the number of persons with whom it had to deal, and might always know with whom it was dealing until the contract was completed and a settlement made.”42

However, the AAA is not absolute. The FAR provides that the government may waive the prohibition of assignment of a government contract through executing a formal novation agreement.43 In addition, courts have judicially established a number of exceptions to the AAA. Prior to 1953, the Supreme Court held in several cases that the AAA did not restrict or apply to assignment arising by “operation of law” because such transactions did not create the “evil” that Congress designed the Act to obviate.44 For example, in Erwin v. United States, the Court ruled that the AAA will not apply to an involuntary transfer, such as assignment through the bankruptcy process.45

B.  The Novation Agreement

1.   General Introduction of Novation Agreements

The novation agreement exception to the AAA is established by the FAR, which states that the federal government, when in its interest, may waive the prohibition against assignments and recognize the assignee as the successor in interest to a government contract.46 FAR 42.1204 provides that the government may do so by executing a novation agreement with the current contractor and the assignee.47 By signing the novation agreement, the government allows the assignee to assume the rights and obligations of the original contractor, while holding the original contractor answerable to the government for any post-novation defaults in performance of the novation contract.48 Examples of transactions where the novation agreement might be required include, but are not limited to:

(i)    Sale of these assets with a provision for assuming liabilities;

(ii)    Transfer of these assets incident to a merger or corporate consolidation; and

(iii)    Incorporation of a proprietorship or partnership, or formation of a partnership.49

2.   The Risk of Obtaining a Novation Agreement

Although the FAR provides a waiver for the prohibition of assignment, it also may create significant risk and uncertainty for government contractors seeking novation agreements.50 First, the FAR gives the contracting officer wide latitude in determining whether or not to execute a novation agreement with the contractor.51 The contracting officer has discretion to determine whether the assignment of the contract would constitute a government interest, and the government has no obligation to approve the request for novation agreement.52 Second, if the government refuses to recognize the successor contractor, the original contractor remains obligated to perform the contract.53 If the contracting officer does not approve the novation and the original contractor fails to perform the contract, the contract may be terminated for default.54

Troublingly, a contractor may sometimes assign the government contract to an assignee through an asset transaction — ”a mere sale of its property by one corporation to another.”55 Under the FAR, the contractor—the assignor of the government contract — cannot request a novation agreement until the completion of all asset transactions because the government requires the company to submit certain post-transaction documents in order to determine whether or not to sign a novation agreement for the assignment.56 Such a procedural requirement would force contractors to face a period of uncertainty after the transfer of the assets and prior to the government’s approval of a novation.57 Furthermore, if the government refused to issue a novation agree- ment and the assignment of the government contract is barred by the AAA, neither the Contract Dispute Act of 1978 nor the Tucker Act would provide standing for an assignee to pursue a claim or appeal against the government.58 Even if the government waived the anti-assignment exclusion and recognized the transferee as the successor to the contractor, under the novation agreement, the original contractor will still remain liable as the guarantor of the transferee’s performance.59

Given the above-mentioned risks and uncertainties, it is more appealing for contractors to formulate their transactions in ways that do not require a novation agreement from the government.

III.  Applying the Exceptions of a Novation Agreement Established by Case Law in Merger and Acquisition Transactions – “Operation of Law”

Although the FAR requires contractors to obtain a novation agreement in certain types of corporate transactions, including a sale of assets with a provision for assuming liabilities, a transfer of assets incident to a merger or corporate consolidation, and an incorporation of a proprietorship or partnership, or the formation of a partnership,60 it is not mandatory for contractors to obtain novation agreements for every single transaction involving the assignment of contracts or claims against the government. By examining what Congress intended to prevent, courts have created a number of judicial exceptions to the AAA, that include assignments by “operation of law.”61 Transfer structures that fall within such exceptions include transfers by “intestate succession, bankruptcy transfers, subrogation, assignments by judicial order, and a business merger, consolidation, or other change in business structure.”62

A. The History of the “Operation of Law” Exception

The “operation of law” exception to the AAA can be traced back through more than 100 years in our judicial history and courts have developed the exception through a number of cases.63 The first case to establish the “operation of law” exception was United States v. Gillis.64 There, the Supreme Court held that certain types of assignments, such as “devolutions of title by force of law, without any act of parties, or involuntary assignments, compelled by law,” were excepted from the prohibition of the 1853 Act.65

The case commonly cited is Seaboard Air Line Railway v. United States, a case that applied the “operation of law” exception to corporate transactions66 and involved the transfer of claims incident to the merger of two railroad companies: the Florida Central & Peninsular Railroad (“Florida Central”), which was the original government contractor, and the Seaboard Air Line Railway (“Seaboard”).67 Florida Central merged into Seaboard through a statutory merger under the statutes of Georgia and Florida, with Seaboard as the surviving company.68 Seaboard then brought a claim against the government to recover for transportation services originally payable to Florida Central.69 The Supreme Court considered the congressional intent behind the AAA and ruled in favor of Seaboard and concluded that the statutory merger transaction was within the scope of the “operation of law” exception.70 The Court found that since the assignee, Seaboard, received all the assets and resources that were essential to performing the government contract from the contractor, such a transaction would not damage contract performance.71 By including statutory mergers as another type of “operation of law” exception, the earliest “operation of law” transactions only included transactions that would not raise problems concerning contract performance.72

After Seaboard, the Supreme Court ruled in United States v. Aetna Casualty & Surety Co. that the subrogation of an insurer to the insured constituted a transfer by operation of law, and was exempted from the 1853 Act.73 In the opinion, the Court expressly rejected the government’s argument that the exception should only be recognized when the assignment would not result in any “procedural embarrassments” suffered by the government.74 The Court emphasized that the AAA will not prohibit assignment through transactions that would not produce the evils that the Act was designed to inhibit, such as the government being harassed by multiple claims from different claimants, and that the transfer by “operation of law” was free from producing such “evil[].”75

By relying on those cases under the AAA and by applying the test from Seaboard, the Armed Services Board of Contract Appeals (ASBCA) found that assignments resulting from a subsidiary company, which was the original contractor, merging with its parent company, was within the scope of the “operation of law” exception and a novation agreement from the government was unnecessary.76 The ASBCA noted that by acquiring the whole assets of the subsidiary, the parent company retained all the assets and abilities of the subsidiary, and so it could be considered that the same entity (the subsidiary company) was still performing the contract after the merger.77 Therefore, the merger would have no effect on the resources engaged in performing the government contract. For the same reason, in L-3 Communications Integrated Systems, L.P. v. United States, a case that involved the sale of whole assets from the subsidiary contractor to its parent,78 the court held that “[w]here a transfer is incident to the sale of an entire business or the sale of an entire portion of a business, the transfer is considered to have occurred ‘by operation of law,’ and the assignment is exempted from the anti-assignment statute.”79

B. Limitations of the Operation of Law Exception

However, some courts and boards of contract appeals have limited the scope of the “operation of law” exception. For example, in Broadlake Partners, the appellant sold a government lease to Meritor Bank, and in response, the contracting officer issued a decision terminating the lease for default.80 The General Services Board of Contract Appeals (GSBCA) refused to recognize an exception to the AAA, claiming that the transaction was a mere assignment of the property and lease, and the prospect of multiple claims posed a threat that the AAA was intended to prevent.81 Although this case did not involve a merger or acquisition transaction, it can be inferred that courts would still uphold the AAA if they found that applying the exception would expose the government to the dangers of facing multiple unexpected claimants for the same issue, which is what Congress intended to avoid.82

Another example is the partial assets purchase transaction. Many merger and acquisition transactions are structured by conducting the transaction so that the acquiror company purchases the target company’s assets.83 However, courts have found that the transaction of selling partial corporate property to another corporation does not fall within the “operation of law” exception.84 In Westinghouse Electric Co. v. United States, the contract was first awarded to Westinghouse Electric Corporation, which then acquired CBS, Incorporated and changed its name to CBS Corporation (CBS).85 Later, another company, British Nuclear Fuels, purchased certain assets from CBS, including assets acquired from the plaintiff.86 By examining the congressional intent behind the AAA, the court concluded that such transaction would potentially force the government to face additional claims arising under the contract, which was precisely the “evil” that Congress intended to prevent.87 The court thus held that the sale of partial assets alone was outside the scope of the “operation of law” exception.88

All the judicial decisions mentioned above reveal a trend that, when determining whether the merger transaction is within the scope of the “operation of law” exemption, courts look at whether the merger will have little or no effect on the personnel, management, and resources engaged in performing those contracts,89 as well as whether such transactions will result in multiple claims raised by multiple claimants against the government. In considering these matters, courts look to whether the assignee of the government contract will have the same resources and be able to provide the same benefit to the government as the original contractor.90 For example, courts have recognized that certain types of transactions, such as total asset transactions and subsidiary mergers into the parent company, fall within the scope of the “operation of law” exception.91 This is because after the transaction, the surviving company will have control of all the resources required for performing the contract and no additional potential claimant would be generated though the transaction. Courts can easily determine that such a transaction would have no effect on contract performance.

However, there is still a potential threat to the government that applying the “operation of law” exception would result in allowing the assignee to perform a government contract without any evaluation regarding the company’s suitability or responsibility.92 As a consequence, government contracts could be performed by an irresponsible corporation that the government would not have chosen.93 Because of this concern, courts have held that the assignee must share the same management, assets, and financial resources as the original contractor.94

In conclusion, courts consider the applicability of the “operation of law” exception if the nature of the transaction (1) would not generate multiple claimants against the government95 and (2) would have little or no effect on the personnel, management, and resources engaged in performing those contracts.96 The exception typically applies to assignments made pursuant to “transfers by intestate succession or testamentary disposition, judicial sale, the process of subrogation to an insurer, and where the assignment or transfer of a claim is effected through consolidation or merger.”97

IV.  An Introduction to Reverse Triangular Mergers  

Currently, the reverse triangular merger is one of the most popular one-step merger structures used in U.S. public company mergers, particularly for cash transactions, because the acquiring company is not subject to the liabilities of the target company.98 However, when choosing a triangular merger structure, government contractors would still face the ultimate question of whether the transaction would fall within the “operation of law” exception to the AAA. The nature of the reverse triangular merger would further complicate this question because unlike a regular parent-subsidiary merger, the surviving company of a reverse triangular merger would usually become a subsidiary of the acquiror.99

A.   An Introduction and Comparison of Forward Triangular Mergers and Reverse Triangular Mergers

As mentioned above, the structure of the merger and acquisition transaction would determine whether the assignment of a government contract can be exempted from the AAA by the “operation of law” exception. Two types of mergers will be discussed below: forward triangular mergers and reverse triangular mergers.100 In the last twenty years, the reverse triangular merger structure has grown in popularity in the merger and acquisition market.101

1.   Forward Triangular Mergers

In a forward triangular merger, the acquiring company does not directly participate in the merger by acting as the “buyer” in the transaction.102 Instead, the acquiring company forms a wholly owned subsidiary to play the role of the “buyer,” and then the target company merges with the subsidiary.103 The shareholders of the target company exchange their shares for shares of the acquiring company, and the acquiring company’s wholly owned subsidiary then owns the target company’s whole assets.104 By adopting this structure, the acquiring company can squeeze-out the target company’s minority shareholders by giving them cash and nothing more.105 However, this structure results in significant legal problems.106 Because the target company ceases to exist after the transaction and all the target’s assets are inherited by the acquiring company, the acquiring company is automatically liable for all the target company’s debts and liabilities, which is burdensome for the acquiring company.107 As a result, most acquiring companies prefer a merger structure that prevents them from inheriting the target company’s liability.

See a diagram of a forward triangular merger:108

2.   Reverse Triangular Mergers

Different from a forward triangular merger, the reverse triangular merger is structured in a way that the subsidiary of the acquiring company merges into the target company, leaving the target company in existence after the transaction.109 During the transaction, the subsidiary’s shares are replaced by the target company’s shares.110 Upon conclusion of the transaction, the target company becomes a wholly owned subsidiary of the acquiring company.111 Since the whole transaction is constructed through stock exchange and the target company still exists after the transaction, there is no asset transaction or contract assignment between the two companies during the merger.112 Naturally, the liability is not transferred to the acquiring company. The reverse triangular merger also does not require a shareholder vote from the target company since the company will continue to exist after the transaction.113 Given this advantage, many corporations prefer the reverse triangular merger structure over the forward triangular merger.114

See a diagram of a reverse triangular merger:115

B.  The Anti-Assignment Clause in a Commercial Transaction When Applying the Reverse Triangular Merger Structure

Unlike government contracts, the common law generally allows the assignment of contractual rights.116 However, contract parties can expressly prohibit assignment by imposing an anti-assignment clause in the contract in order to prevent uncertainty and ensure the performance of the contract.117 Such a clause renders the assignment invalid unless the third party gives approval.118 Consequently, corporations which are planning a merger and acquisition can look for a structure that would be exempted from the anti-assignment clause in order to conclude the transaction without a third party’s consent.119

In a private business transaction, one of the arguments is that using reverse triangular mergers would provide such an advantage.120 If the acquiring company applies the reverse triangular merger, it can argue that since all of the assets and liabilities will remain with the target company because its existence is not affected by the transaction, then no assignment of the contract has taken place.121 Therefore the anti-assignment clause would not create any barrier during the transaction and consent from the third party would not be required for contract assignment.

This argument is supported by judicial decisions in Delaware. In Baxter Pharmaceutical Products, Inc. v. ESI Lederle Inc., although the transaction was structured as a stock purchase rather than a reverse triangular merger, the Delaware Court of Chancery concluded that the purchase of a corporation’s stock, standing alone, does not constitute an assignment of any contractual right.122 Under such circumstances, the underlying contract rights are not being transferred to the corporation who purchased the securities.123

The most important case supporting this argument is Meso Scale Diagnostics, LLC v. Roche Diagnostics GMBH., where the Delaware Court of Chancery gave the clarification of whether a reverse triangular merger can result in an assignment by “operation of law.”124 By interpreting the statutory language of the General Corporation Law of the State of Delaware, the court concluded that during a merger and acquisition, assignments only result in “the transfer of the non-surviving corporation’s rights and obligations to the surviving corporation by operation of law.”125 Therefore, for forward triangular mergers, in which the surviving company is not the original target company, an assignment takes place during the transaction because all the assets and liability of the target company is inherited by the surviving company.126 In contrast, since the target company is the surviving company with all the assets and liabilities after the reverse triangular merger, the court held that no assignment of con- tract takes place.127

It should be noted that Meso Scale Diagnostics, LLC only focused on interpreting the statute in the General Corporation Law of the State of Delaware and established the rule for reverse triangular mergers only in Delaware.128 But the decision does support the argument that a reverse triangular merger does not result in an assignment of the target’s contractual rights by “operation of law.”129 It is widely suggested that the decision should give assurance to potential acquirors that, absent explicit language addressing change of control in an anti-assignment clause, they are not required to obtain third party consent when utilizing a reverse triangular merger.130

V.  Applying the Anti-Assignment Clause to Reverse Triangular Mergers in the Government Contracts Context

This section includes a two-step analysis. First, it suggests that, due to the nature of the reverse triangular merger, no assignment of contracts occur during the transaction. Second, even if the federal courts will not adopt the decision of the Delaware Court of Chancery, the reverse triangular merger should be within the scope of the “operation of law” exception because it does not produce the “evil” that the Congress intended to prevent.

A.  No Assignment of Contracts Takes Place During a Reverse Triangular Merger

As mentioned above, the AAA in the federal contract setting focuses on protecting the government from being harassed by multiple claimants and on ensuring the contract be performed by the original contractor.131 So when considering whether the AAA should be exempted during a reverse triangular merger, the most important factor to consider is whether such a transaction would impose the “evil” that Congress intended to prevent.132

Until recently, there has been no federal court decision addressing the issue of whether a reverse triangular merger should be exempt from the AAA; however, a decision made by the ASBCA did address such a transaction structure in the government contracts context.133 In Appeals of Newport News Shipbuilding and Dry Dock Co., Tenneco, the acquiring company, purchased Newport News, an independent, publicly-owned corporation, through the process of reverse triangular merger.134 Tenneco Virginia, Inc., the subsidiary of Tenneco, Inc., merged into Newport News, leaving Newport News as the remaining company after the merger.135

Although the ASBCA did not address whether an assignment of contract took place under the reverse triangular merger, it did hold that reverse triangular mergers were stock purchase transactions when the acquired corporation retained their separate corporate existence.136 The court also concluded that since the target company retained its separate corporate identity, the acquiring corporation did not become liable for the target company’s debt.137 Furthermore, it stated that under such a merger structure, the target company’s contracts are, in most instances, unaffected.138

The decision of Appeals of Newport News Shipbuilding and Dry Dock Co. indicates that the federal government agrees with the prevailing view that no assignment occurs during a reverse triangular merger.139 In addition, it can be argued that the formation of a reverse triangular merger does not trigger the “evil” that Congress intended to prevent by passing the AAA. Since the target company, the contractor, is unaffected by the transaction, the government can deal with the same claimant after the transaction and no additional claimants are added.140 Thus, it can be argued that the reverse triangular merger should be exempt from the AAA because no assignment occurs during the transaction.

B.  Even If There Is an Assignment During a Reverse Triangular Merger, It Is Within the Scope of the “Operation of Law” Exception and Does Not Require a Novation Agreement.

Although Delaware corporate jurisprudence is often persuasive in other jurisdictions, other courts could reach the opposite result and find that there is an assignment during a reverse triangular merger.141 Since no judicial precedent at the federal level suggests that reverse triangular mergers do not trigger the AAA and no federal statute provides relevant guidance, government con- tractors involved in such transactions can only obtain a novation agreement from the government in order to avoid defaulting on contract performance.142 However, by comparing reverse triangular mergers to transactions that are within in the scope of the “operation of law” exception, one can argue that reverse triangular mergers should fall within the scope of the “operation of law” exception and that no novation agreement should be required.

First, courts have concluded that the “operation of law” exception “generally involves situations where, for all intents and purposes, the contract with the Government continues with essentially the same entity, which has undergone a change in its corporate form or ownership.”143 This requirement can easily be satisfied through a reverse triangular merger because the contractor company, as the target, retains its separate corporate identity and all the assets and liabilities of the contractor company remain unchanged during the transaction.144

Second, the Court of Federal Claims has held that an assignment resulting from a subsidiary company, which is the original contractor, merging into its parent company is within the scope of the “operation of law” exception.145 The reason behind such an exemption is that the parent company retains all the assets from the contractor, therefore there is no risk of exposing the government to multiple claimants.146 As mentioned above, the target company of a reverse triangular merger also retains all the assets after the transaction.147 One can infer that the similarity between the reverse triangular merger and the “parent-subsidiary” merger supports the view that assignments occur during a reverse triangular merger and such a transaction should be within the scope of the “operation of law” exception.

Finally, one can conclude that the reverse triangular merger would not raise the “evil” by comparing it with the partial sale of assets transaction, which is a type of transaction that is outside the scope of the “operation of law” exception.148 By holding that a partial sale of assets transaction is subject to the AAA, courts are asserting that the government might be facing multiple claims raised from different claimants because the contract might be performed by a third party rather than the contractor alone due to the partial sale of assets.149 In contrast, a reverse triangular merger does not raise this problem because there is no sale of assets during the transaction and the target company still retains its separate corporate identity and liability.150

In conclusion, since the reverse triangular merger does not create the “evil” that the AAA was designed to obviate, assignments under a reverse triangular merger should fall within the scope of the “operation of law” exception.151

VI.  The FAR Council Should Amend the FAR to Define the Scope of the "Operation of Law" Exception and Include Reverse Triangular Mergers within that Scope.

As mentioned above, there are a number of cases from Supreme Court, Court of Claims, and Armed Services Board of Contract Appeals precedent that have held that certain types of mergers or consolidations that occur by “operation of law” are not subject to the AAA.152 Unfortunately, there is no provision in the FAR explaining the scope of the “operation of law” exception and no statutory definition of the outer bounds of the exception.153 Instead, the FAR only provides that a novation agreement is required for a transfer of assets “incident to a merger or corporate consolidation.”154 Under such circumstances, contractors are hesitant to conduct transactions without first obtaining a novation from the government because there is no guarantee that the contracting officer will follow the courts’ judicial decision and will likely instead comply with the FAR’s requirement.155 Such uncertainty forces the contractor to choose to obtain the novation agreement, which is totally at the agency’s discretion.156

On the other hand, even with compelling legal arguments for the inapplicability of the statutes, a contractor may still have to bring such a dispute to the federal court and seek a judicial opinion, which is time-consuming.157 Such a waste of time could potentially cause contractors to lose prospective business opportunities.

Moreover, as mentioned above, it is reasonable to include the reverse triangular merger within the scope of the “operation of law” exception because it is similar to the other transactions that are exempt from the AAA. However, one cannot overlook that a reverse triangular merger could potentially lead to a change of the contractor company’s management, structure, and the nature of the corporate culture because of the sole control of the acquiring company.158 This kind of change is exactly the evil that the AAA was intended to prevent.

Because of all the considerations mentioned above, it is the FAR Council’s opportunity to clarify the scope of the “operation of law” exception and provide guidance for contracting officers. The FAR Council should amend the FAR to include and specify transactions that would not result in the government dealing with multiple claimants within the scope of the “operation of law” exception, such as the total assets transaction and parent-subsidiary merger. It is also reasonable to include the reverse triangular merger within the scope of the “operation of law” exception because of its similar result to the transactions mentioned above. Additionally, the Council should add the specific requirement that the transaction must keep the management officers of the contractor the same after the transaction, and the transaction must be performed in a way that would not change the contractor’s original structure, nature, or corporate culture. By amending the current regulation, not only would the FAR be consistent with judicial decisions regarding the “operation of law” exception, but it would also be able to provide a handbook for contractors seeking a structure for corporate reorganization.

VII.  Conclusion

The solution this Note demonstrates would provide general guidance or a “safe-harbor” for contractors structuring merger and acquisition transactions. It would also comply with the congressional intent of protecting the government from dealing with unpredicted multiple claimants. Given the time consumption and risk of uncertainty mentioned above for obtaining novation agreements, contractors would be more willing to make use of the “operation of law” exception and adopt transactions that do not require novation agreements. By complying with the “safe-harbor” that the FAR Council should implement, contractors could conduct their transactions in a way that avoids both the uncertainty of whether a novation agreement is required and the “evil” that Congress intended to prevent.

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  1. Meso Scale Diagnostics, LLC v. Roche Diagnostics GMBH., 62 A.3d 62, 65–66 (Del. Ch. 2013).
  2. Id. at 70.
  3. Id. at 62.
  4. See Hernan Cristerna, et al., 2019 Global M&A Outlook: Unlocking Value in a Dynamic Market, J.P. Morgan at 2 (Jan. 2019), https://www.jpmorgan.com/jpmpdf/1320746694177.pdf [https://perma.cc/7XD8-V3U3].
  5. See id.
  6. See Greg Nossaman, M&A Opportunities Abound in a Changed Market, Wash. Tech. 1 (Feb. 23, 2017), https://washingtontechnology.com/articles/2017/02/23/insights-nossamen-manda-trends.aspx [https://perma.cc/L4P6-VLGQ].
  7. See id.
  8. For example, it will raise uncertainty if the contractor’s proposals were pending during the merger and acquisition transaction. See John Chierichella & Keith Szeliga, What You Need to Know About Mergers and Acquisitions Involving Government Contractors and Their Suppliers: Volume III – What Happens to Pending Proposals?, SheppardMullin Gov’t Cont. & Investigations Blog at 1 (Mar. 17, 2016), https://www.governmentcontractslawblog.com/2016/01/articles/mergers-and-acquisitions/what-you-need-to-know-about-mergers-and-acquisitions-involving-government-contractors-and-their-suppliers/ [https://perma.cc/K26E-ZVTP].
  9. See John Chierichella & Keith Szeliga, What You Need to Know About Mergers and Acquisitions Involving Government Contractors and Their Suppliers: Volume I – The Structure of the Deal and Government Consent, SheppardMullin Gov’t Cont. & Investigations Blog at 2 (Jan. 14, 2016), https://www.governmentcontractslawblog.com/2016/01/articles/mergers-and-acquisitions/what-you-need-to-know-about-mergers-and-acquisitions-involving-government-contractors-and-their-suppliers [https://perma.cc/EFC9-QNSW] [hereinafter Chierichella & Szeliga, Volume I].
  10. 41 U.S.C. § 6305 (2012).
  11. 31 U.S.C. § 3727 (2012).
  12. See Karen L. Manos, Novation Agreements in Corporate Restructuring: The Government’s Contractual Stealth Weapon, 26 Pub. Cont. L.J. 339, 340 (1997).
  13. FAR 42.1204(a) (2019).
  14. FAR 42.1204(b).
  15. See William A. Roberts, III & Kay Tatum, The Novation of Government Contracts and the Unreliable and Unpredictable “Operation of Law” Exception, 50 Procurement Law. 11, 11 (2014).
  16. See id.
  17. See Seaboard Air Line Ry. v. United States, 256 U.S. 655, 657 (1921) (holding that the assignment was exempted from the Anti-Assignment Act in a parent-subsidiary merger). But see Westinghouse Elec. Co. v. United States, 56 Fed. Cl. 564, 570 (2003) (holding that the assignment through sale of partial assets transaction did not fall within the “operation of law” exception).
  18. See Roberts & Tatum, supra note 15.
  19. See Thaddeus J. Malik, Jill R. Sheiman & Eric M. Jones, Delaware Chancery Court Rules That a Reverse Triangular Merger May Constitute an “Assignment by Operation of Law,” PaulHastings at 1 (May 2011), https://www.paulhastings.com/docs/default-source/PDFs/1913.pdf.
  20. See FAR 42.1204(a) (“The Government may, when in its interest, recognize a third party as the successor in interest to a Government contract . . . .”) (emphasis added).
  21. See Chierichella & Szeliga, Volume I, supra note 9, at 3 (internal citation omitted).
  22. See Seventh Nat’l Bank of Phila. v. Shenandoah Iron Co., 35 F. 436, 440 (C.C.W.D. Va. 1887) (citation omitted).
  23. See Restatement (Second) of Contracts, § 317(2).
  24. See id. § 317(2)(a).
  25. See id. § 317(2)(c).
  26. See David R. White, To Dance with the One You Came with: Federal Government Regulation of Assignments of Contractual Performance, 29 Pub. Cont. L.J. 601, 603 (2000) (citations omitted).
  27. See id.
  28. 41 U.S.C. § 6305.
  29. 31 U.S.C. § 3727; see Manos, supra note 12 (citations omitted).
  30. 41 U.S.C. § 6305(a); see Roberts & Tatum, supra note 15, at 10-11 (citations omitted).
  31. Id. § 6305(b)(1); see Roberts & Tatum, supra note 15 (citation omitted).
  32. 31 U.S.C. § 3727; see John W. Chierichella & Douglas E. Perry, Mergers and Acquisitions of Government Contractors: Special Considerations and Due Diligence Concerns, 23 Pub. Cont. L.J. 471, 485 (1993).
  33. An Act to Prevent Frauds Upon the Treasury of the United States, ch. 81, § 1, 10 Stat. 170 (1853). It provides as follows:
    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That all transfers and assignments hereafter made of any claim upon the United States, or any part or share thereof, or interest therein, whether absolute or conditional, and whatever may be the consideration therefor, and all powers of attorney, orders, or other authorities for receiving payment of any such claim, or any part or share thereof, shall be absolutely null and void, unless the same shall be freely made and executed in the presence of at least two attesting witnesses, after the allowance of such claim, the ascertainment of the amount due, and the issuing of a warrant for the payment thereof.
    See also Chung Kun Kevin Park, Removing Uncertainty for the Most Uncertain Times: The Need for Amending the Anti-Assignment Acts to Better Prepare for a Financial Crisis, 47 Pub. Cont. L.J. 307, 316 (2018) (citations omitted).
  34. An Act to Prevent Frauds upon the Treasury of the United States § 1.
  35. See Park, supra note 33.
  36. See White, supra note 26, at 607 (citations omitted).
  37. See id.
  38. See An Act to define the Pay and Emoluments of certain Officers of the Army, and for other Purposes, ch. 200, § 14, Stat. 594 (1862) (providing “[t]hat no contract or order, or any interest therein, shall be transferred by the party or parties to whom such contract or order may be given to any other party or parties, and that any such transfer shall cause the annulment of the contract or order transferred, so far as the United States are concerned: Provided, That all rights of action are hereby reserved to the United States . . . ).
  39. See White, supra note 26, at 608 (citation omitted).
  40. See, e.g., Spofford v. Kirk, 97 U.S. 484, 489–90 (1878); United States v. Shannon, 342 U.S. 288, 291 (1952); Westinghouse Elec. Co. v. United States, 56 Fed. Cl. 564, 570 (2003) (concluding that the policy concerns of the Anti-Assignment Act are implicated in this case because “[h]aving closed out the . . . contract with [the original contracting party] . . . the government now faces additional claims arising under the contract . . . . This is precisely the type of situation the anti-assignment legislation was aimed at preventing.”).
  41. See Kirk, 97 U.S. at 489-90.
  42. Hobbs v. McLean, 117 U.S. 567, 576 (1886) (citation omitted).
  43. See FAR 42.1204(a); Tuftco Corp. v. United States, 614 F.2d 740, 745 (Ct. Cl. 1980) (“The soundest and most accepted method of establishing recognition by the Government is for all three parties to enter into a novation agreement.”) (citation omitted).
  44. See Chierichella & Perry, supra note 32, at 486; Erwin v. United States, 97 U.S. 392, 397 (1878).
  45. Erwin, 97 U.S. at 397 (claiming the Anti-Assignment Act applies only to cases of voluntary assignment and the passing of claims to heirs, devisees, or assignee in bankruptcy is not what the Act aimed for).
  46. See Roberts & Tatum, supra note 15 (citation omitted).
  47. See FAR 42.1204(a).
  48. See Chierichella & Perry, supra note 32.
  49. FAR 42.1204(a)(2).
  50. See Roberts & Tatum, supra note 15.
  51. See id.
  52. See FAR 42.1204(a) (“The Government may, when in its interest, recognize a third party as the successor in interest to a Government contract . . . .”) (emphasis added); Manos, supra note 12, at 345 (citations omitted).
  53. See FAR 42.1204(c) (“When it is in the Government’s interest not to concur in the transfer of a contract from one company to another company, the original contractor remains under contractual obligation to the Government, and the contract may be terminated for reasons of default, should the original contractor not perform.”).
  54. See id.
  55. 19 Am. Jur. 2d Corporations § 2156 (2019) (citations omitted); see FAR 42.1204(a)(2)(i).
  56. See FAR 42.1204(f)(1), (5) (information required to be submitted with request for novation agreement includes an authenticated copy of the instrument effecting the transfer of assets and opinion of legal counsel stating that the transfer was properly effected under applicable law); Manos, supra note 12, at 345 (citations omitted).
  57. See Manos, supra note 12, at 345.
  58. See id. at 346 (citations omitted).
  59. See Agnes P. Dover, Richard T. Horan, Jr. & Todd R. Overman, Mergers & Acquisitions - Special Issues When Purchasing Government Contractor Entities/ Edition II, Briefing Papers Collection 1, 4 (2009) (citation omitted); FAR 42.1204(h)(3).
  60. See FAR 42.1204(a)(2).
  61. See Roberts & Tatum, supra note 15 (citation omitted); Anchor Sav. Bank, FSB v. United States, 121 Fed. Cl. 296, 326 (2015) (noting that the Anti-Assignment Act does not apply to transfers by operation of law) (citations omitted).
  62. Anchor Sav. Bank, FSB, 121 Fed. Cl. at 326 (quoting Holland v. United States, 62 Fed. Cl. 395, 400 (2004)).
  63. See Jean F. Rydstrom, Annotation, Modern Status and Application of Rule That Only Voluntary Transfer or Assignment of Claim Against United States Is Within Assignment of Claims Act (31 U.S.C.A. § 203, 41 U.S.C.A. § 15), 44 A.L.R. Fed. 775, Art. 2 § 6 (1979).
  64. United States v. Gillis, 95 U.S. 407, 416 (1877).
  65. Id.; see Rydstrom, supra note 63.
  66. See Roberts & Tatum, supra note 15.
  67. See Seaboard Air Line Ry. v. United States, 256 U.S. 655, 656 (1921).
  68. See id.
  69. See id. at 655.
  70. See id. at 657 (“We cannot believe that Congress intended to discourage, hinder or obstruct the orderly merger or consolidation of corporations as the various States might authorize for the public interest. There is no probability that the United States could suffer injury in respect of outstanding claims from such union of interests and certainly the result would not be more deleterious than would follow their passing to heirs, devisees, assignees in bankruptcy, or receivers, all of which changes of ownership have been declared without the ambit of the statute. The same principle which required the exceptions heretofore approved applies here.”).
  71. See Roberts & Tatum, supra note 15, at 12.
  72. See id.
  73. See United States v. Aetna Cas. & Sur. Co., 338 U.S. 366, 372 (1949) (citation omitted); Rydstrom, supra note 63.
  74. See Manos, supra note 12, at 341 (citing Aetna Cas. & Sur. Co., 338 U.S. at 374–75).
  75. See Rydstrom, supra note 63.
  76. See Isotopes, Inc., ASBCA No. 15663, 74-1 BCA ¶ 10,371, at 48,977 (citations omitted); White, supra note 26, at 619 n.123.
  77. See Isotopes, 1974 BCA ¶ 10,371, at 48,977; Omega Envtl., Inc., ASBCA No. 51639, 99-1 BCA ¶ 30,253, at 149,605 (finding that the merger of a subsidiary, which was the original contractor, into the parent resulted in the parent succeeding to the subsidiary’s interests and becoming the assignee of the government contract, which was valid under the Anti-Assignment Act) (citations omitted).
  78. L-3 Commc’ns Integrated Sys., L.P. v. U.S., 84 Fed. Cl. 768, 771 (2008).
  79. Id. at 777–78 (citations omitted).
  80. See Broadlake Partners, GSBCA No. 10713, 92-1 BCA ¶ 24,699, at 123,268.
  81. See id. at 123, 269–70 (citation omitted).
  82. See id. (holding that the transaction was not exempted from the Anti-Assignment Act because the prospect of multiple litigation posed a threat to the government).
  83. See Manos, supra note 12, at 342.
  84. See Westinghouse Elec. Co. v. United States, 56 Fed. Cl. 564, 570 (2003).
  85. See id. at 566.
  86. See id.
  87. See id. at 570.
  88. See id.; see also Mancon Liquidating Corp., ASBCA No. 18304, 74-1 BCA ¶ 10,470, at 49, 511-12 (holding that the sale of assets is a voluntary transfer and hence does not fall within the “operation of law” exception) (citations omitted). But see Consumers Ice Co. v. United States, 475 F.2d 1161, 1163 (Ct. Cl. 1973) (holding that a sale of whole assets of the corporation does fall within the scope of the “operation of law” exception) (citation omitted).
  89. See Dover, Horan, Jr., & Overman, supra note 59, at 3 (citations omitted).
  90. See id.
  91. See Manos, supra note 12, at 340–41.
  92. See White, supra note 26, at 624 (citations omitted).
  93. See id.
  94. See id.
  95. See Westinghouse Elec. Co. v. United States, 56 Fed. Cl. 564, 570 (2003).
  96. See Dover, Horan, Jr., & Overman, supra note 59, at 3.
  97. L-3 Commc’ns Integrated Sys., L.P. v. U.S., 84 Fed. Cl. 768, 776–77 (2008) (citations omitted).
  98. See Guide to Acquiring a US Public Company, Latham & Watkins LLP (2015), https://www.lw.com/thoughtLeadership/lw-acquiring-a-us-public-company-for-the-non-us-acquirer.
  99. See id.
  100. See Shannon D. Kung, The Reverse Triangular Merger Loophole and Enforcing Anti-Assignment Clauses, 103 Nw. U. L. Rev. 1037, 1045 (2009) (citations omitted).
  101. See id. at 1040 (citations omitted).
  102. See F. Hodge O’Neal & Robert B. Thompson, O’Neal & Thompson’s Oppression of Minority Shareholders and LLC Members §5:6 (2018) (citation omitted).
  103. See id.
  104. See Stephanie Hoffer & Dale A. Oesterle, Tax-Free Reorganizations: The Evolution and Revolution of Triangular Mergers, 108 Nw. U. L. Rev. 1083, 1093-94 (2014) (citation omitted).
  105. O’Neal & Thompson, supra note 102.
  106. See Kung, supra note 100.
  107. See id. (“In a forward triangular merger, all the target company’s assets and liabilities are automatically transferred to the surviving corporation by operation of law after the merger certificate is filed with the Secretary of State of the surviving corporation’s state of incorporation.”) (citation omitted).
  108. Forward Triangular Merger, Witnesseth, http://witnesseth.typepad.com/blog/forward-triangular-merger.html [https://perma.cc/R6DA-8N52].
  109. SeeHoffer & Oesterle, supra note 104, at 1094 (citation omitted).
  110. See id.
  111. See Robert S. Reder, David S. Schwartz & Alison Fraser, Is Reverse Triangular Merger an Assignment of Target’s Assets ‘By Operation Of Law’?, 26 No. 25 Westlaw J. Corp. Officers & Directors Liability 2, 1 (2011).
  112. See Kung, supra note 100, at 1046 (citation omitted).
  113. See Kirschner Bros. Oil, Inc. v. Natomas Co., 185 Cal. App. 3d 784, 785 (1986) (holding that the reverse triangular merger did not trigger the shareholders’ voting right because target had not been merged into another corporation).
  114. See id.; see Kung, supra note 100, at 1040–41.
  115. Reverse Triangular Merger, Witnesseth, http://witnesseth.typepad.com/blog/reverse-triangular-merger.html [https://perma.cc/6T55-AV74].
  116. See Restatement (Second) of Contracts, § 317(2) (“A contractual right can be assigned . . . .”).
  117. See id. § 317(2)(c).
  118. See Kung, supra note 100, at 1043.
  119. See id. at 1044.
  120. See id. at 1040–41.
  121. See id.
  122. Baxter Pharm. Prods., Inc. v. ESI Lederle Inc., No. Civ. A. 16863, 1999 WL 160148, at *5 (Del. Ch. Mar. 11, 1999).
  123. See id.
  124. See generally Meso Scale Diagnostics, LLC v. Roche Diagnostics GMBH., 62 A.3d 62 (Del. Ch. 2013).
  125. Id. at 82–83 (citations omitted).
  126. See Ryan M. Murphy, Contract Assignment in M&A Transactions, Bloomberg BNA Corp. L. & Accountability Rep. at 2 (2016).
  127. Meso Scale Diagnostics, LLC, 62 A.3d at 83.
  128. Id.; see Annual Survey Working Group of the M&A Jurisprudence Subcommittee, Mergers and Acquisitions Committee, ABA Business Law Section, Annual Survey of Judicial Developments Pertaining to Mergers and Acquisitions, 69 Bus. Law. 477, 491 (2014) [hereinafter Annual Survey of Judicial Developments Pertaining to Mergers and Acquisitions] (noting that the Delaware state court’s decision was in contrast to a California state court’s decision, which held that a reverse triangular merger constituted an assignment, citing SQL Sols., Inc. v. Oracle Corp., No. C-91-1079 MHP, 1991 WL 626458 (N.D. Cal. Dec. 18, 1991)); see also Joseph C. Marrow, Does a Reverse Triangular Merger Constitute An Assignment by Operation of Law?, Morse Barnes-Brown Pendleton (Mar. 18, 2013), http://www.mbbp.com/news/reverse-triangular-merger [https://perma.cc/444C-AHYX].
  129. See Murphy, supra note 126; Marrow, supra note 128.
  130. See Marrow, supra note 128.
  131. See United States v. Shannon, 342 U.S. 288, 291 (1952).
  132. See Seaboard Air Line Ry. v. United States, 256 U.S. 655, 657 (1921).
  133. See Appeal of Newport News Shipbuilding & Dry Dock Co., ASBCA Nos. 44731, 44826, 97-1 BCA ¶ 28,835, at 143,848; Lucantonio N. Salvi & Marko W. Kipa, Meso Scale: Re-Defining The Implications of a Reverse Triangular Merger?, Gov’t Cont. & Investigations Blog at 1–2 (Aug. 4 2011), https://www.governmentcontractslawblog.com/2011/08/articles/aerospace-and-defense/meso-scale-re-defining-the-implications-of-a-reverse-triangular-merger/ [https://perma.cc/M2C7-ZLS6].
  134. See Newport News, 1997 BCA ¶ 28,835, at 143,849.
  135. See id.
  136. See id. at 143,850.
  137. See id.
  138. See id. (“Newport News was not liquidated; accordingly, it retained its separate corporate status, assets and liabilities. Subsequent to the merger, Newport News continued to carry its assets on its own books and to apply its existing depreciation and amortization policies . . . . In addition, Newport News continued to obtain its own commercial contracts . . . .”).
  139. See Salvi & Kipa, supra note 133.
  140. See Newport News, 1997 BCA ¶ 28,835, at 143,850 (concluding that Newport News continued to obtain its own commercial contracts).
  141. See Annual Survey of Judicial Developments Pertaining to Mergers and Acquisitions, supra note 128.
  142. See FAR 42.1204.
  143. See L-3 Commc’ns Integrated Sys., L.P. v. U.S., 84 Fed. Cl. 768, 777 (2008) (citations omitted).
  144. See Newport News, 1997 BCA ¶ 28,835, at 143,850.
  145. See L-3 Commc’ns Integrated Sys., L.P., 84 Fed. Cl. at 778.
  146. See id. at 777.
  147. See Newport News, 1997 BCA ¶ 28,835, at 143,850.
  148. See Westinghouse Elec. Co. v. United States, 56 Fed. Cl. 564, 570 (2003).
  149. See id.
  150. See Newport News, 1997 BCA ¶ 28,835, at 143,850.
  151. See L-3 Commc’ns Integrated Sys., L.P. v. U.S., 84 Fed. Cl. 768, 778 (2008).
  152. See supra Section III.A.
  153. See Roberts & Tatum, supra note 15.
  154. FAR 42.1204(a)(2)(ii).
  155. See Chierichella & Szeliga, Volume I, supra note 9, at 3.
  156. See Manos, supra note 12, at 345.
  157. See Chierichella & Szeliga, Volume I, supra note 9, at 3.
  158. See Kung, supra note 100, at 1057–58 (citations omitted).