My contractor has filed chapter 11 and they have been purchased by another company as approved by the court. Where is the FAR does it talk about the sale of all or nearly all the assets of a contractor to a new corportation?

By Faruk on Thursday, May 09, 2002 - 05:15 pm:

Try FAR 42.9 and then FAR 42.12. Any other suggestions?

By Eric Ottinger on Thursday, May 09, 2002 - 05:17 pm:

Denise,

You need a novation. See FAR 42.12.

Eric

By John Ford on Friday, May 10, 2002 - 11:06 am:

Denise, Eric has jumped to a conclusion that may not be warranted. As FAR 42.12 points out, you only need a novation when a new legal entity will perform the contract. However, a novation is not required everytime a new legal entity will be the one performing a contract. The ASBCA, and I believe the Supreme Court, have held that a novation is not necessary when the new legal entity will perform the contract as a result of a merger by operation of law.
In your case, that is one of the considerations you need to consider regarding existing contracts. If your contractor was merely acquired through a stock purchase and remains the contractor, you do not need a novation. Also, as a matter of practicality, novations take quite a while to accomplish. If you have contracts that are almost over, you may want to just let them go to completion and not worry about novations.

By Vern Edwards on Friday, May 10, 2002 - 11:17 am:

Denise:

To add to what John Ford has said, the government is not obligated to enter into a novation agreement. See: Ateron Corporation, ASBCA No. 46867, 93-4 BCA ¶ 27229, October 6, 1994, and F.P.PLA Tool and Manufacturing Company, Inc. (d/b/a Pravia Mfg. & Development Co.), ASBCA No. 19073, 75-1 BCA ¶ 11091, February 12, 1975.

A contracting officer should not agree to a novation unless he or she has first determined that the novation is in the government's interests. See FAR § 42.1204. This requires consultation with the cognizant agency attorney and others before proceeding.

By Eric Ottinger on Friday, May 10, 2002 - 01:05 pm:

Denise,

Lets disclose that none of us are lawyers here.

You should get advice from your legal counsel.

From what I see in the cases which pop up, you might not need a novation. By the same token, you might have a hard time getting paid, and you might have a real hard time pursuing a dispute if you need to pursue a dispute.

In the cases that I read, the contractors who did not get a novation sometimes won and sometimes lost. But none of them came out ahead.

I think the Court of Claims puts it nicely, “…a novation agreement between all three parties is the soundest method of establishing recognition by the government, …”

(Tuftco Corporation v. The United States., (Jan. 23, 1980) No. 415-78, Decided January 23, 1980 614 F2d 740)

Of course, if you have reason to think that the government will not approve –let’s say you are owned by a foreign terrorist organization—Vern’s advice might be the best.

Eric

By Vern Edwards on Friday, May 10, 2002 - 02:20 pm:

Eric:

You've jumped to yet another unwarranted conclusion. Denise is not with a contractor; she is with the government--the U.S. Army Corps of Engineers.

Withdraw and regroup.

By Eric Ottinger on Friday, May 10, 2002 - 02:50 pm:

OK Vern,

Unless Denise wishes to terminate (which she can do anyway) explain to me why it would be in the government's interest not to novate.

Eric

By Vern Edwards on Friday, May 10, 2002 - 03:21 pm:

Eric:

One reason for refusing to novate would be if the transferee is nonresponsible. Another would be if the transferee is unwilling or unable to assume all of the contractor's obligations under the original contract. Another would be the inability to obtain the consent of surety. Another would be ultra vires on the part of the transferee.

Shall I go on?

Why are you picking on me? I gave Denise the same advice that you did--talk to a lawyer. It's John who said that you jumped to an unwarranted conclusion. Why aren't you picking on him?

Go home and rest up over the weekend.

By Eric Ottinger on Thursday, May 16, 2002 - 07:47 am:

Vern,

Exactly. Denise should either terminate the contract or continue it.

If she intends to continue, she should do the novation.

Yes, the lawyers have the largest say in these matters. That is exactly why I question why John (with your endorsement) is giving Denise legal advice.

Eric

By Vern Edwards on Thursday, May 16, 2002 - 09:41 am:

Eric:

John did not give Denise legal advice and you have no business saying so. If anyone gave legal advice, it was you: "Denise, You need a novation. See FAR 42.12. [signed] Eric." Remember that?

All John did was state the simple fact that a novation is not necessary in some cases. All I did was say that the government is not obligated to make a novation -- another simple fact -- refer her to the appropriate FAR guidance, and advise her to check with her lawyer.

You know, I get a kick out of sparring with you like this, but you really should find a more graceful way to get out of the the corners in which you put yourself. The kind of thing that you're doing now simply sets you up for another good combination. Next time, try saying something like: "Denise, John makes a good point. See FAR § 42.1204(b)."

Is this the best you can do after a weekend of rest and relaxation? It took you four works days to come up with a graceless accusation?

By Eric Ottinger on Thursday, May 16, 2002 - 10:10 pm:

Vern,

This is a chat room. I frequently respond at the outset with a short, conversational answer. I don’t pretend to have all of the details or all of the answers.

I don’t attempt to read the minds of the people asking questions and I don’t demand that they give me all of the details so that I can give them a definitive answer.

At most I hope to get them pointed in the right direction.

If there is a controversy, I may dig a bit deeper to see if there is anything readily available in the case law, statutes, etc. to resolve the controversy.

I didn’t jump to any conclusion, and I doubt that I led Denise to jump to any conclusion.

Most of us have enough common sense to understand that general rules usually have exceptions. That’s why we all need to read carefully and obtain advice from counsel, when appropriate. The exception for a stock purchase is clearly stated in FAR 42.12. My initial answer was brief but it was not likely to mislead.

As for the cases cited by John, I have actually read them, and I don’t see anything to suggest that either party actually benefited by not doing a novation. The fact is -- they ended up in litigation. That is rarely a benefit. Until you actually do the research and make a coherent argument, I doubt I will see any need to revise that opinion.

Whether John was providing legal advice or merely grandstanding, I will leave to the constant reader.

Normally it is our business to establish clear, unambiguous contractual relationships with a minimum of potential for disputes, litigation and administrative hassle. We do novations for the same purpose.

If -- as it seems -- you are advocating continuing the contractual relationship with an entity that cannot perform, while some third party completes the work, I think you have one heck of a burden explaining why this will be a benefit to either party.

On the other hand you may be saying that we should terminate if neither the old contractor nor the new contractor are responsible. If so, I have no idea why you wish to quarrel with my previous post.

If you choose to continue this dialogue please explain to me how it makes any kind of sense to refuse to do the novation and to allow the contract to continue. What does either party gain? If you don’t, I will simply ask the question again.

Eric

By Vern Edwards on Thursday, May 16, 2002 - 10:30 pm:

Eric:

It seems to me that your beef is with John, not me, although I don't think you have a legitimate beef, since what John spoke was the simple truth, as indicated in FAR.

I have advocated nothing, and I have already answered your question about why it might not be in the government's interest to novate.

John has apparently stung your pride. Take it up with him.

By Eric Ottinger on Thursday, May 23, 2002 - 12:26 pm:

Vern,

John was merely showing off esoteric knowledge and reaching esoteric conclusions. My “beef”, as you call it, is with your hasty and belligerent endorsement of John’s argument.

It isn’t “simple.” Even when the FAR doesn’t require a novation, FAR 42.1204 contemplates a “formal agreement” which addresses the “issues.” In other words, the document isn’t called a “novation” but it covers much the same ground.

FAR 42.1204 Applicability of novation agreements. “However, whether there is a purchase of assets or a stock purchase, there may be issues related to the change in ownership that appropriately should be addressed in a formal agreement between the contractor and the Government (see 42.1203(e)).”

John’s argument regarding “merger by operation of law” is not reflected in the FAR, simply or otherwise. As far as I can tell, even when a merger by operation of law is not be subject to the Anti-Assignment Act, the FAR nevertheless expects a novation.

In any case, pending some additional input from John, these cases only resolved one issue. The contractor was allowed to pursue a claim or a dispute, even though a novation was not done.

Eric

By Eric Ottinger on Thursday, May 23, 2002 - 12:28 pm:

For those who wish to research this topic, my word search in the CCH database turned up a few cases.

Johnson Controls identifies significant precedents and quotes key passages from the Supreme Court and the Claims Court.

Johnson Controls World Services, Inc. v. United States, United States Court of Federal Claims, No. 97-357C, June 18, 1999 48 Fed.Cl. 182

“Transfers or assignments occurring by operation of law are exempt from the Act’s application. See Seaboard Air Line Ry. v. United States, 256 U.S. 655, 657 (1921); Rel-Reeves, Inc. v. United States, [26 CCF 83,548] 221 Ct. Cl. 263, 273 n.7, 606 F.2d 949, 954 n.7 (1979); Patterson, 173 Ct. Cl. at 823-24, 354 F.2d at 329-30; UIIS, 26 Cl. Ct. at 898. Transfers by operation of law include corporate mergers, consolidations, and reorganizations. See Tuftco Corp., 222 Ct. Cl. at 285, 614 F.2d at 745; Stearns Co. v. United States, 34 Fed. Cl. 264, 270 (1995). In Seaboard the Supreme Court commented:”

“’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 interest 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.’”

“256 U.S. at 657. The Court of Federal Claims, as the Claims Court, reached a similar conclusion when confronted with the transfer of a claim from a British corporation to a United States corporation:”

“’In substance therefore there was really no transfer of the subject-matter of the claim in question, for, although the bare legal title to the claim might have passed from Kingan & Co., Limited, to the plaintiff under the deeds referred to in the facts, the equitable ownership of the claim at all times reposed in the same individuals, that is, in the hands of the same stockholders.’”

“Stearns Co., 34 Fed. Cl. at 270 (quoting Kingan & Co. v. United States, 71 Ct. Cl. 19, 29, 44 F.2d 447, 451 (1930)).”

Tuftco has to sue to get paid. The agency winds up paying twice for the same contract. The court opines that a novation would have been a much better idea.

Tuftco Corporation v. The United States. the United States Court of Claims. No. 415-78, Decided January 23, 1980 614 F2d 740

Government decides that new contractor (United International Investigative Services) is subcontractor to old contractor. Government decides that successor-in-interest, as subcontractor, does not have privity of contract. Court disagrees. However-- “As defendant correctly points out, the execution of the name change agreement was ineffective in achieving a novation under Federal Acquisition Regulation 42.1204.”

United International Investigative Services v. The United States, United States Claims Court, No. 407-89C, July 20, 1992 26 ClCt 892

Court-ordered assignment is an assignment by operation of law. GSBCA decides that lease is nonetheless subject to the Anti-Assignment Act because it creates a risk of multiple litigation. Contractor doesn’t obtain novation and loses case.

Broadlake Partners, GSBCA, GS-09B-86844. 10713, December 31, 1991, 92-1 BCA

All and all, it appears that John’s advice is for those who go for the gusto and like to live life on the edge without inconveniences like seatbelts, safety nets and unambiguous, clearly enforceable contractual agreements. Caveat Emptor.

As usual, I am not a lawyer and all opinions are my own.

Eric

By John Ford on Saturday, May 25, 2002 - 02:46 pm:

Eric, thank you, and Vern, for doing the legal research and finding some of the cases I was referring to in my initial post. You have made my case that a novation is not always needed when there is a change in the legal entity performng a contract.
I don't understand why you assert I was merely showing off some esoteric knowledge regarding novations. There are many of us who have regularly been involved in contract administration matters who are quite familiar with novations and when they are required. I would like to think that most of the ACOs employed by DCMA know when to obtain a novation and when it is not necessary. That way they avoid a lot of unnecessary time and expense to the government and contractor in pursuing something that is not required or necessary. Their knowledge in this area has permitted many contracts to be transferred without a novation and without unnecessarily generating a dispute as occurred in most of the cases where there is a board or court decision.
On this issue, the point that was made by the cases where a transferee was allowed to pursue a claim against the government was that the transferee became the contractor without a novation. The unfortunate thing in these cases is that the contractng officer did not recognize this fact. Remember, there can only be a dispute between a contractor and the government. Subcontractors or hopeful contractors cannot bring claims directly against the government.
Finally, while the FAR may suggest a formal agreement may be desirable in sime circumstances when a novation is not required, the FAR does not mandate such an agreement. More importantly, nothing in the FAR or its standard clauses, compels a contractor to enter into such an agreement. I use the term contractor here because when there is a transfer that does not require a novation, the transferee is the contractor whether the government has consented or not.

By Vern Edwards on Tuesday, May 28, 2002 - 11:33 am:

John:

Just to clarify--in your last post you said, "a novation is not always needed when there is a change in the legal entity performng [sic] a contract." Don't you mean that a novation is not always needed when there has been a change in the ownership of the legal entity performing a contract, but no change in the legal entity itself?

By John Ford on Wednesday, May 29, 2002 - 11:01 am:

No, I meant that a novation is not always required when there is a change in the legal entity performing a contract. Specifically, when a contract is transferred by operation of law from one entity to another, as the cases state, the Anti-Assignment Act does not apply. For example, no novation is required when a contract is transferred from a bankrupt contractor to a bankruptcy trustee. I realize this may seem to be at odds with the literal language of the FAR. However, this is another example of where the language of the FAR and the case law are at odds. Other examples are the notice provisions in most of the Changes clauses, the title provision in the Progress Payments clause, and the interest provision regarding contractor claims. In such cases, I will follow the case law.

By Eric Ottinger on Wednesday, May 29, 2002 - 11:31 am:

John,

I saw nothing in the case law suggesting a preference for NOT doing a novation. I see no significant disagreement between the case law and the FAR.

Vern,

I take it your May 16 “Simple Truth” post is no longer operative.

Eric

By Vern Edwards on Wednesday, May 29, 2002 - 11:34 am:

John:

In light of the fact that what you are saying does contradict the literal language of FAR § 42.1204(b), and since you say that your position is based on case law, please cite a case in support of the proposition that transfer from a bankrupt contractor to a bankruptcy trustee does not require a novation.

I'm not asking this in order to argue with you; I don't doubt that FAR sometimes fails to reflect case law. But I want to learn more about this, and it would help me -- and others who may be reading this thread -- to be able to read the pertinent decisions.

By Eric Ottinger on Wednesday, May 29, 2002 - 12:27 pm:

John and Vern,


US-DIST-CT, 36 CCF 75,837 , In re Carolina Parachute Corporation. United States of America, Department of Air Force v. Carolina Parachute Corporation.,
United States District Court, Middle District of North Carolina, Nos. B-87-00203 C-11, C-89-117-G, December 8, 1989

“Debtor relies on Erwin v. United States, 97 U.S. 392, 24 L.Ed. 1065 (1878) and subsequent cases as standing for the proposition that an assignment by operation of law, including a transfer incident to a proceeding in bankruptcy, is an exception to the Anti-Assignment Act. Debtor’s reliance is misplaced. Erwin addresses the assignment of claims against the government, not the assignment of executory contracts as does the instant case. Cases subsequent to Erwin are inapposite because they apply and construe 31 U.S.C. §203, the Assignment of Claims Act, instead of 41 U.S.C. §15, which is at issue in this case. See e.g., Keydata Corp. v. United States, 205 Ct.Cl. 467, 504 F.2d 1115 (1974), Danielson v. United States, 416 F.2d 408 (9th Cir. 1969).”

Eric

By Vern Edwards on Wednesday, May 29, 2002 - 12:56 pm:

Eric:

John still may be telling the simple truth. Our ignorance of the truth doesn't mean that it's complicated.

I've been reading a lot about novation during the past few days. One of the things that I have learned is that what FAR calls a "novation" isn't really a novation at all, as that term is used in American law.

In a true novation, the novation frees (discharges) the original contractor of all of its obligations under the original contract, substituting a new third party in its stead. See: Restatement, Second, Contracts, § 280, Comment b; Farnsworth, Contracts, 3d ed., §4.24; and Calamari and Perillo, Contracts, 3d ed., §21-8. But FAR requires that the original contractor (the transferor) guarantee the performance of the new contractor (the transferee). See: FAR § 42.1204(h)(3); the model novation agreement in FAR § 42.1204(i), paragraphs (b)(5) and (8); Dynamics Corporation of America, ASBCA No. 22,259, 78-1 BCA ¶ 13,115; and McDonnell Douglas Corporation, NASA BCA No. 873-10, 75-1 BCA ¶ 11,337. Thus, what FAR calls a "novation" is actually a delegation, or to use the more general term, an assignment, which is very different. See: Nash, et al., The Government Contracts Reference Book, 2d ed., p. 369; Farnsworth, op. cit., §11.10; and, Black's Law Dictionary, 7th ed. p. 438 (under "delegation of duties") and pp. 109-110 (under "novation"). (Technically, one assigns rights and delegates duties, but I have been told that the term assignment is sometimes used in both senses. For more discussion of assignment and delegation, see: Farnsworth, op. cit., Ch. 11; and Calamari and Perillo, op. cit., Ch. 18.)

Even the much-esteemed-by-you Ask A Professor doesn't understand the distinction between the common law concept of novation and "novation" as that term is used in the FAR. Consider the following AAP Q&A:

"Novation Agreement

Posted to Post-Award Procurement and Contracting on 5/6/00 by Clarence Roberts.

The Question: Once the Government agreed/approved the novation and the successor in interest (third party) does not perform, can or would the government go after the transferor (second party) for performance, keeping in mind that once the novation is agreed upon there is no contractual relationship with the second party. Also can the government T4D the second party for the third party not performing?

The Answer: Once the novation agreement is made, there is no further relationship to the party of the first part (second party). You have nothing to do with the original party after that time. All your actions are concerning the third party."

That answer is wrong, because the FAR novation agreement requires the transferor to guarantee the performance of the transferee. See Dynamics Corporation of America, cited above, in which the ASBCA noted the distinction between novation, as that term is generally used in the common law, and "novation" as used in government contracting. The "professor" apparently was not aware that FAR uses the term "novation" in a unique way.

Thus, I would not be surprised if what John says about FAR being inconsistent with case law turns out to be the simple truth. I discussed novation with Prof. Nash at length yesterday, and he told me that the FAR is very much off the mark in its treatment of novation.

As to John's present assertion that a FAR "novation" may not be necessary even when there is a change of legal entity, I will await his case citation(s). I frankly don't know the truth in that regard.

By Eric Ottinger on Wednesday, May 29, 2002 - 01:52 pm:

Vern,

It is clear that your concept of "simple" is not the same as mine.

Eric

By Vern Edwards on Wednesday, May 29, 2002 - 02:51 pm:

Eric:

That doesn't surprise me.

By Eric Ottinger on Wednesday, May 29, 2002 - 10:42 pm:

Vern,

That was your cue to graciously concede a point. Initially, you gave John a wholehearted endorsement. Then you queried John to see if the two of you were in agreement. Now, although John has yet to actually cite a case, you hope that he will find one to support his argument.

As far as I can tell, I have read the relevant cases. They do not support John’s argument, and Carolina Parachute flatly contradicts John’s argument.

As the court said, your “reliance is misplaced.”

John,

I have no idea what “most of the ACOs employed by DCMA” know. The reader can review the formal DCMA policy at the following site: (Scroll down to 6.2.1.)

http://web1.deskbook.osd.mil/scripts/rwisapi.dll/@e_search.env?CQ_PROCESS
_LOGIN=YES&CQ_LOGIN=YES&CQ_USER_NAME=guest&CQ_PASSWORD
=guest&CQ_SAVE[SearchText]=novation&CQ_SAVE[file_name]=MDCMA\0017D\007\0017D007
DOC.HTM&CQ_SAVE[docid]=DskBkRef7141&CQ_SAVE[CQlibs]=DskBkRef&CQ_SAVE[T]=#FIRSTHIT

Also, take a look at 9.2 -- Progress Payments Based On Costs:

4.6.10.5. Corporate Restructuring or Novation.” For suppliers who have outstanding progress payments, or who undergo corporate restructuring or novation, the ACO must take the appropriate action, such as executing subordination agreements or putting appropriate language in novation agreements, to preserve the Government’s rights to progress payment inventories. The ACO must coordinate the proposed actions with local counsel.”

After that, the really diligent reader may want to dig up the relevant cases and discuss them with legal counsel.

I’m not that diligent. My first inclination would be to find a competent legal counsel and let him/her figure it out. That is also what the FAR suggests.

I don’t know how you define “esoteric.” To my mind, information that isn’t found in the relevant regulations and policy documents is esoteric, particularly if it contradicts said policy documents.

Shifting from policy to pure pragmatic realpolitik, I understand that there may be situations where it may be smarter to do nothing, than to turn over a rock just to see what might be hiding underneath.

I might have a suspicion that it will be very difficult to get the novation approved, and I might be aware that the customer really, really needs to have the item delivered.

However, Denise should be getting such advice from her legal counsel and her supervisors.

Eric

By Vern Edwards on Thursday, May 30, 2002 - 09:15 am:

Eric:

John is correct that "a novation is not always required when there is a change in the legal entity performing a contract."

I decided not to wait for him and did the research myself. John's fact was even simpler than I had originally thought. There is a long-standing body of case law to the effect that a third party can become the contractor by "operation of law" without a novation agreement.

In Huffman Lumber Company, AGBCA (Department of Agriculture) No. 85-208-1, 86-3 BCA ¶ 19,027, the board said:

"We recognize that a third party by operation of law, such as bankruptcy or court order, may under certain circumstances not pertinent to this appeal, become the successor to a Government contract without the Government's express approval."

In Dickman Builders, Inc., ASBCA No. 32,612, 89-3 BCA ¶ 22206, the board said:

"The Board had the opportunity to examine the anti-assignment statute in Mancon Liquidating Corporation/Intercontinental Mfg. Co., Inc., ASBCA Nos. 18304, 18218, 74-1 BCA ¶ 10,470. There we noted that:

Involuntary assignments, such as those effected by operation of law, are outside the purview of the statute, such as transfers pursuant to corporate reorganizations, mergers and consolidations.

Id. at 49,512. Mancon, although cited by the Government for the proposition, does not support the conclusion that prior consent is required by the Government for a mere change of name to be effective. In Mancon we noted that the 'Armed Services Procurement Regulations since 1956 have provided detailed forms, instructions and procedures for use by the parties in establishing a formalized recognition by the Government of the successor in interest to a government contractor.' Id. While consent has been required in 'sale-of-asset cases,' we held that '[p]rior consent is not provided for and is not required as a matter of law in the case of mergers and incorporations [citations omitted] since transfers of Government contracts as an incident to such business reorganizations are by operation of law. Such transfers are deemed not to be within the mischief which Congress intended to prevent in enacting the anti-assignment statutes.' Id. at 49,513. 'Government consent to transfer the contracts to Mancon was not a legal necessity since the change occurred by operation of law (4 Comp.Gen. 184) although for administrative convenience a change of name agreement is provided for in ASPR....' Id."

In Broadlake Partners, GSBCA No. 10713, 92-1 BCA ¶ 24,699, the board said:

"The Supreme Court has recognized numerous exceptions to this prohibition where the transfer occurs by operation of law. These include, for example, assignments such as the passage of claims to heirs and devisees, transfers made incident to proceedings in bankruptcy or receivership, transfers by the succession of one business entity for another, assignments made by judicial sale or order, and assignments produced by operation of the law of subrogation. Keydata Corp. v. United States, 205 Ct.Cl. 467, 504 F.2d 1115, 1118 (1974); see also Seaboard Air Line Ry. v. United States, 256 U.S. 655, 657 (1921); Science Management Corporation Systems & Technology Group, Inc., GSBCA No. 6283-TD, 82-2 BCA ¶ 16,039. These classes of assignments are all thought to be outside the purview of the statutes because they present none of the dangers Congress was seeking to avoid: the prevention of fraud and the avoidance of multiple litigation."

In Ball, Ball & Brosamer, Inc., IBCA No. 2103N, 92-2 BCA ¶ 24,797, the board reported:

"The goal of the anti-assignment statutes was to prevent fraud and, principally, the undesirable effects of the Government's 'having to deal with several persons instead of one'; 'the introduction of a party who was a stranger to the original transaction'; or improper influences engendered by the transfer to and prosecution of a claim by one or more persons 'not originally interested in it.' Seaboard Air Line Railway v. United States, 256 U.S. 655, 657 (1921) (citations omitted). Early on, the Supreme Court fashioned exceptions to the anti-assignment statutes, including, for example, transfers by operation of law, bankruptcy, will, corporate merger, restructure or consolidation, and assignments for the benefit of creditors--some of which were involuntary and others which, while voluntary, were considered part of the orderly processes of law and not the instruments of 'mischief' Congress was attempting to protect against. Id.; Goodman v. Niblack, 102 U.S. 556 (1880); Mitchell Canneries, Inc. v. United States, 111 Ct.Cl. 228, 252 (1948); Yates & Patterson, Inc., IBCA No. 1382-8-80, 13 IBCA 289, 81-1 BCA ¶ 14,825 (1980)."

So decisions by four boards of contract appeals have verified John's proposition. I found 24 such cases by searching Westlaw for "novation" and "operation of law".

John:

Thanks for the education. I've learned more about novation in the past week than I thought there was to know.

Vern