GSA Schedule Novation: What Happens When Your Company Is Acquired
When a company holding a GSA Schedule contract is acquired, merged with another entity, or undergoes a significant ownership change that results in a new legal entity, the existing Schedule contract must be formally transferred to the successor entity through a process called novation. The novation agreement is a legal instrument that assigns the contractor's rights and obligations under the Schedule from the old entity to the new one. Without a novation, the new entity cannot legally perform under the existing Schedule contract.
When Novation Is Required
Novation is required when there is a transfer of: substantially all of the assets of the original contractor to a new entity, a transfer of the business unit that holds the Schedule contract to a new entity, or a merger or acquisition that creates a new legal entity distinct from the original contractor. Simple ownership changes (stock sales, new investors) that don't change the legal entity do not require novation — the same legal entity holds the contract. Consult with a government contracts attorney to determine whether your specific transaction requires novation.
The Novation Process
The novation process requires submitting a package to GSA (your CO and/or the FAS office) that includes: the executed asset purchase agreement or merger documents, the list of all federal contracts to be novated, a legal opinion confirming the transfer, financial statements of the successor entity, representations and certifications from the successor, and an agreement signed by both the old and new entity confirming the transfer. The CO reviews and approves the novation — until approval, the original entity must continue to perform. Novation can take 30–90+ days.