FAR 52.232-23 Bid-Day Checklist: Assignment of Claims
When preparing proposals for federal construction projects, contractors and estimators must evaluate how cash flow will be maintained throughout project delivery. If an enterprise relies on external capital to finance payroll, mobilization, or material procurement, verifying contract financing clauses during proposal preparation is essential. Federal contracts regulate how payment rights can be transferred to commercial lenders. This bid-day checklist walks through the key provisions of FAR 52.232-23 Assignment of Claims so bidding teams can confirm that project cash flow and credit arrangements align with federal procurement requirements.
Item 1: Verify the Statutory Authorization and Prescribed Clause
The first item on your bid-day review is confirming whether the solicitation incorporates the May 2014 version of FAR 52.232-23, which is prescribed under FAR 32.806(a)(1). This clause establishes that under the Assignment of Claims Act, as amended (31 U.S.C. 3727 and 41 U.S.C. 6305), a contractor may assign its rights to be paid amounts due or to become due resulting from contract performance. When pricing general conditions or preparing to mobilize trades, ensuring this clause is intact confirms that your company holds the legal right to secure third-party funding against future earnings.
Item 2: Check Financing Institution Eligibility
Not every third party can receive assigned earnings on a federal job. Before finalizing financing assumptions on bid day, confirm that your intended lender meets the statutory definitions outlined in FAR 52.232-23. Under paragraph (a), an assignment may be made exclusively to:
- A bank;
- A trust company;
- Another financing institution; or
- Any Federal lending agency.
If your firm plans to leverage credit lines to support operations, ensuring your funding partner qualifies under these four categories prevents administrative rejection once work begins.
Item 3: Review Single-Party and Total Balance Limitations
Federal rules strictly prohibit piecemeal payment assignments. Estimators and project executives reviewing payment mechanics should coordinate with their review of standard terms, such as FAR 52.232-5 Bidding Checklist: Payments and Retainage Rules, to understand how entire contract proceeds are handled. Paragraph (b) of FAR 52.232-23 establishes two mandatory parameters:
- All Unpaid Amounts: Any assignment or reassignment authorized under the Act and clause must cover all unpaid amounts payable under the contract.
- Single Party Rule: An assignment cannot be made to more than one party, except that an assignment or reassignment may be made to one party acting as agent or trustee for two or more parties participating in the contract financing.
On bid day, ensure your banking setup does not attempt to split government receivables across multiple independent accounts or institutions without an agency or trustee structure.
Item 4: Confirm Reassignment Permissions for Lenders
Financial institutions frequently syndicate or transfer project facilities. Paragraph (a) of the clause clarifies that an assignee that receives an assignment under the contract may thereafter further assign or reassign its right under the original assignment. However, this reassignment must also go to a bank, trust company, or other financing institution, including any Federal lending agency. Knowing this allowance helps contractors address lender questions during final pre-bid reviews.
Item 5: Inspect the Solicitation for Alternate I (No-Setoff Commitment)
A critical financial item to check on your bid day checklist is whether the contracting agency has included Alternate I (Apr 1984) of FAR 52.232-23. As cross-referenced in FAR 32.801 and FAR 32.803(d), Alternate I adds a specific sentence to paragraph (a):
Unless otherwise stated in the contract, payments to an assignee of any amounts due or to become due under the contract shall not, to the extent specified in the Act, be subject to reduction or setoff.
Lenders often seek this no-setoff language because it limits the government's ability to reduce disbursements to the financing institution to satisfy other claims against the contractor. Checking for Alternate I helps ensure your lender will not raise unexpected objections after award.
Item 6: Review Clearance Protocols for Classified Work
If the solicitation involves secure facilities or sensitive scopes, paragraph (c) imposes an explicit restriction regarding project documentation. The contractor shall not furnish or disclose to any assignee any classified document (including the contract itself) or information related to work under the contract until the Contracting Officer authorizes such action in writing. Bidding teams must note this restriction early so that standard credit underwriting does not inadvertently cause an unauthorized release of protected materials.
Sources
52.232-23 Assignment of Claims. | Acquisition.GOV
Published October 30, 2026. No affiliate links on this page. Facts come from the sources linked above; check them for updates.