Government Contracts Mergers and Acquisitions

Holland & Hart's Government Contracts Group brings together a comprehensive set of legal skills when assisting clients engaged in asset sales and purchases as well as mergers and acquisitions involving government contracts. Because the performance of government contracts requires careful compliance with a multitude of unique federal and state laws, executive orders, and contract terms and conditions, companies must identify and ensure that the prospective seller has properly performed its government contracts. We also work with buyers and sellers to assess the anticipated post-close value of the government contracts, including the potential loss of small business set-aside contracts and the integration and compliance costs resulting from the acquired government contracts. We are able to work seamlessly with our firm's large and experienced Corporate practice group on such transactions, but have also provided "specialty counsel" services to other firm's corporate law groups which lack this expertise internally.

Potential buyers should be aware of the December 2008 Federal Acquisition Regulation (FAR) rule specifying new contractor ethics and disclosure requirements. This rule makes it even more important for the buyer to gain a complete understanding during due diligence of the seller's systems and controls for government contract compliance, so as to avoid unanticipated post-closing disclosures and liabilities relating to the acquired government contracts.

Pre-Closing Due Diligence
Our attorneys have developed a comprehensive due diligence checklist unique to government contracts, based upon decades of experience working on government contracts acquisitions. The checklist covers seven broad areas including:

  • Procurement Law Compliance
    This category includes a compliance check on 15 unique laws applicable to government contracting covering pricing disclosures pursuant to the Truth in Negotiations Act, the proper designation of products pursuant to the Buy American Act and Trade Agreements Act, as well as meeting a variety of socio-economic requirements. This category also includes a review of compliance with security regulations applicable to the performance of classified contracts and the maintenance of a facility clearance by companies
  • Contract and Proposal Files
    This category includes a review of closed, current, and pending government contracts and subcontracts. Issues reviewed include certifications and representations, performance issues, assignments of contract proceeds and past performance ratings
  • Financial Audits, Pricing, and Cost Accounting
    This category is particularly important for companies with cost-type contracts and General Services Administration (GSA) Multiple Award Schedule (MAS) contracts, and covers audit issues and dealing with government audit agencies including the Defense Contract Audit Agency and the various Inspectors General. The review includes direct and indirect rate issues, overhead rates, forward pricing rates, cost accounting system compliance, time-charging and time card procedures, commercial sales practices disclosures, the disclosure of certified "cost or pricing data" and "information other than cost or pricing data." When appropriate, we engage and work closely with accountants specializing in pricing and cost issues unique to government contracts
  • Litigation and Other Disputes
    This category includes a review of possible, threatened, and on-going disputes, claims, suspension and debarment proceedings, and bid protests. This category includes subcontractor claims and other contractual dispute issues
  • Intellectual Property
    This category includes a review of the unique and often complicated requirements associated with technical data rights, software licenses, trade secrets, patents, and copyrights—whether developed during the performance of a government contract or licensed as part of a government contract deliverable. The review includes procedures used to identify intellectual property, marking and disclosure procedures, march-in rights, and licensing and intellectual property protection procedures

Post-Closing Novation
In addition to assisting with the acquisition and sale of government contracts and government contracting entities, the attorneys at Holland and Hart can assist clients and other law firms with the post-closing process of novating the acquired contracts to the new company. This process includes both properly structuring the definitive agreement to clearly identify the parties' respective "post-close" obligations and ensuring a timely submission of required documents and working with the lead government agency to ensure timely approval.

Representative matters include:

  • Represented the buyer in connection with a $70 million stock purchase involving a technology company with a substantial and complex government contracts business, including R&D contracts. Representation included due diligence, drafting and negotiation of relevant purchase agreement sections and counseling on post-closing compliance issues
  • Represented several different buyers in connection with multi-million dollar asset acquisitions involving GSA MAS contracts for IT hardware and software and business consulting services. Representation included due diligence, drafting and negotiation of relevant purchase agreement sections and counseling on post-closing compliance issues. In each case the MAS contract assignment was approved by GSA
  • Represented the seller of a small business, government-focused accounting firm in the sale of the company to a large business accounting firm. Representation included assistance producing government contracts due diligence materials, drafting and negotiation of relevant sections of the purchase agreement and pre-closing discussions with government officials about government consent to the contemplated contract assignments
  • Represented an IT hardware manufacturer buyer in its acquisition of the assets of a publicly-traded, government-focused IT reseller with annual revenues in excess of $150 million. Representation included due diligence, as well as drafting and negotiation of relevant purchase agreement sections and counseling on post-closing compliance issues

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