Can I transfer my federal government contracts when I sell my business?

If your business holds Government of Canada contracts, a buyer may ask whether they come with it. Part VII of the Financial Administration Act governs assignment of debts owed by the federal Crown. This page covers federal contracts only.

The general rule in section 67

Section 67 says that, except as provided in that Act or any other Act of Parliament, a Crown debt is not assignable, and no transaction purporting to assign one is effective to give anyone rights or remedies in respect of it.

The route in section 68

Subject to section 68, an assignment may be made of a Crown debt that is an amount due or becoming due under a contract (one involving the payment of money by the Crown), or of any other Crown debt of a prescribed class. The assignment is valid only if:

• it is absolute, in writing and made under the hand of the assignor;
• it does not purport to be by way of charge only; and
• notice of the assignment has been given to the Crown as provided in section 69.

Section 68(4) makes an assignment subject to all conditions and restrictions on the right of transfer that relate to the original Crown debt or that attach to or are contained in the original contract. Ask each contract’s contracting authority which clause applies and what process it requires.

How the deal is structured

If a buyer takes over a contract, these sections address the transfer of the money due under it. If only the owners of the company holding the contract change, the sources read for this page do not say whether notice or consent is needed; ask the contracting authority and your lawyer before agreeing terms.

Security clearances

Under the Contract Security Program manual, a Company Security Officer or Alternate Company Security Officer who becomes aware of changes in the organization’s legal status, corporate structure, ownership or list of key senior officials must promptly inform the program, to start a review of the registration and organizational screening. See also how customer contracts generally travel in a sale.