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FAR and DFARS › FAR Part 32: Contract Financing › Subpart 32.8

FAR 32.804 Extent of assignee's protection.

The codified text (eCFR, as of 2026-10-02). Under the Revolutionary FAR Overhaul ↗, agencies follow class deviations with new text for many parts while the formal rules go through the Federal Register: check the solicitation and your contract's clauses, which rule.

In plain English

This section explains the protection given to a bank or other assignee that receives payments from the Government under an assigned contract. It says the Government generally cannot recover those payments because of the contractor's debts, and if the contract has a no-setoff commitment, the assignee is usually entitled to full payment without reductions for certain contractor liabilities. However, setoff may still be allowed in some cases, such as when the assignee has not made or committed to a loan.

Applies to: Assignees (e.g., banks) receiving payments under Government contracts assigned under the Assignment of Claims Act.

Key terms: assignee · no-setoff commitment · setoff · assigned contract · Assignment of Claims Act

Written by AI from this section's text. A guide, not legal advice: the text below rules.

The text

(a) No payments made by the Government to the assignee under any contract assigned in accordance with the Act may be recovered on account of any liability of the contractor to the Government. This immunity of the assignee is effective whether the contractor's liability arises from or independently of the assigned contract.

(b) Except as provided in paragraph (c) below, the inclusion of a no-setoff commitment in an assigned contract entitles the assignee to receive contract payments free of reduction or setoff for—

(1) Any liability of the contractor to the Government arising independently of the contract; and

(2) Any of the following liabilities of the contractor to the Government arising from the assigned contract:

(i) Renegotiation under any statute or contract clause.

(ii) Fines.

(iii) Penalties, exclusive of amounts that may be collected or witheld from the contractor under, or for failure to comply with, the terms of the contract.

(iv) Taxes or social security contributions.

(v) Withholding or nonwithholding of taxes or social security contributions.

(c) In some circumstances, a setoff may be appropriate even though the assigned contract includes a no-setoff commitment, e.g.—

(1) When the assignee has neither made a loan under the assignment nor made a commitment to do so; or

(2) To the extent that the amount due on the contract exceeds the amount of any loans made or expected to be made under a firm commitment for financing.

← 32.803 Policies. · 32.805 Procedure. →

Rule changes for FAR Part 32

Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.

FAR 32.804 Extent of assignee's protection · SpendQuery