FAR Novation Rules: A Missed Opportunity for Reform – Freshfields Lawyer Featured in The Nash & Cibinic Report

Freshfields U.S. government contracts Counsel Nathaniel E. Castellano published an article on mergers and acquisitions involving government contracts in the November 2025 issue of The Nash & Cibinic Report. As Nathan explains, the rules governing the transfer of U.S. government contracts, known as “novations”, are antiquated and inconsistent with commercial practices.

Many in the government contracting community had hoped these outdated provisions would be modernized as part of the ongoing “Revolutionary FAR Overhaul.” Yet, based on current draft revisions, it appears that the overhaul will leave the existing novation rules largely unchanged.

Nathan’s article details how the current FAR novation framework creates unnecessary delays, transaction costs, and uncertainty during corporate restructurings and M&A activity. Contractors often rely on “subcontract pending novation” arrangements that add complexity and risk for both buyers and sellers.

The piece also outlines practical reforms, including pre-closing novation reviews, 90-day agency deadlines, and streamlined documentation, that would better align federal procurement with modern business practices.

Why it matters: FAR novation requirements can significantly impact deal timing, valuation, and risk allocation in government contractor M&A. Understanding these rules, and the potential for reform, is essential for investors and companies operating in this space.

The full article, available here, was published in the November 2025 issue of The Nash & Cibinic Report.