With regards to invoice factoring and the assign ability of government contracts, typically the contract will state that the work to be performed cannot be assigned to another party, but rarely will the contract preclude assigning the proceeds (payments) of finished work to a third party, like a factoring company.

Using a factoring company to finance U.S. government contracts, requires the Notice of Assignment. Any prime contractor (billing the government directly) with a FAR (Federal Acquisition Regulation) contract will need to have the contract amended to put the NOS in place. Contract regulations require that in order for payments to be made to a third party – the factoring company, there must be an assignment in place that sets the proceeds of the contract to that third party.

The NOS is typical paperwork and factors can prepare them, but you should let your contract officer know right away that your plans will involve securing outside financing. The contract officer has to sign off on the NOS and by giving them a heads up you won’t get bogged down waiting for the paperwork to go through proper channels. The actual content of the NOS is standard so there are no legal hurdles to jump.

So US Government contractors remember the Notice of Assignment, and deal with it as soon as possible when securing that new contract.