The contract provision requires contractors to notify the contracting officer within 30 days whenever it becomes aware that a change in its ownership has occurred, or is certain to occur, that could result in changes in the valuation of its capitalized assets in the accounting records. This notification must be made in writing. The clause also requires written notification within 30 days whenever changes to asset valuations or any other cost changes have occurred as a result of a change in ownership.
The primary purpose for this notification is to ensure that increased costs as a result of asset write-ups are not passed on to Government contracts. FAR 31.205-52 limits what a contractor can pass on as a result of business combinations.
Under this provision, contractors must:
- maintain current, accurate, and complete inventory records of assets and their costs
- provide the ACO ready access to those records
- ensure that assets, accumulated depreciation, and useful lives are identified accurately before and after each change in ownership
- retain and continue to maintain depreciation and amortization schedules based on the asset records maintained before each ownership change.