FAR 32.801—Definitions.
Plain-English Summary
FAR 32.801 provides the key definitions used in the assignment of claims subpart. It defines two terms: "designated agency," meaning any department or agency of the executive branch of the United States Government, and "no-setoff commitment," meaning a contractual promise that, to the extent allowed by the Assignment of Claims Act, payments made by the designated agency to the assignee will not be reduced to collect the contractor’s debts to the Government. These definitions matter because they determine who is covered by the assignment rules and what protection an assignee can expect when financing contract receivables. In practice, the section supports lender confidence, clarifies the Government entity involved in making payments, and frames the limits of the Government’s ability to offset contractor indebtedness against assigned payments. Although brief, the section is foundational for understanding how claim assignments work under FAR Subpart 32.8.
Key Rules
Designated agency defined
A designated agency is any department or agency of the executive branch of the United States Government. This definition identifies the Government entity whose payments may be subject to an assignment of claims under the subpart.
No-setoff commitment defined
A no-setoff commitment is a contractual undertaking that payments to the assignee will not be reduced to satisfy the contractor’s debt to the Government, but only to the extent permitted by the Assignment of Claims Act. The promise is limited by statute, so it does not eliminate all Government rights of setoff.
Statutory limits still apply
The definition of no-setoff commitment expressly incorporates the limits of the Act. That means the Government’s promise is not absolute and must be read together with the statutory framework governing assignments and offsets.
Assignment context only
These definitions apply "as used in this subpart," so they are specific to FAR Subpart 32.8. They are not general-purpose definitions for all FAR parts or all Government payment situations.
Responsibilities
Contracting Officer
Use these definitions when administering assignment of claims matters, determining whether the paying entity is a designated agency, and understanding the scope of any no-setoff commitment included in the contract or assignment documentation.
Contractor
Recognize that an assignment of claims involves payments from a designated agency and that any protection against setoff is limited by law. The contractor must understand that Government debts may still affect assigned payments within statutory limits.
Assignee / Financing Institution
Rely on the definitions to assess whether the receivables are payable by a designated agency and what protection a no-setoff commitment actually provides. The assignee should verify that the commitment is legally supportable and does not exceed the Government’s authority.
Agency / Designated Agency
Make payments in accordance with the assignment framework and any valid no-setoff commitment, while preserving any offset rights that remain available under the Act and applicable law.
Practical Implications
This section is important for contract financing because lenders need to know whether assigned payments are coming from an executive branch agency and what protection exists against Government setoff.
A common pitfall is assuming a no-setoff commitment means the Government can never offset contractor debts; the definition makes clear that the promise is only effective to the extent permitted by the Act.
Contracting officers and finance personnel should read these definitions together with the assignment of claims procedures, since the terms are only meaningful in that broader context.
Contractors should not treat an assignment as eliminating all collection risk; unresolved debts to the Government can still affect payment flows within legal limits.
Assignees should confirm the exact wording and legal basis of any no-setoff commitment before relying on it for financing decisions.
Official Regulatory Text
Designated agency , as used in this subpart, means any department or agency of the executive branch of the United States Government (see 32.803 (d)). No-setoff commitment , as used in this subpart, means a contractual undertaking that, to the extent permitted by the Act, payments by the designated agency to the assignee under an assignment of claims will not be reduced to liquidate the indebtedness of the contractor to the Government.