FAR 52.215-19—Notification of Ownership Changes.
Plain-English Summary
FAR 52.215-19, Notification of Ownership Changes, requires contractors to promptly inform the Administrative Contracting Officer (ACO) when an ownership change has occurred or is certain to occur if that change could affect the valuation of capitalized assets or cause other cost changes. The clause also requires notice when asset valuations or other costs have changed, or are certain to change, because of the ownership change. Beyond notice, it imposes recordkeeping and accounting duties: maintaining current, accurate, and complete inventory records; allowing the ACO or a designated representative access to those records; correctly identifying individual and grouped assets, capitalized values, accumulated depreciation or amortization, and remaining useful lives before and after each ownership change; and preserving depreciation and amortization schedules based on pre-change asset records. Finally, the clause requires flowdown to applicable subcontracts under FAR 15.408(k). In practice, this clause is about protecting the Government’s ability to evaluate cost impacts, preserve auditability of asset accounting, and avoid distortions in pricing, reimbursement, or cost allowability after a change in corporate control.
Key Rules
Notify on ownership change
The contractor must notify the ACO in writing within 30 days after becoming aware that an ownership change has occurred, or is certain to occur, if the change could affect capitalized asset valuations. The trigger is awareness of a change that may affect accounting treatment, not just formal closing of the transaction.
Notify on cost impacts
The contractor must also notify the ACO within 30 days whenever asset valuations or any other cost changes have occurred, or are certain to occur, because of the ownership change. This covers both direct valuation effects and broader cost consequences.
Maintain complete asset records
The contractor must keep current, accurate, and complete inventory records of assets and their costs. These records are the basis for determining whether ownership changes affect accounting values and for supporting any resulting cost adjustments.
Provide access to records
Upon request, the contractor must give the ACO or a designated representative ready access to the relevant records. This supports Government review, audit, and verification of the accounting effects of the ownership change.
Track asset values before and after
The contractor must accurately identify individual and grouped assets, capitalized values, accumulated depreciation or amortization, and remaining useful lives before and after each ownership change. This requirement ensures continuity in asset accounting across the transaction.
Preserve depreciation schedules
The contractor must retain and continue maintaining depreciation and amortization schedules based on the asset records that existed before each ownership change. The clause is designed to prevent the transaction from erasing historical accounting data needed for proper cost treatment.
Flow down to covered subcontracts
The contractor must include the substance of this clause in all subcontracts that meet the applicability requirement in FAR 15.408(k). This extends the same notification and recordkeeping expectations to affected subcontractors.
Responsibilities
Contractor
Monitor ownership transactions and promptly notify the ACO in writing within 30 days when a change has occurred or is certain to occur that could affect capitalized asset valuations. Also notify the ACO within 30 days when the ownership change causes or is certain to cause asset valuation changes or other cost changes.
Contractor
Maintain current, accurate, and complete inventory records of assets and costs; ensure asset values, depreciation or amortization, and remaining useful lives are properly identified; and preserve depreciation and amortization schedules based on pre-change records.
Contractor
Provide ready access to the records to the ACO or designated representative upon request and support any review of the accounting effects of the ownership change.
Contractor
Insert the substance of the clause into all subcontracts that meet the applicability requirement in FAR 15.408(k).
Administrative Contracting Officer (ACO)
Receive ownership-change and cost-impact notifications, request and review supporting records as needed, and use the information to assess the effect of the ownership change on contract costs and asset accounting.
Designated Representative
When authorized by the ACO, access the contractor’s records to verify asset valuations, depreciation/amortization schedules, and other cost impacts associated with the ownership change.
Covered Subcontractor
Comply with the flowed-down substance of the clause when the subcontract meets the applicability requirement, including providing required notifications and maintaining supporting asset records as applicable.
Practical Implications
This clause is a transaction-monitoring requirement, so contractors should involve accounting, legal, and contracts staff early when a merger, acquisition, recapitalization, or other ownership event is being considered.
The 30-day notice clock starts when the contractor becomes aware a change has occurred or is certain to occur, so waiting until closing or until the accounting entries are finalized can create compliance risk.
Asset valuation and depreciation records must be clean and traceable before the transaction; weak fixed-asset records are a common pitfall because they make it hard to prove whether costs changed because of the ownership change.
The Government may want to review records quickly, so contractors should be prepared to produce inventory listings, capitalization support, depreciation schedules, and any transaction-related cost analyses without delay.
Flowdown can be overlooked in subcontracting, but failure to include the clause where required can leave the prime contractor exposed if a covered subcontractor’s ownership change affects contract costs or asset accounting.
Official Regulatory Text
As prescribed in 15.408 (k) , insert the following clause: Notification of Ownership Changes (Oct 1997) (a) The Contractor shall make the following notifications in writing: (1) When the Contractor 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, the Contractor shall notify the Administrative Contracting Officer (ACO) within 30 days. (2) The Contractor shall also notify the ACO within 30 days whenever changes to asset valuations or any other cost changes have occurred or are certain to occur as a result of a change in ownership. (b) The Contractor shall- (1) Maintain current, accurate, and complete inventory records of assets and their costs; (2) Provide the ACO or designated representative ready access to the records upon request; (3) Ensure that all individual and grouped assets, their capitalized values, accumulated depreciation or amortization, and remaining useful lives are identified accurately before and after each of the Contractor’s ownership changes; and (4) Retain and continue to maintain depreciation and amortization schedules based on the asset records maintained before each Contractor ownership change. (c) The Contractor shall include the substance of this clause in all subcontracts under this contract that meet the applicability requirement of FAR 15.408 (k). (End of clause)