[Code of Federal Regulations]
[Title 48, Volume 1]
[Revised as of October 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR32.005]

[Page 622]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
                CHAPTER 1--FEDERAL ACQUISITION REGULATION
 
PART 32_CONTRACT FINANCING--Table of Contents
 
Sec.  32.005  Consideration for contract financing.

    (a) Requirement. When a contract financing clause is included at the 
inception of a contract, there shall be no separate consideration for 
the contract financing clause. The value of the contract financing to 
the contractor is expected to be reflected in either
    (1) A bid or negotiated price that will be lower than such price 
would have been in the absence of the contract financing, or
    (2) Contract terms and conditions, other than price, that are more 
beneficial to the Government than they would have been in the absence of 
the contract financing. Adequate new consideration is required for 
changes to, or the addition of, contract financing after award.
    (b) Amount of new consideration. The contractor may provide new 
consideration by monetary or nonmonetary means, provided the value is 
adequate. The fair and reasonable consideration should approximate the 
amount by which the price would have been less had the contract 
financing terms been contained in the initial contract. In the absence 
of definite information on this point, the contracting officer should 
apply the following criteria in evaluating whether the proposed new 
consideration is adequate:
    (1) The value to the contractor of the anticipated amount and 
duration of the contract financing at the imputed financial costs of the 
equivalent working capital.
    (2) The estimated profit rate to be earned through contract 
performance.
    (c) Interest. Except as provided in subpart 32.4, Advance Payments 
for Non-Commercial Items, the contract shall not provide for any other 
type of specific charges, such as interest, for contract financing.

[60 FR 49710, Sept. 26, 1995]