[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: 48CFR32.104]

[Page 626-627]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
                CHAPTER 1--FEDERAL ACQUISITION REGULATION
 
PART 32_CONTRACT FINANCING--Table of Contents
 
           Subpart 32.1_Non-Commercial Item Purchase Financing
 
Sec.  32.104  Providing contract financing.

    (a) Prudent contract financing can be a useful working tool in 
Government acquisition by expediting the performance of essential 
contracts. Contracting officers must consider the criteria in this part 
in determining whether to include contract financing in solicitations 
and contracts. Resolve reasonable doubts by including contract financing 
in the solicitation. The contracting officer must--
    (1) Provide Government financing only to the extent actually needed 
for prompt and efficient performance, considering the availability of 
private financing and the probable impact on working capital of the 
predelivery expenditures and production lead-times associated with the 
contract, or groups of contracts or orders (e.g., issued under 
indefinite-delivery contracts, basic ordering agreements, or their 
equivalent);
    (2) Administer contract financing so as to aid, not impede, the 
acquisition;
    (3) Avoid any undue risk of monetary loss to the Government through 
the financing;
    (4) Include the form of contract financing deemed to be in the 
Government's best interest in the solicitation (see 32.106 and 32.113); 
and
    (5) Monitor the contractor's use of the contract financing provided 
and the contractor's financial status.
    (b) If the contractor is a small business concern, the contracting 
officer must give special attention to meeting the contractor's contract 
financing need. However, a contractor's receipt of a certificate of 
competency from the Small Business Administration has no bearing on the 
contractor's need for or entitlement to contract financing.
    (c) Subject to specific agency regulations and paragraph (d) of this 
section, the contracting officer--
    (1) May provide customary contract financing in accordance with 
32.113; and
    (2) Must not provide unusual contract financing except as authorized 
in 32.114.
    (d) Unless otherwise authorized by agency procedures, the 
contracting officer may provide contract financing in the form of 
performance-based payments (see subpart 32.10) or customary progress 
payments (see subpart 32.5) if the following conditions are met:
    (1) The contractor--
    (i) Will not be able to bill for the first delivery of products for 
a substantial time after work must begin (normally 4 months or more for 
small business concerns, and 6 months or more for others), and will make 
expenditures for contract performance during the predelivery period that 
have a significant impact on the contractor's working capital; or
    (ii) Demonstrates actual financial need or the unavailability of 
private financing.
    (2) If the contractor is not a small business concern--
    (i) For an individual contract, the contract price is $2 million or 
more; or
    (ii) For an indefinite-delivery contract, a basic ordering agreement 
or a similar ordering instrument, the contracting officer expects the 
aggregate

[[Page 627]]

value of orders or contracts that individually exceed the simplified 
acquisition threshold to have a total value of $2 million or more. The 
contracting officer must limit financing to those orders or contracts 
that exceed the simplified acquisition threshold.
    (3) If the contractor is a small business concern--
    (i) For an individual contract, the contract price exceeds the 
simplified acquisition threshold; or
    (ii) For an indefinite-delivery contract, a basic ordering agreement 
or a similar ordering instrument, the contracting officer expects the 
aggregate value of orders or contracts to exceed the simplified 
acquisition threshold.

[65 FR 16278, Mar. 27, 2000]