[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: 48CFR32.304-2]

[Page 637-638]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
                CHAPTER 1--FEDERAL ACQUISITION REGULATION
 
PART 32_CONTRACT FINANCING--Table of Contents
 
           Subpart 32.3_Loan Guarantees for Defense Production
 
Sec.  32.304-2  Certificate of eligibility.

    (a) The contracting officer shall prepare the certificate of 
eligibility for a contract that the contracting officer deems to be of 
material consequence, when--
    (1) The contract financing office requests it;
    (2) Another interested agency requests it; or
    (3) The application for a loan guarantee relates to a contract or 
subcontract within the cognizance of the contracting officer.
    (b) The agency shall evaluate the relevant data, including the 
certificate of eligibility, the accompanying data, and any other 
relevant information on the contractor's financial status and 
performance, to determine whether authorization of a loan guarantee 
would be in the Government's interest.
    (c) If the contractor has several major national defense contracts, 
it is normally not necessary to evaluate the eligibility of relatively 
minor contracts. The determination of eligibility should be processed, 
without delay, based on the preponderance of the amount of the 
contracts.
    (d) The certificate of eligibility shall include the following 
determinations:
    (1) The supplies or services to be acquired are essential to the 
national defense.
    (2) The contractor has the facilities and the technical and 
management ability required for contract performance.
    (3) There is no practicable alternate source for the acquisition 
without prejudice to the national defense. (This statement shall not be 
included if the contractor is a small business concern.)
    (e) The contracting officer shall consider the following factors in 
determining if a practicable alternate source exists:
    (1) Prejudice to the national defense, because reletting of a 
contract with another source would conflict with a

[[Page 638]]

major policy on defense acquisition; e.g., policies relating to the 
mobilization base.
    (2) The urgency of contract performance schedules.
    (3) The technical ability and facilities of other potential sources.
    (4) The extent to which other sources would need contract financing 
to perform.
    (5) The willingness of other sources to enter into contracts.
    (6) The time and expense involved in repurchasing for contracts or 
parts of contracts. This may include potential claims under a 
termination for convenience or delays incident to default at a later 
date.
    (7) The comparative prices available from other sources.
    (8) The disruption of established subcontracting arrangements.
    (9) Other pertinent factors.
    (f) The contracting officer shall attach sufficient data to the 
certificate of eligibility to support the determinations made. Available 
pertinent information shall be included on--
    (1) The contractor's past performance;
    (2) The relationship of the contractor's operations to performance 
schedules; and
    (3) Other factors listed in paragraph (e) above, if relevant to the 
case under consideration.
    (g) If the contracting officer determines that a certificate of 
eligibility is not justified, the facts and reasons supporting that 
conclusion shall be documented and furnished to the agency contract 
finance office.
    (h) The guaranteeing agency shall review the proposed guarantee 
terms and conditions. If they are considered appropriate, the 
guaranteeing agency shall complete a standard form of authorization as 
prescribed by the Federal Reserve Board. The agency shall transmit the 
authorization through the Federal Reserve Board to the Federal Reserve 
Bank. The Bank is authorized to execute and deliver to the financing 
institution a standard form of guarantee agreement, with the terms and 
conditions approved for the particular case. The financing institution 
will then make the loan.
    (i) Substantially the same procedure may be followed for the 
application of an offeror who is actively negotiating or bidding for a 
defense contract, except that the guarantee shall not be authorized 
until the contract has been executed.
    (j) The contracting officer shall report to the agency contract 
finance office any information about the contractor that would have a 
potentially adverse impact on a pending guarantee application. The 
contracting officer is not required, however, to initiate any special 
investigation for this purpose.
    (k) With regard to existing contracts, the agency shall not consider 
the percentage of guarantee requested by the financing institution in 
determining the contractor's eligibility.