[Code of Federal Regulations]
[Title 48, Volume 1]
[Revised as of October 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR32.202-1]

[Page 637-638]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
              (This book contains chapter 1, parts 1 to 51)

                CHAPTER 1--FEDERAL ACQUISITION REGULATION
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PART 32_CONTRACT FINANCING--Table of Contents
 
             Subpart 32.2_Commercial Item Purchase Financing
 
Sec. 32.202-1  Policy.

    (a) Use of financing in contracts. It is the responsibility of the 
contractor to provide all resources needed for performance of the 
contract. Thus, for purchases of commercial items, financing of the 
contract is normally the contractor's responsibility. However, in some 
markets the provision of financing by the buyer is a commercial 
practice. In these circumstances, the contracting officer may include 
appropriate financing terms in contracts for commercial purchases when 
doing so will be in the best interest of the Government.
    (b) Authorization. Commercial interim payments and commercial 
advance payments may be made under the following circumstances--
    (1) The contract item financed is a commercial supply or service;
    (2) The contract price exceeds the simplified acquisition threshold;
    (3) The contracting officer determines that it is appropriate or 
customary in the commercial marketplace to make financing payments for 
the item;
    (4) Authorizing this form of contract financing is in the best 
interest of the Government (see paragraph (e) of this subsection);
    (5) Adequate security is obtained (see 32.202-4);
    (6) Prior to any performance of work under the contract, the 
aggregate of commercial advance payments shall not exceed 15 percent of 
the contract price;
    (7) The contract is awarded on the basis of competitive procedures 
or, if only one offer is solicited, adequate consideration is obtained 
(based on the time value of the additional financing to be provided) if 
the financing is expected to be substantially more advantageous to the 
offeror than the offeror's normal method of customer financing; and
    (8) The contracting officer obtains concurrence from the payment 
office concerning liquidation provisions when required by 32.206(e).
    (c) Difference from non-commercial financing. Government financing 
of commercial purchases under this subpart is expected to be different 
from that used for non-commercial purchases under subpart 32.1 and its 
related subparts. While the contracting officer may adapt techniques and 
procedures from the non-commercial subparts for use in implementing 
commercial contract financing arrangements, the contracting officer must 
have a full understanding of effects of the differing contract 
environments and of what is needed to protect the interests of the 
Government in commercial contract financing.
    (d) Unusual contract financing. Any contract financing arrangement 
not in accord with the requirements of agency regulations or this part 
is unusual contract financing and requires advance approval in 
accordance with agency procedures. If not otherwise specified, such 
unusual contract financing shall be approved by the head of the 
contracting activity.
    (e) Best interest of the Government. The statutes cited in 32.201 do 
not allow contract financing by the Government unless it is in the best 
interest of the United States. Agencies may establish standards to 
determine whether contract financing is in the best interest of the 
Government. These standards

[[Page 638]]

may be for certain types of procurements, certain types of items, or 
certain dollar levels of procurements.

[60 FR 49711, Sept. 26, 1995, as amended at 61 FR 39190, July 26, 1996]