[Code of Federal Regulations]

[Title 48, Volume 1]

[Revised as of October 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 48CFR32.005]



[Page 646]

 

            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]