[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: 48CFR32.102]



[Page 649]

 

            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. 32.102  Description of contract financing methods.



    (a) Advance payments are advances of money by the Government to a 

prime contractor before, in anticipation of, and for the purpose of 

complete performance under one or more contracts. They are expected to 

be liquidated from payments due to the contractor incident to 

performance of the contracts. Since they are not measured by 

performance, they differ from partial, progress, or other payments based 

on the performance or partial performance of a contract. Advance 

payments may be made to prime contractors for the purpose of making 

advances to subcontractors.

    (b) Progress payments based on costs are made on the basis of costs 

incurred by the contractor as work progresses under the contract. This 

form of contract financing does not include--

    (1) Payments based on the percentage or stage of completion 

accomplished;

    (2) Payments for partial deliveries accepted by the Government;

    (3) Partial payments for a contract termination proposal; or

    (4) Performance-based payments.

    (c) Loan guarantees are made by Federal Reserve banks, on behalf of 

designated guaranteeing agencies, to enable contractors to obtain 

financing from private sources under contracts for the acquisition of 

supplies or services for the national defense.

    (d) Payments for accepted supplies and services that are only a part 

of the contract requirements (i.e., partial deliveries) are authorized 

under 41 U.S.C. 255 and 10 U.S.C. 2307. In accordance with 5 CFR 

1315.4(k), agencies must pay for partial delivery of supplies or partial 

performance of services unless specifically prohibited by the contract. 

Although payments for partial deliveries generally are treated as a 

method of payment and not as a method of contract financing, using 

partial delivery payments can assist contractors to participate in 

contracts without, or with minimal, contract financing. When 

appropriate, contract statements of work and pricing arrangements must 

permit acceptance and payment for discrete portions of the work, as soon 

as accepted (see 32.906(c)).

    (e)(1) Progress payments based on a percentage or stage of 

completion are authorized by the statutes cited in 32.101.

    (2) This type of progress payment may be used as a payment method 

under agency procedures. Agency procedures must ensure that payments are 

commensurate with work accomplished, which meets the quality standards 

established under the contract. Furthermore, progress payments may not 

exceed 80 percent of the eligible costs of work accomplished on 

undefinitized contract actions.

    (f) Performance-based payments are contract financing payments made 

on the basis of--

    (1) Performance measured by objective, quantifiable methods;

    (2) Accomplishment of defined events; or

    (3) Other quantifiable measures of results.



[48 FR 42328, Sept. 19, 1987, as amended at 52 FR 30077, Aug. 12, 1987; 

60 FR 49711, Sept. 26, 1995; 62 FR 12706, Mar. 17, 1997; 66 FR 65355, 

Dec. 18, 2001]