[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: 48CFR32.104]



[Page 650]

 

            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 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]