[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: 48CFR32.202-1]



[Page 654-655]

 

            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM

 

                CHAPTER 1--FEDERAL ACQUISITION REGULATION

 

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



[[Page 655]]



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 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]