[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: 48CFR32.303]



[Page 660-661]

 

            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM

 

                CHAPTER 1--FEDERAL ACQUISITION REGULATION

 

PART 32_CONTRACT FINANCING--Table of Contents

 

           Subpart 32.3_Loan Guarantees for Defense Production

 

Sec. 32.303  General.



    (a) Section 301 of the Defense Production Act authorizes loan 

guarantees for contract performance or other operations related to 

national defense, subject to amounts annually authorized by Congress on 

the maximum obligation of any guaranteeing agency under any loan, 

discount, advance, or commitment in connection therewith, entered into 

under section 301. (See 50 U.S.C. App. 2091 for statutory limitations 

and exceptions concerning the authorization of loan guarantee amounts 

and the use of loan guarantees for the prevention of insolvency or 

bankruptcy.)

    (b) The guarantee shall be for less than 100 percent of the loan 

unless the agency determines that--

    (1) The circumstances are exceptional;

    (2) The operations of the contractor are vital to the national 

defense; and

    (3) No other suitable means of financing are available.

    (c) Loan guarantees are not issued to other agencies of the 

Government.

    (d) Guaranteed loans are essentially the same as conventional loans 

made by private financial institutions, except that the guaranteeing 

agency is obligated, on demand of the lender, to purchase a stated 

percentage of the loan and to share any losses in the amount of the 

guaranteed percentage. It is the responsibility of the private financial 

institution to disburse and collect funds and to administer the loan. 

Under Regulation V of the Federal Reserve Board (12 CFR 245), any 

private financing institution may submit an application to the Federal 

Reserve Bank of its district for guarantee of a loan or credit.

    (e) Federal Reserve Banks will make the loan guarantee agreements on 

behalf of the guaranteeing agencies.

    (f) Under Section 302(c) of Executive Order 10480, August 14, 1953 

(3 CFR 1949-53), as amended, all actions and operations of Federal 

Reserve Banks, as fiscal agents, are subject to the supervision of the 

Federal Reserve Board. The Federal Reserve Board is authorized to 

prescribe the following, after consultation with the heads of 

guaranteeing agencies:

    (1) Regulations governing the actions and operations of fiscal 

agents.

    (2) Rates of interest, guarantee and commitment fees, and other 

charges that may be made for loans, discounts, advances, or commitments 

guaranteed by the guaranteeing agencies through the Federal Reserve 

Banks. These prescriptions may be in the form of specific rates or 

limits, or in other forms.

    (3) Uniform forms and procedures to be used in connection with the 

guarantees.

    (g) The guaranteeing agency is responsible for certifying 

eligibility for the guarantee and fixing the maximum



[[Page 661]]



dollar amount and maturity date of the guaranteed loan to meet the 

contractor's requirement for financing performance of the defense 

production contract on hand at the time the guarantee application is 

submitted.