[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: 48CFR32.304-2]



[Page 661-662]

 

            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. 32.304-2  Certificate of eligibility.



    (a) The contracting officer shall prepare the certificate of 

eligibility for a contract that the contracting officer deems to be of 

material consequence, when--

    (1) The contract financing office requests it;

    (2) Another interested agency requests it; or

    (3) The application for a loan guarantee relates to a contract or 

subcontract within the cognizance of the contracting officer.

    (b) The agency shall evaluate the relevant data, including the 

certificate of eligibility, the accompanying data, and any other 

relevant information on the contractor's financial status and 

performance, to determine whether authorization of a loan guarantee 

would be in the Government's interest.

    (c) If the contractor has several major national defense contracts, 

it is normally not necessary to evaluate the eligibility of relatively 

minor contracts. The determination of eligibility should be processed, 

without delay, based on the preponderance of the amount of the 

contracts.

    (d) The certificate of eligibility shall include the following 

determinations:

    (1) The supplies or services to be acquired are essential to the 

national defense.

    (2) The contractor has the facilities and the technical and 

management ability required for contract performance.

    (3) There is no practicable alternate source for the acquisition 

without prejudice to the national defense. (This statement shall not be 

included if the contractor is a small business concern.)

    (e) The contracting officer shall consider the following factors in 

determining if a practicable alternate source exists:

    (1) Prejudice to the national defense, because reletting of a 

contract with another source would conflict with a major policy on 

defense acquisition; e.g., policies relating to the mobilization base.

    (2) The urgency of contract performance schedules.

    (3) The technical ability and facilities of other potential sources.

    (4) The extent to which other sources would need contract financing 

to perform.

    (5) The willingness of other sources to enter into contracts.

    (6) The time and expense involved in repurchasing for contracts or 

parts of



[[Page 662]]



contracts. This may include potential claims under a termination for 

convenience or delays incident to default at a later date.

    (7) The comparative prices available from other sources.

    (8) The disruption of established subcontracting arrangements.

    (9) Other pertinent factors.

    (f) The contracting officer shall attach sufficient data to the 

certificate of eligibility to support the determinations made. Available 

pertinent information shall be included on--

    (1) The contractor's past performance;

    (2) The relationship of the contractor's operations to performance 

schedules; and

    (3) Other factors listed in paragraph (e) above, if relevant to the 

case under consideration.

    (g) If the contracting officer determines that a certificate of 

eligibility is not justified, the facts and reasons supporting that 

conclusion shall be documented and furnished to the agency contract 

finance office.

    (h) The guaranteeing agency shall review the proposed guarantee 

terms and conditions. If they are considered appropriate, the 

guaranteeing agency shall complete a standard form of authorization as 

prescribed by the Federal Reserve Board. The agency shall transmit the 

authorization through the Federal Reserve Board to the Federal Reserve 

Bank. The Bank is authorized to execute and deliver to the financing 

institution a standard form of guarantee agreement, with the terms and 

conditions approved for the particular case. The financing institution 

will then make the loan.

    (i) Substantially the same procedure may be followed for the 

application of an offeror who is actively negotiating or bidding for a 

defense contract, except that the guarantee shall not be authorized 

until the contract has been executed.

    (j) The contracting officer shall report to the agency contract 

finance office any information about the contractor that would have a 

potentially adverse impact on a pending guarantee application. The 

contracting officer is not required, however, to initiate any special 

investigation for this purpose.

    (k) With regard to existing contracts, the agency shall not consider 

the percentage of guarantee requested by the financing institution in 

determining the contractor's eligibility.