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RULES AND REGULATIONS

8568
levels, shall be furnished promptly through channels to the Army Comp troller, in the Department of the Army, the Assistant Comptroller, Accounting and Finance, in the Department of the Navy, and the Deputy for Contract F i nancing to the Assistant Secretary Financial Management in the Depart ment of the Air Force, with an additional copy to be forwarded by those contract financing offices, respectively, to the As sistant Secretary of Defense Comptrol ler. Changes and additions for this part will be developed within the Con tract Finance Committee, in the manner contemplated by 82.12-3 and 82.32.

medium fo r financing borrowers who hold subcontracts, or numerous prime contracts, or prime contracts with sev eral contracting agencies. Funds are disbursed and collected by the lending institution, and its personnel administer the loan. Government funds are not involved except for purchases of the guaranteed portion of loans or settlement of losses.
82.8

Advance payments ; authority.

This subpart describes the methods of contract financing by guaranteed loans, advance payments and progress pay ments, and states basic authority and responsibilities.

Advance payments on all contracts are authorized in accordance with the pro visions of 10 UiS.C. 2307. When appro priate, advance payments are also au thorized pursuant to the Act of August 28, 1958 to authorize the making, amendment and modification of con tracts to facilitate the national defense Pub. Law 85-804, 72 Stat. 972, Execu tive Order No. 10789, and Department of Defense Directive No. 7830.1. Navy ad vance payments for salvage operations are also authorized by 10 U.S.C. 7364.

82.6

82.9

Subpart A Introduction 82.5

Scope o f subpart.

Guaranteed loans ; authority.

a Under section 301a of the De fense Production Act of 1950, as amend ed, and section 301 of Executive Order No. 10480, the Department of the Army, the Department of the Navy, and the Department of the Air Force, among others, are designated as guaranteeing agencies, and authorized by section 302
a of Executive Order No. 10480 to guarantee in whole or in part any public or private financing institution includ ing any Federal Reserve B an k, by com mitment to purchase, agreement to share losses, or otherwise, against loss of prin cipal or interest on any loan
which may be made by such financing institution for the purpose of financing any contractor, subcontractor, or other person in connection with the perform ance of any contract or other operation deemed by the guaranteeing agency to be necessary to expedite production and deliveries or services under Government contracts for the procurement of mate rials or the performance of services for the national defense, or for the purpose of financing any contractor, subcon-.
tractor, or other person in connection with or in contemplation of the termi nation, in the interest of the United States, of any contract made for the national defense.
b As defined in section 702d of the Defense Production Act of 1950, as amended, the term national defense means programs for military and atomic energy production or construction, mili tary assistance to any foreign nation, stockpiling, and directly related ac tivity.
82.7

Guaranteed loans ; description.

Guaranteed loans, usually called V-loans, are essentially the same as other loans made by financing institu tions without guarantee, except that under a standard form of guarantee agreement the guaranteeing agency is obligated on demand of the lender to purchase a stated percentage of the loan and to share losses in the amount of the guaranteed percentage.
Guaranteed loans afford an especially convenient
Advance payments ; description.

Advance payments are advances of money, made by the Government to a contractor prior to, in anticipation of, and for the purpose of complete per formance under a contract or contracts.
Advance payments are made only to prime contractors. They are expected to be liquidated from payments due to the contractor incident to performance of contracts. Since they are not meas ured by performance, they differ from partial, progress, or other payments made because of and on the basis of performance or part performance of a contract. Advance payments may be made to prime contractors for the pur pose of making sub-advances to sub contractors.
82.10

Progress payments ; authority.

Progress payments are authorized in accordance with the provisions of 10
U.S.C. 2307.
82.11

Progress payments ; description.

The term progress payments, as used herein, signifies payments made as work progresses under a contract, upon the basis of costs incurred, qf percentage of fcompletion accomplished, or of a par ticular stage of completion. As used in this part this term does not include pay ments for partial deliveries accepted by the Government under a contract, or .partial payments on contract termina tion claims.
82.12

Responsibilities
Sections 82.12-1 to 82.12-3 set forth organization and responsibilities.
82.121

Organization.

In terms of organization, the financing function should be separated from the procurement function, but close coopera tion between the procurement and fi nancing functions should be preserved at all times. Insofar as progress pay ments are concerned, it is contemplated that contract financing officers will ordi narily participate in the development of appropriate regulations and standard contract provisions designed to avoid un
due risk to the Government, but will otherwise participate only in specific cases involving policy questions or un usual financial arrangements and con ditions.
82.122

Resolution o f disagreements.

I f a disagreement arises between the financing office and the interested pro curing activity in any Department as to whether, to what extent, or in what form, financing should be furnished, the mat ter will be referred immediately to and resolved in the higher echelons of au thority responsible respectively for fi nancing and procurement functions, subject to any issue being resolved ulti mately by the Secretary of the Depart ment concerned.
82.123 Responsibility;
administra tion ; Contract Finance Committee.

a The responsibility for insuring uniform administration of financing in accordance with directions shall be in the Assistant Secretary of Defense Com ptroller. Specific cases need not be referred to the Office of the Assistant Secretary Comptroller, unless policy or important procedural problems are involved, and the day-to-day financing operations shall be the responsibility of the Military Departments.
b Responsibility for financing in each Department shall be in the Under or Assistant Secretary responsible for the comptroller function, with the focal point of such activities at Departmental headquarters although contract financ ing offices may be established at the operational level determined by that Department.
c There shall be a Contract Finance Committee composed of a representative of the Assistant Secretary of Defense Comptroller as Chairman, a repre sentative of the Assistant Secretary of Defense Supply and Logistics and two representatives of each Military Depart ment one representing procurement and one representing the c o n t r a c t finance office, which Committee shall meet upon call by the Chairman, upon his own initiative or when requested by a member of the Committee. This Com mittee shall advise and assist the Assist ant Secretary of Defense Comptroller in assuring proper and uniform applica tion of policies and the developm ent of procedures and forms, and may from time to time recommend to the Secre tary of Defense through the Assistant Secretary of Defense Comptroller and the Assistant Secretary of Defense Sup ply and Logistics such further policy directives on the subject of financing as may appear desirable. This Commit tee shall be responsible also for the formulation, revision and promulgation of u n i f o r m regulations on contract financing 82.32. For matters in volving guaranteed loans, a representa tive of the Board of Governors o f tn Federal Reserve System may be inyiten to meet with the Committee. The Com mittee also may from time to time secu the advice of representatives of otn branches of the Government and otn persons and may invite such represent tives and persons to its meetings.