Quiero saber acerca de...

Friday, October 23, 1959

FEDERAL REGISTER

Subpart B Basic Policies 82.13

82 .1 9
Support o f procurement; mini mizing monetary loss.

Scope o f subpart.

This subpart sets forth basic policies applicable to guaranteed loans, advance payments, and progress payments. Poli cies and procedures more particularly pertaining to the specific methods of contract financing are contained in the sections of this part relating to each method of financing.
82.14

Acceleration o f payments.

Payments must be made promptly on all contracts when due. It is of contin uing importance that there be accelera tion of all p r o p e r payments earned by contractors, i n c l u d i n g progress payments.
82.15

Timely action.

In connection with requests for pro vision of progress payments, advance payments, or loan guarantees, there must be timely action, no unwarranted delay, and no hesitation to make proper contract financing provisions.
82.16

Uniformity.

Uniform financing policies and,-so far as practicable, uniform procedures and standard forms are to be used by the Military Departments and, to the extent mutually agreed upon by the Military Departments, facilities and personnel are to be used in common.
82.17

Small business.

Immediate and continuing attention must be given at all levels to insure that constructive measures will be taken to facilitate and accelerate necessary con tract financing assistance to small busi ness concerns. Every reasonable effort must be made to assist small business concerns in the resolution of their prob lems relative to the financing of contract Performance, including any cases in which it may be reasonably necessary to increase the rate for progress payments and to assist them in understanding and complying with the requirements of per formance as to payment forms, inspec tion and cost accounting. However, the issuance of a certificate of competency by the Small Business Administration shall not be considered as a requirement that contract financing must be provided by a Military Department.
_i 82.18

Purpose o f contract financing.

The providing of funds for payment of expenses of performance of contracts is an essential element of defense produc tion. Contract financing is to be re garded as a useful working tool that may be used to the benefit o f the Govern-

btent, for
aiding
procurement
by
expediting performance o f d e f e n s e contracts and subcontracts. The con tact financing system makes possible Production in volume that could not be accomplished otherwise. Prudent con-

financing supports procurement bu < production and fosters the small fiw f688 policy Py providing necessary a b i suPr>ement other funds availe to contractors for contract per formance.

-

Financing must support procurement and should be designed to aid, not im pede, essential procurement, but should be so administered as to avoid/the risk of monetary loss to the Government to the extent compatible with aiding essen tial procurement.
82.20

Reasonable need.

Government financing for production or services should be provided only if, and to the extent, reasonably required for prompt and efficient performance of Government contracts and subcontracts.
82.21

W orking capital purposes.

a Guaranteed loans under section 301 of the Defense Production Act of 1950, as amended, will be used primarily fo r working capital purposes.
Such guarantee authority will not be used for loans for facilities expansion.
b It is not the intent of these regu lations, however, to preclude guarantees in cases in which a relatively small part o f the loan might be used for facilities expansion of a minor or incidental na ture: Provided, That the borrowers fi nancial condition is such that the facilities expansion will not delay or impair repayment of a guaranteed loan which would be granted on a commercial banking basis.
c Since advance payments and prog ress payments should be self-liquidating from contract performance, they also will not be used to finance fixed asset acquisitions for contractor ownership.
d These limitations are not intended to apply to contracts under which fa
cilities are being acquired for Govern ment ownership. _
82.22

Order o f preference.

In determining what form of financing shall be recommended or made available to suppliers, the following order of pref erence generally should be observed, recognizing that there may be valid ex ceptions in specific cases or classes of cases:
a Private financing on reasonable terms without governmental guaran tee supplemented when reasonably necessary by Government financing to the extent reasonably required;
b Customary progress payments, as described herein 82.72 including progress payments incident to Small Business Restricted Advertising or inci dent to procurement by formal advertis ing, as authorized herein 82.73 except that guaranteed loans may be preferable to customary progress payments when so indicated by a contractor and financing institution; or progress payments based on a percentage or stage of completion, confined to contracts for construction 10.101-6 o f this chapter, shipbuild ing and ship conversion, alteration or repair;
c Guaranteed loans with financing institutions participating to an extent appropriate to the risk involved;
d Unusual progress payments, as described herein 82.74, not including contracts involving advance payments;
e Advance payments 82.58.

8569
82.23

Financing not a handicap.

The need for advance payments or for progress payments or for a guaranteed loan with reasonable percentage of guarantee shall not be treated as a handicap in awarding contracts to those qualified contractors who are deemed competent and capable of satisfactory performance 1.903-1 and 2.406 of this chapter and 82.24 and 82.25. The ability of the contractor to perform the contract, including the availability of money or credit necessary fo r perform ance, must be reasonably assured in all cases. Awards which are otherwise prop er must not be deterred by the necessity fo r providing reasonable contract fi nancing. A contractor deemed reliable, competent, capable and otherwise re sponsible, must not be regarded as any less responsible by reason of the. need for reasonable contract financing pro vided or guaranteed by a Military De partment. Responsible personnel must endeavor to assure that full, proper and prudent use is made of contract financ ing, in such ways that financial difficul ties will not bring about delay or failure in performance or result in monetary losses to the Government. In selection o f an appropriate method for provision o f funds, contractors will not be ex pected to seek or obtain loans or credit a at excessive interest rates or other exorbitant charges, or b from agencies of the Government outside the Depart ment of Defense.
82.231 Non-indication financing need.

of
contract
Before contract awards, contractors sometimes indicate that contract financ ing by guaranteed loan, progress pay ments or advance payments will not be required. In some of those cases, the need for such contract financing later arises, usually from changed circum stances differing from those projected at the time of the award. The fact that a contractor did not indicate before award that he would require contract financing, or that he stated that he would not require such financing, does not disqualify the contractor for proper contract financing conforming to these regulations and should not be permitted to deter such financing. Each such case should be dealt with and decided on its merits, without giving weight to the con tractors earlier error with regard to the need for contract financing.
82.24 Financial responsibility o f con tractors.

Procuring activities in placing con tracts must give due regard to the finan cial capabilities of the supplier. Finan cial difficulties encountered by contrac tors and subcontractors may a disrupt production schedules, b cause wastage of manpower and materials, and c if connected with guaranteed loans, ad vance payments, or progress payments, result in monetary loss to the Govern ment. Also, if financial crises occur in the course of a contractors production, the need for continued production may make guaranteed loans or advance pay ments imperative for continuance of such production, even though monetary