Overview
FAR 32.114 defines "unusual contract financing" as any arrangement that deviates from the standard practices prescribed in FAR Part 32. It establishes that such arrangements require high-level authorization, typically from the head of the agency.
Key Rules
- Definition of Unusual Financing: Any financing arrangement not specifically authorized by or deviating from the standard provisions of FAR Part 32 is classified as "unusual."
- Approval Authority: Use of unusual contract financing is prohibited unless authorized by the head of the agency or through specific procedures established in agency-level regulations.
Practical Implications
- High Administrative Burden: Contractors and Contracting Officers should expect a rigorous and lengthy justification process, as seeking approval from the head of an agency represents a significant administrative hurdle.
- Case-by-Case Necessity: Unusual financing is typically reserved for highly complex, large-scale acquisitions where standard payment methods (like progress payments or performance-based payments) are demonstrably insufficient to meet the contractor's working capital needs.