Overview
FAR 32.401 identifies the specific legal statutes that grant federal agencies the authority to provide advance payments to contractors under both negotiated and sealed bid contracts.
Key Rules
- Broad Applicability: Advance payments can be authorized for both negotiated acquisitions and sealed bidding, provided they meet statutory requirements.
- Civilian Agency Authority: Agencies are governed by the provisions found in 41 U.S.C. chapter 45.
- Defense Agency Authority: Military departments and related agencies derive their authority from 10 U.S.C. chapter 277.
- Extraordinary Authority: Under Public Law 85-804 and Executive Order 10789, agencies may authorize advance payments for reasons of national defense, even when other statutory conditions are not met (governed further by FAR subpart 50.1).
Practical Implications
- Contracting Officers must ensure that any agreement for advance payments is tied to one of these specific statutory foundations to ensure the legality of the obligation.
- While advance payments are generally discouraged in government contracting, these authorities provide the necessary legal "permission" for agencies to support contractors in specific scenarios, such as high-priority defense projects or cases where contractor financing is otherwise unavailable.