Overview
This section outlines how agencies may utilize Public Law 85-804 to authorize advance payments for sealed bid contracts to facilitate national defense, even if such provisions were not originally included in the solicitation.
Key Rules
- Authority: Designated agencies can provide advance payments for both sealed bid and negotiated contracts under the national defense authorities of P.L. 85-804.
- Timing of Requests: Bidders are permitted to request advance payments either before or after the contract award, regardless of whether the Invitation for Bids (IFB) originally contained an advance payment provision.
- Conditionality Prohibition: The contracting officer must reject any bid that is conditioned upon the receipt of advance payments as a basis for acceptance.
- Agency Options: Upon receiving a request for advance payments, the agency may:
- Amend the contract to include advance payments according to FAR Part 32;
- Award the contract without advance payments if the contractor does not actually require them; or
- Deny the award if the request is disapproved and the bidder lacks the financial resources to perform.
Practical Implications
- Responsiveness Risk: Contractors must be careful not to make their bid "contingent" on receiving advance payments, as this triggers a mandatory rejection of the bid for being non-responsive.
- Responsibility Determination: If a bidder requests advance payments and the agency denies them, the bidder may be found non-responsible if they cannot demonstrate they have other adequate funds to perform the work.