Overview
This section outlines the procedures, approvals, and specific provisions required when incorporating cost-based progress payments into solicitations and contracts. It establishes the administrative framework for ensuring that government financing is offered appropriately and that high-risk financial situations receive proper oversight before a contract is awarded.
Key Rules
- Responsiveness: A contracting officer must reject a bid as nonresponsive if the bidder conditions their bid on receiving progress payments when the solicitation did not offer them.
- Mandatory Clearances: Approval from the contract finance office is required for providing rates higher than customary, deviating from standard terms, or awarding to contractors with doubtful financial health or existing federal debt (the "Hold-up List").
- Required Provisions:
- 52.232-13: Used in invitations for bids (IFB) and requests for proposals (RFP) that include progress payments.
- 52.232-14: Used when progress payments are restricted exclusively to small business concerns.
- 52.232-15: Used when progress payments will specifically not be included in the solicitation.
- Clause Usage (52.232-16): This is the primary clause for cost-based progress payments, which includes specific Alternates for small businesses (Alt I), letter contracts (Alt II), and large business indefinite-delivery contracts (Alt III).
- Severable Work: If a contract has clearly severable portions of work requiring separate accounting, the contracting officer may describe separate progress payment rates in a supplementary special provision.
Practical Implications
- Contractors must carefully review solicitation financing terms, as requesting progress payments in a bid where they are not authorized is a fatal defect that will result in the bid being rejected.
- The government utilizes these preaward checks as a risk-mitigation strategy to avoid providing advanced funding to contractors who are financially unstable or owe money to the United States.