if a corporation, a list of major stockholders, and shares held;

(d) Statement of compensation payable to each officer, partner, proprietor, and principal executive, and to each key employee receiving comparable compensation, including bonus, commission, and profit-sharing arrangements, together with similar data for the past 2 years; also past and projected dividends, unless obtained with paragraph (a) of this § 1-30.214;

(e) Schedule of principal contracts and orders on hand, showing defense orders and civilian orders separately, and showing face amounts, unfinished amounts, and unliquidated advance or progress payments, and also indicating bids outstanding and contemplated and explanation concerning contracts under negotiation;

(f) Cash forecast, showing estimated disbursements and receipts for the period or periods involved (see §§ 1-30.214-1 and 1-30.214-2);

(g) Estimated profit and loss statements and estimated balance sheets (see § 1-30.214-3);

(h) Comparison of past financial results with estimates previously furnished by the contractor;

(i) Credit agency ratings of the contractor, and, when significant, credit agency ratings of principal subcontractors and of principal business customers (defense and commercial) of the contractor;

(j) Existing and contemplated credit or financing arrangements, names of parties and relationship, if any, to contractor, amounts available or to be available, periods of availability, and required or contemplated payments, including: (1) Loans and credits;

(2) Advances and progress payments; (3) Projected equity capital increases; (4) Deferred trade credit, if any; (5) Creditor subordinations or standbys; and

(6) Mortgages, liens, pledges, assignments, conditional sales, lease-purchases, hypothecations, and other encumbrances or security arrangements, both existing and contemplated.

(k) Status of all tax accounts, particularly Federal income, excise, and withholding taxes, and social security taxes or contributions (including verification with Internal Revenue Service, when appropriate) with special attention to the matter of Federal tax delinquencies

(which are covered by the lien and right of distraint and levy provided by sections 6321 and 6331 of the Internal Revenue Code);

(1) Appropriate information, explanation and schedules to indicate:

(1) Leases, deferred purchase arrangements, and patent or royalty arrangements, outlining terms and showing relationship, if any, of other parties to the contractor;

(2) Insurance maintained and to be maintained;

(3) Contemplated capital expenditures, debt reduction or retirement, and acquisitions of capital stock;

(4) Delinquencies on contracts, subcontracts, or purchase orders, and status thereof;

(5) Pending or anticipated liability for contract price refunds, or for renegotiation, or for other Government claims;

(6) Anticipated losses on contracts; (7) Contingent liabilities, including those on endorsements, guarantees, warranties, surety bonds, and material litigation pending or threatened;

(8) Aging and collectibility of accounts and notes receivable, status of disputed receivables, identification of any amounts included in receivables but not currently due and payable;

(9) Obsolescence of inventory and method of valuing inventory;

(10) Aging of accounts and notes payable, identifying major creditors and interest rates and other charges, if any, and status of significant disputed items; (11) Adequacy of reserves for depreciation;

(12) Analysis of surplus.

(m) Significant ratios such as:

(1) Inventory to annual sales;

(2) Inventory to current assets; (3) Liquid assets to current assets; (4) Liquid assets to current liabilities; (5) Current assets to current liabilities; and

(6) Net worth to debt.

(n) Comments and opinion of pertinent audit activity concerning contractor's accounting system and controls, and available audit activity analysis of important elements of financial statements or projections;

(0) Other facts that may be appropriate for the purposes stated at the beginning of this § 1-30.214. (See §§ 130.211-1 to 1-30.211-6, inclusive.)

§ 1-30.214-1

Cash flow forecast, and estimated financial statements.

In doubtful cases, an estimated cash budget (Cash Flow Forecast) and related estimated Profit and Loss Statements and estimated Balance Sheets prepared by the contractor, will be very useful for the purpose of arriving at an informed judgment as to the cash requirements (both for the contract and for the contractor's other activities), cash receipts for the contract period, and cash or credit needed to supply any excess of projected expenditures over projected receipts. When considered useful or necessary, such estimates should be requested from the prospective contractor, analyzed by financial personnel, and discussed to the extent necessary or appropriate with the prospective contractor. Many contractors will have such projections readily available, perhaps not including estimated balance sheets. The failure of the contractor to have prepared such estimates, or resistance to their preparation, or difficulties and delays in preparation, or poor quality of the projections, or the use of unreasonable or unrealistic assumptions in their preparation, may well constitute warning signals that the company's planning has been insufficient and that significant financial troubles may be encountered during the contemplated period of contract performance.

§ 1-30.214-2 Realistic assumptions.

Cash forecasts can, of course, be no more reliable and representative of probable financial developments than the assumptions on which these forecasts are based. Each cash forecast and related projection should disclose the important underlying assumptions. The more important of these assumptions

are:

(a) Estimated amounts and timing of purchases of materials, parts, components, subassemblies, services, and payments therefor;

(b) Estimated amounts and timing of purchases of machinery and equipment, other production or test facilities, other fixed assets, and purchases or production of special tooling, and payments therefor;

(c) Schedule of fixed cash charges, such as debt installments, interest, rentals, and taxes;

(d) Projected manufacturing and production schedules;

(e) Projected shipments, or delivery acceptances;

(f) Estimated amounts and timing of billings to customers (including progress payments), and customer payments;

(g) Estimated amounts and timing of cash receipts from lenders or other credit sources, and liquidation of loans; and

(h) Estimated amounts and timing of cash receipts from other sources. The assumptions underlying cash forecasts should be checked, as may be prudent in the circumstances of the case, for reasonableness and realism. This checking should be done with the contractor, with Government personnel responsible in the areas of engineering, production scheduling, cost and price analysis, and with others (including prospective supply, subcontract, and loan or credit sources).

§ 1-30.214-3

Estimated profit and loss statements and balance sheets.

The cash budget or cash forecast does not show anticipated profit or loss, and is limited to the forecast of movements within a company's cash account. The concurrent submission of an estimated profit and loss statement covering the same period serves to tie in the anticipated cash transactions with the estimated sales and expense activity, and culminates in the estimated balance sheet position. The estimated profit and loss statement also can serve as a guide for evaluating the company's projections with respect to sales volume, cost of goods sold, gross profit and net profit in relation to the known results of past performance. The interrelationship between the cash budget, estimated profit and loss statement and estimated balance sheet, covering a given period, is illustrated by the suggested formats appearing in § 1-30.218 for use in financial projections.

made available, with appropriate protection of the Government's interest, either in connection with or independently of performance financing (see § 1-8.212-1 regarding partial payments upon termination).

§ 1-30.216 Report of adverse developments-prompt decisions.

When materially adverse developments concerning a borrower having a guaranteed loan, or concerning a contractor having advance payments or progress payments, become known to a procuring activity, pertinent facts, including information as to remedial or protective action taken or proposed, should be furnished by the procuring activity to the appropriate financing activity so that timely appropriate protective or remedial action may be taken by coordinated action of all concerned. However, the furnishing of such information does not relieve the personnel responsible for administration of the contract from taking such action as is deemed proper, prudent, and beneficial to the Government. When there are reasons to doubt the prudence of continuing progress payments or advance payments in cases involving performance difficulties or financial deterioration, decision must be made promptly and with proper regard to the harmful effects of delay on the continued operation of the contractors concerned.

§ 1-30.220

[Reserved]

Foreign procurement. This Part 1-30 applies equally to domestic and foreign procurement, with the exceptions and qualifications stated below. The enforceability of a contract provision in a foreign jurisdiction is dependent on local law and procedure. It may sometimes become necessary to take action in foreign countries to enforce collateral security or other contract financing protective provisions, or to recover property pursuant to a progress payment clause, and to collect contract financing indebtedness. In such cases, the nature and extent of remedies available for enforcement of contract provisions is necessarily determined by the laws, rules, and procedures of the country in which the relief is sought.

§ 1-30.220-1 Progress payments on contracts for foreign performance. When progress payments are contemplated for contracts to be performed wholly or partly in a foreign country, appropriate legal advice should be obtained with respect to the validity, enforceability, and effectiveness of the contemplated progress payment clause (see §§ 1-30.510-1, 1-30.510-2, and 130.511) and of any proposed guarantees, pledges, or other special protective arrangements, within the foreign country involved. Such legal advice should also cover the need, if any, for additional protective provisions (§ 1-30.511-6) or for deviations (§ 1-30.509-9) from the uniform clauses, that may be required to comply with the applicable foreign law and to provide for the most effective protection and enforcement of the interests of the United States.

§ 1-30.220-2 Advance payments on contracts for foreign performance.

When advance payments are proposed for contracts to be performed wholly or partly in a foreign country, the recommendation for advance payments (see § 1-30.412) should include appropriate legal advice as referred to in § 1-30.220-1. When advance payments are proposed to be made on contracts with foreign governments, it is expected that the advance payment arrangement, if approved, would not include provisions generally unsuitable for government-togovernment agreements, such as those for special bank accounts, unilateral withdrawal of funds, liens, insurance, additional security, or representations, warranties and covenants of the kinds set forth in §§ 1-30.414-2(p)) and 1-30.414-2(r). It is recognized that advance payments to foreign governments, when authorized, will need to be adapted to the special circumstances of each case to provide appropriate protection in the light of the relationship of the United States to each affected foreign government and with due recognition of the sovereign status of the contracting parties.

§ 1-30.220-3 Guaranteed loans for foreign contract performance.

When contracts or subcontracts are to be performed in a foreign country, financing by means of guaranteed loans

§ 1-30.221-2 Format 221-2, Interrelationship of projection of financial statements.

Liabilities;