Subpart 1-30.3-[Reserved] Subpart 1-30.4-Advance Payments § 1-30.400 Scope of subpart. (a) This subpart covers policies and procedures for advance payments on prime contracts, including advance payments on subcontracts under all types of prime contracts. It applies to all advance payments hereafter authorized pursuant to any legislation or other authority, except as provided in § 1-30.419. It is to be applied in conformity to the policies stated in Subpart 1-30.2. (b) The policies, standards and procedures of this subpart 1-30.4 are applicable to advance payments to subcontractors under all prime contracts, including fixed-price types and cost-reimbursement types of prime contracts. For the prime contractor to receive advances to, in turn, advance to subcontractors, or in order for the prime contractor to be reimbursed for advances to the subcontractor, it is required that the prime contract make provision for advance payments conforming to the regulations in this part, with appropriate provision for advance payments by the prime contractor to subcontractors or suppliers (see § 130.414-2(q)). § 1-30.401 Types of contracts that may have advance payments. (a) Advance payments may be made on any approved type of contract. (b) In view of the nonprofit position of educational institutions, and the Government objective of strengthening the research capabilities of these institutions, all agencies shall make advance payments to them in reasonable amounts on contracts for research, whenever practical, in all cases where the agency is authorized by law to do so. (See §§ 1-30.403, 1-30.404, and 1-30.408.) [47 FR 57027, Dec. 22, 1982] § 1-30.402 Advance payments in addition to progress or partial payments. Where necessary and in accordance with this Part 1-30, advance payments may be authorized in addition to prog ress or partial payments on the same contract (see § 1-30.508). § 1-30.403 Interest. (a) Interest will be charged on the unliquidated balance of all advance payments at the rate established by the Secretary of the Treasury pursuant to Pub. L. 92-41, 85 Stat. 97, for the Renegotiation Board. The rate in effect at the time the advance payment is authorized shall be used throughout the term of repayment for advances made under this Subpart 130.4. However, advance payments may be approved without interest in connection with contracts with nonprofit educational or research institutions for experimental, developmental, or research work (including studies, surveys, and demonstrations in socio-economic areas), or contracts solely for the management and operation of Government-owned plants, or, in other classes of cases when specifically authorized by agency procedure. In this connection, contracts for acquisition of facilities at cost, for Government ownership, in combination with or in contemplation of supply contracts or subcontracts, will be treated as contracts requiring interest on advance payments. This interest rate applies to increases and extensions. (b) Contracts with interest-free advance payments should provide that the contractor will charge interest at the rate established by the Secretary of the Treasury pursuant to Pub. L. 92-41 on subadvances or downpayments to subcontractors, and that interest charged on such subadvances or downpayments will be credited to the account of the Government. However, interest need not be charged on subadvances on subcontracts with nonprofit educational or research institutions for experimental, developmental, or research work (including studies, surveys, and demonstrations in socio-economic areas). (c) Interest on advance payments will not be allowed as a cost under any cost-reimbursement type contract nor cost-reimbursement subcontract thereunder, and no such contract or subcontract may provide or be amended to 13-132 0-83--26 provide for allowance of such interest as an item of cost. (d) Interest rates established by the Secretary of the Treasury pursuant to Pub. L. 92-41, 85 Stat. 97 may be obtained from the Chief, Investment Branch, Bureau of Government Financial Operations, Department of the Treasury, Washington, DC 20220, Telephone (202) 964-5651. [29 FR 10356, July 24, 1964, as amended at 40 FR 43729, Sept. 23, 1975] § 1-30.404 Standards-amounts-need. (a) Advance payments should be used sparingly and care should be taken to see that advances outstanding are sufficient for but do not exceed the actual reasonable requirements for the contract. The amount of the advance payment in any case should be based upon an analysis of the cash flow required under the contract, and as a general rule should not exceed the interim cash needs arising during the reimbursement cycle. (b) Generally, except for (1) contracts with nonprofit educational or research institutions for experimental, developmental, or research work, and (2) contracts solely for the management and operation of Governmentowned plants, advance payments should not be authorized unless no other means of adequate financing is available to the contractor (not including loans or credit (i) at excessive interest rates or other exorbitant charges, or (ii) from other agencies of the Government), and the amount of the authorization is predicated upon use of the contractor's own working capital to the extent possible. [29 FR 10356, July 24, 1964, as amended at 40 FR 43729, Sept. 23, 1975] § 1-30.405 Statutory requirements. The statutes authorizing advance payments apply equally to negotiated contracts and contracts awarded or to be awarded by formal advertising. Accordingly, advance payments under either method of contracting may be made only upon the following conditions: (a) The contractor shall give adequate security (see § 1-30.413); (b) The advance payments shall not exceed the unpaid contract price; (c) A determination shall be made by the agency head, or his authorized delegatee (see § 1-30.406), that the making of the advance payment is in the public interest when the action is pursuant to the authority of section 305 of the Property Act or 10 U.S.C. 2307, and such determination shall be based upon written findings (see § 130.410); or (d) A determination shall be made by the agency head, or his authorized delegatee (see §§ 1-30.406 and 117.301), that the making of the advance payment will facilitate the national defense when the action is pursuant to the Act of August 28, 1958, Public Law 85-804 (50 U.S.C. 14311435), hereinafter referred to in this Part 1-30 as "the Act," and Executive Order No. 10789 (see Part 1-17) and such determination shall be based upon written findings (see § 1-30.410). § 1-30.406 Responsibility-delegation authority. of Each agency, utilizing section 305 of the Property Act or other authority for advance payments, should provide by agency procedure that: (a) The responsibility and authority for making findings and determinations with respect to advance payments, and in each case for approval of contract provisions for advance payments, or for approval of the terms and conditions thereof (see § 1-30.410), shall be exercised at an organizational level sufficiently high to assure uniform application of the policies set forth in this Part 1-30; and (b) Prior to committing the Government to the making of an advance payment, the approving agency official shall obtain the advice and concurrence of the head (or an authorized alternate) of the activity which is required to provide contract finance advice and assistance to the procuring activity. [31 FR 349, Jan. 12, 1966] |