PART 9-30 CONTRACT FINANCING

$9-30.000 Scope of part.

This part implements and supplements FPR Part 1-30 for use in the placement and administration of contracts for the procurement of materials and services by or for the account of DOE.

Subpart 9-30.1 Forms of Financing

$9-30.102 Guaranteed loans-description.

The following implements the FPR stating DOE procedure, criteria, and policies:

(a) Procedure. The procedure for obtaining a guaranteed loan is essentially the same as the procedure for obtaining a conventional loan. The contractor or prospective contractor requiring additional funds to perform the contract applies to its bank for a loan or credit of the required amount. The amount may be such that the bank can grant the loan for its own account. However, if for any reason the bank deems it necesssary to require a guarantee, the bank may apply to DOE through the appropriate Federal Reserve Bank for the required guarantee. DOE certification of guaranteed loan applications shall be made only by the Head of the Agency or designee authorized for that purpose.

(b) Criteria. The following criteria apply to the approval of guaranteed loans by DOE: (1) The materials or services to be furnished by the contractor are necessary to the Government's interest.

(2) Such materials or services cannot practicably be obtained from alternate sources without delaying or impeding the Government's interest, except that no small business concern shall be held ineligible for the issuance of such guarantee by reason of alternative sources of supply.

(3) The contractor has demonstrated its inability to obtain the necessary financing in conventional credit channels without the guarantee.

(4) There is reasonable assurance that the loan can be repaid.

(5) The contractor is competent to perform the contract. Eligibility under subparagraphs (1), (2), and (5) of this paragraph is determined on the basis of findings by the appropriate procuring activity. Eligibility under subparagraphs (3) and (4) of this paragraph is determined by the Controller, based on information contained in the application, the Federal Reserve Bank's report, and information furnished by the procuring activity concerned.

(c) Policies. The following policies governing the exercise of its loan guarantee authority have been established by DOE:

(1) The use of the loan guarantee authority is not restricted to contracts or subcontracts of any particular types or classes. Each case is to be evaluated on its own merits and under the particular circumstances applicable thereto.

(2) The fact that a contract has been awarded as a result of competitive bidding should not, of itself, render the loan ineligible for guarantee by DOE if the contractor is financially responsible and its need for working capital is the result of the impact of the defense program or any other DOE program for which guaranteed loans are authorized.

(3) The guarantee authority should, in general, not be used in connection with loans to contractors required to furnish performance bonds, except in those cases in which the time likely to be required for the surety or DOE to take over in the event of default will result in delays

which cannot be tolerated by the particular program concerned. When performance bonds have been furnished, the surety shall be required to subordinate its rights in favor of the guaranteed loan.

(4) The criterion that the materials or services to be provided cannot readily be procured from alternative sources does not require the finding that the materials or services are absolutely unobtainable elsewhere. The criterion should be so applied as to permit guarantees of loans when, although the materials or services can be obtained elsewhere, such factors as the urgency of supply schedules, technical capacity of the contractor, comparative prices, and time and expense involved in re-issuing the contract, including termination payments, establish that it is to the Government's advantage not to resort to alternative sources merely because the contractor or subcontractor may require a guaranteed loan.

(5) If it is known at the time the contract is to be awarded that the low offeror who is technically qualified and competent to furnish the required materials and services will require a guaranteed loan, the Contracting Officer should obtain appropriate staff advice and in reaching a decision should consider at least the following:

(i) The savings to be realized by awarding the contract to the low offeror;

(ii) The risk to the Government in guaranteeing a loan; and

(iii) The likelihood, if award is made to the second low offeror, of his applying for

a guaranteed loan at a later date.

Extreme care should be exercised in rejecting a low bid or proposal simply because the low offeror requires a guaranteed loan.

(6) The amount of the loan should bear reasonable relationship to the value and terms of the contract, the probable investment required to be made by the contractor in payrolls and inventories, etc., the frequency with which contract payments are to be made, and the borrower's current working capital position.

(7) Borrowings for working capital purposes under guaranteed loans shall be limited to the amount necesssary to perform the contracts for which the loan is sought. In order that the contractor will also use its own funds in the performance of the contracts, amounts outstanding under the loan or line of credit shall be limited to an amount not to exceed 90 percent of the borrower's investment in its contracts, regardless of the total amount of the loan or line of credit authorized. The borrower's investment includes all items for which the borrower would be entitled to payment on performance or termination of contracts, but does not include any items for which no work has been done nor expenditures made.

(8) Unless there are exceptional circumstances, the loan should mature not later than 30 days after the estimated date of final payment under the contract.

§9-30.109 Partial payments-description.

Partial payments, as a financing device, may be used in conjunction with other methods of financing, such as guaranteed loans.

Subpart 9-30.2 Basic Policies

§9-30.209 Order of preference.

(a) With respect to cost-reimbursement type procurement geneally, Contracting Officers shall require contractors to employ private financing with or without assignment of contract payments (FPR Subpart 1-30.7). Periodic interim reimbursement on account of incurred cost and payment of fixed fee (if any) will normally be made, reducing the amount of necessary financing for working capital (§9-7.202-4). In some instances, where no other means of adequate financing is available on reasonable terms, DOE may approve (in order of preference) a guaranteed loan or an advance payment for performance of the contract.

(b) Partial payment, as provided for in the standard form of supply contract (FPR 116.901-32), should be considered as a form of contractor financing in the second place in the order of preference.

Subpart 9-30.4 Advance Payments

§9-30.400 Scope of subpart.

This subpart does not apply to financing arrangements for contracts with DOE prime operat ing and on-site service contractors, who are financed through special arrangements.

§9-30.403 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; however, advance payments may be made without interest:

(1) Pursuant to FPR 1-30.403;

(2) In CPFF contracts for construction or engineering service; or

(3) Where the contract provides that title to the advance funds has been retained by the Government (§9-50.704-18).

§9-30.404 Standards-amounts-need.

The total advance payment shall not exceed 90 percent of the value of the uncompleted portion of the contract and shall not include any portion of the anticipated profit or the fixed fee.

§9-30.406 Responsibility-delegation of authority.

The Head of the Procuring Activity or designee shall have the responsibility and authority for making the findings and determinations referenced in FPR 1–30.406.

Subpart 9-30.5 Progress Payments Based on Costs

$9-30.501 Percentage or stage of completion.

In accordance with FPR 1-30.501, the Head of the Procuring Activity may authorize progress payments based on a percentage or stage of completion.

§9-30.505 Unusual progress payments-standards-procedures.

Requests for unusual progress payments shall be submitted to the Head of the Procuring Activity for approval. The HPA shall forward all requests which are considered favorable, with supporting information, to the Senior Procurement Official, Headquarters, who, with the concurrence of the Controller, will grant final approval.

$9-30.517 Contract financing office clearance.

The prior approval specified here shall be obtained from the Senior Procurement Official, Headquarters, who with the concurrence of the Controller, will grant final approval.

§9-30.528 Consideration for amendments providing for progress payments.

To the extent applicable and appropriate, these provisions may also relate to a partial payments clause. If justified, an amendment for this purpose may be made without consideration, pursuant to FPR Part 1-17 and Part 9-17. When any such amendment is made, the consent of sureties, if any, should be obtained.