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techo receipts for the contract period, cash receipts in
ated estimated Profit and Loss State- billings to custom
informed judgment as to the cash re
those items which are appropriate to the amounts, and unliquidated advance or particular case will be required.
progress payments, and also indicating (a) Balance sheet and profit and loss bids outstanding and contemplated and statement for the most recent fiscal explanation concerning contracts under year prepared and certified by an inde negotiation; pendent public accountant (including his (f) Cash forecast, showing estimated comments, if any), and, if available, disbursements and receipts for the period similar financial data for the two previ or periods involved (see 88 1-30.2141 ous years; also latest available interim and 1-30.214-2); balance sheet and profit and loss state (g) Estimated profit and loss statement of the current fiscal year; also a ments and estimated balance sheets (see separate statement of amounts of de $ 1-30.214-3); fense and commercial sales. If audit re (h) Comparison of past financial reports are not available, then correspond sults with estimates previously furnished ing statements should be submitted, by the contractor; certified by an authorized officer, part (1) Credit agency ratings of the conner, or individual proprietor as truly and tractor, and, when significant, credit fully setting forth the financial condition
agency ratings of principal subcontracand operating results of the applicant; tors and of principal business customers also, if a proprietorship, partnership or (defense and commercial) of the conjoint venture, personal financial state tractor; ments of the proprietor, partners, or (j) Existing and contemplated credit members of the joint venture and de or financing arrangements, names of scription of individual liabilities of the parties and relationship, if any, to conpartners or members of the joint venture tractor, amounts available or to be availon contracts of the partnership or joint able, periods of availability, and required venture;
or contemplated payments, including: (b) Summary history of the contrac (1) Loans and credits; tor and his principal management per (2) Advances and progress payments sonnel, indicating particularly any past (3) Projected equity capital increases; insolvencies of the contractor, or a pred (4) Deferred trade credit, if any, ecessor, or of the officers, partners, or (5) Creditor subordinations or standproprietors; also, a description of his bys; and products or services; (c) Statement of all affiliates of the
(6) Mortgages, liens, pledges, asslgncontractor, showing financial interests
ments, conditional sales, lease-purchases, of the contractor in affiliates and of
hypothecations, and other encumbrances affiliates in the contractor, and also
or security arrangements, both existing mutual officers, directors, and major
and contemplated. stockholders or owners, and disclosing
(k) Status of all tax accounts, particcharacter and amount of business trans
ularly Federal income, excise, and withactions with affiliates or with officers,
holding taxes, and social security taxes directors, major stockholders or owners
or contributions (including verification of the contractor, or his affiliates; also.
with Internal Revenue Service, when 1f & corporation, a list of major stockholders, and shares held:
appropriate) with special attention to (d) Statement of compensation pay
the matter of Federal tax delinquencles able to each officer, partner, proprietor,
(which are covered by the lien and right and principal executive, and to each key
of distraint and levy provided by sections employee receiving comparable compen
6321 and 6331 of the Internal Revenue sation, including bonus, commission, and
Code) ; profit-sharing arrangements, together
(1) Appropriate information, explana. with similar data for the past 2 years;
tion and schedules to indicate: also past and projected dividends, unless
(1) Leases, deferred purchase ar. rangements, and patent or royalty are rangements, outlining terms and showing relationship, if any, of other parties to the contractor;
(2) Insurance maintained and to be maintained;
and cash or credit n (3) Contemplated capital expendi
excess of projected tures, debt reduction or retirement, and
projected receipts. acquisitions of capital stock;
useful or necessar
should be requested
such projections rea
to have prepared su ranties, surety bonds, and material liti sistance to their pre gatlon pending or threatened;
ties and delays in (0) Aging and colectiblllty of AC quality of the proje comnts and notes receivable, status of unreasonable or un disputed receivables, Identlfication of any In their preparation amounts included in receivables but not warning signals ti currently due and payable;
planning has been (9) Obsolescence of inventory and significant financia method of valuing Inventory;
encountered during (10) Aging of accounts and notes pay. period of contract oble
, identifying major creditors and Interest rates and other charges, if any
8 1-30.214–2 Rea! und status of significant disputed Items:
Cash forecasts c
more reliable an
casts are based. Ea (1) Inventory to annual sales;
related projection (2) Inventory to current assets;
Important underly 3) Liquid assets to current assets;
more important (4) Liquid assets to current liabilitles.
are: (5) Current assets to current liabil.
(a) Estimated a purchases of mat nents, subassembli ments therefor;
(b) Estimated a purchases of mach
tion of special to
(d) Projected duction schedules
(e) Projected acceptances;
(6) Net worth to debt.
(0) Other facts that may be appro.
estimated financial statements.
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
seats and estimated Balance Sheets
(8) Estimated cash receipts f credit sources, a and
(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 pay. able, 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.
(5) Current assets to current liabll. Ities; 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 im. portant 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 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. 8 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:
(1) 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
involved. Such legal advice should also warranties and cove cover the need, if any, for additional set forth in $$ 1-30. protective provisions ($ 1-30.511-6) or 414–2(r). It is recog for deviations (f 1–30.509-9) from the payments to foreign uniform clauses, that may be required to authorized, will need comply with the applicable foreign law special circumstance and to provide for the most effective provide appropriate protection and enforcement of the in- light of the relatior terests of the United States.
States to each affec
ment and with due 11-30.220–2 Advance payments on con.
sovereign status of tracts for foreign performance.
§ 1-30.220–3 Guar partly in a foreign country, the recom
eign contract pe mendation for advance payments (see
When contracts o 11-30.412
) should include appropriate be performed in a Legal advice as referred to in $ 1-30.220–1. nancing by means When advance payments are proposed seldom will be pra to be made on contracts with foreign difficulties of loan governments, it is expected that the ad- enforcement. Whe Tabse payment arrangement, if ap- utilized for financi proved, would not include provisions
or subcontracts, it penerally unsuitable for government-to- ally preferably tha Provernment agreements, such as those vided within the Se special bank accounts, unilateral Thdrawal of funds, liens, insurance,
system of the foreig
without the guara. utritional security, or representations,
assumptions underiying caso forecasts should be checked, as may be gradient
progress payments, become known to in the circumstances of the case, for res.
procuring activity, pertinent facts, In
doding information as to remedial or sonsbleness sed realis. This checs. ing should be done with the contractor.
protective action taken or proposed,
should be furnished by the procuring with Government personnel responsible activity to the appropriate financing in the areas of engineering, production activity so that timely appropriate proscheduling, cost and price analysis, and tective or remedial action may be taken with others including prospective sup to coordinated action of all concerned piy. subcontract, and loer a credit sources).
However, the furnishing of such infor
mation does not relieve the personnel $ 1-30-2143 Estimated profit and loss
responsible for administration of the statements and balance sheets
contract from taking such action as is The cash budget or cash forecast does
deemed proper, prudent, and beneficial not show anticipated profit or loss, and
to the Government. When there are rea. is imited to the forecast of movements
sors to doubt the prudence of continuwithin a company's cash account. The
ing progress payments or advance pay. concurrent submission of an estimated
ments in cases involving performance profit and loss statement covering the
disficulties or financial deterioration
. same period serves to the in the antici
decision must be made promptly and peted cash transactions with the esti
with proper regard to the harmful elmated sales and expense activity, and
fects of delay on the continued operaculminates in the estimated balance
tion of the contractors concerned. sheet position The estimated profit and
$S 1_30.217–1-30.219 [Reserved] loss statement also can serve as & guide $ 1-30.220 Foreign procurement. for evaluating the company's projections with respect to sales volume, cost
This Part 1-30 applies equally to doof goods sold, gross profit and net profit
mestic and foreign procurement, with in relation to the known results of past
the exceptions and qualifications stated performance. The interrelationship be
below. The enforceability of a contract tween the cash budget, estimated profit
provision in a foreign jurisdiction is de and loss statement and estimated bal
pendent on local law and procedure
. It ance sheet, covering a given period, is
may sometimes become necessary to Hlustrated by the suggested formats ap
take action in foreign countries to en pearing in § 1-30.218 for use in financia)
force collateral security or other comprojections.
tract financing protective provisions, or $ 1-30.215 Termination financing.
to recover property pursuant to a proe. It is recognized that adequate protec
ress payment clause, and to collect com.
tract financing indebtedness. In such tion against the financial Impact of ter
cases, the nature and extent of remedies mination of Government contracts and
available for enforcement of contrad subcontracts will tend to encourage con
provisions is necessarily determined to tractors to invest their own funds in
the laws, rules, and procedures of the performance under such contracts. Ac
country in which the relief is sought cordingly, termination financing may be made available, with appropriate pro
§ 1-30.220–1 Progress payments tection of the Government's Interest, either in connection with or inde
When progress payments are conte pendently of performance financing (see § 1-8.212-1 regarding partial payments upon termination). § 1-30.216 Report of adverse develop
tained with respect to the validity,
forceability, and effectiveness of the ments-prompt decisions. When materially adverse developments concerning a borrower having a
30.511) and of any proposed guarantea guaranteed loan, or concerning a contractor having advance payments or
plated for contracts to be performed
contemplated progress payment cisa
pledges, or other special protective
involved. Such legal advice should also cover the need, if any, for additional protective provisions (8 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 con.
tracts 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 for.
eign contract performance. When contracts or subcontracts are to be performed in a foreign country, financing by means of guaranteed loans seldom will be practicable because of difficulties of loan administration and enforcement. When loans are to be utilized for financing of such contracts or subcontracts, it is considered generally preferably that the loans be provided within the internal financial system of the foreign country concerned, without the guarantee of the procuring agency.