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(Revised December 20, 2005)



 232.501 General.
 232.501-1 Customary progress payment rates.
 232.501-2 Unusual progress payments.
 232.501-3 Contract price.
 232.502 Preaward matters.
 232.502-1 Use of customary progress payments.
 232.502-4 Contract clauses.
 232.502-4-70 Additional clauses.
 232.503 Postaward matters.
 232.503-6 Suspension or reduction of payments.
 232.503-15 Application of Government title terms.

232.501  General


232.501-1  Customary progress payment rates.


      (a)  The customary progress payment rates for DoD contracts, including contracts that contain foreign military sales (FMS) requirements, are 80 percent for large business concerns, 90 percent for small business concerns, and 95 percent for small disadvantaged business concerns.


232.501-2  Unusual progress payments.

Follow the procedures at PGI 232.501-2 (Pop-up Window or PGI Viewer Mode) for approval of unusual progress payments.


232.501-3  Contract price.


      (b)  The contracting officer may approve progress payments when the contract price exceeds the funds obligated under the contract, provided the contract limits the Government’s liability to the lesser of—


              (i)  The applicable rate (i.e., the lower of the progress payment rate, the liquidation rate, or the loss-ratio adjusted rate); or


              (ii)  100 percent of the funds obligated.


232.502  Preaward matters.


232.502-1  Use of customary progress payments.


      (b)(1)  If the contractor is a small disadvantaged business, progress payments may be provided when the contract will involve $50,000 or more.


232.502-4  Contract clauses.


232.502-4-70  Additional clauses.


      (a)  Use the clause at 252.232-7002, Progress Payments for Foreign Military Sales Acquisitions, in solicitations and contracts that—


              (i)  Contain FMS requirements; and


              (ii)  Provide for progress payments.


      (b)  Use the clause at 252.232-7004, DoD Progress Payment Rates, instead of Alternate I of the clause at FAR 52.232-16, if the contractor is a small business or small disadvantaged business concern.


232.503  Postaward matters.


232.503-6  Suspension or reduction of payments.


      (b)  Contractor noncompliance.  See also 242.7503.


      (g)  Loss contracts.  Use the following loss ratio adjustment procedures for making adjustments required by FAR 32.503-6(f) and (g)—


              (i)  Except as provided in paragraph (g)(ii) of this subsection, the contracting officer must prepare a supplementary analysis of the contractor's request for progress payments and calculate the loss ratio adjustment using the procedures in FAR 32.503-6(g).


              (ii)  The contracting officer may request the contractor to prepare the supplementary analysis as an attachment to the progress payment request when the contracting officer determines that the contractor's methods of estimating the “Costs to Complete” are reliable, accurate, and not susceptible to improper influences.


              (iii)  To maintain an audit trail and permit verification of calculations, do not make the loss ratio adjustments by altering or replacing data on the contractor's original request for progress payment (SF 1443, Contractor's Request for Progress Payment, or computer generated equivalent).


232.503-15  Application of Government title terms.


      (d)  An administrative contracting officer (ACO) determination that the contractor's material management and accounting system conforms to the standard at 252.242-7004(e)(7) constitutes the contracting officer approval requirement of FAR 32.503-15(d).  Prior to granting blanket approval of cost transfers between contracts, the ACO should determine that—


              (i)  The contractor retains records of the transfer activity that took place in the prior month;


              (ii)  The contractor prepares, at least monthly, a summary of the transfer activity that took place in the prior month; and


              (iii)  The summary report includes as a minimum, the total number and dollar value of transfers.




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