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(Revised December 15, 2003)



 232.102 Description of contract financing methods
 232.102-70 Provisional delivery payments
 232.108 Financial consultation
 232.111 Contract clauses for non-commercial purchases.

232.102  Description
of contract financing methods.


      (e)(2)  Progress payments based on percentage or stage of completion are authorized only for contracts for construction (as defined in FAR 36.102), shipbuilding, and ship conversion, alteration, or repair.  However, percentage or stage of completion methods of measuring contractor performance may be used for performance-based payments in accordance with FAR Subpart 32.10.


232.102-70  Provisional delivery payments.


      (a)  The contracting officer may establish provisional delivery payments to pay contractors for the costs of supplies and services delivered to and accepted by the Government under the following contract actions, if undefinitized:


              (1)  Letter contracts contemplating a fixed-price contract.


              (2)  Orders under basic ordering agreements.


              (3)  Spares provisioning documents annexed to contracts.


              (4)  Unpriced equitable adjustments on fixed-price contracts.


              (5)  Orders under indefinite-delivery contracts.


      (b)  Provisional delivery payments shall be—


              (1)  Used sparingly;


              (2)  Priced conservatively; and


              (3)  Reduced by liquidating previous progress payments in accordance with the Progress Payments clause.


      (c)  Provisional delivery payments shall not—


              (1)  Include profit;


              (2)  Exceed funds obligated for the undefinitized contract action; or


              (3)  Influence the definitized contract price.


232.108  Financial consultation.

See 232.070 for offices to be consulted regarding financial matters within DoD.


232.111  Contract clauses for non-commercial purchases.


      (b)  Use the clause at FAR 52.232-7, Payments under Time-and-Materials and Labor-Hour Contracts, with 252.232-7006, Alternate A, in solicitations and contracts when a time-and-materials or labor-hour contract is contemplated.


              (i)  Alternate A permits the administrative contracting officer (ACO) to withhold 5 percent of the amounts due until a reserve is set aside in an amount the ACO considers to be necessary, but not to exceed $50,000, to protect the Government’s interests.


              (ii)  Normally, there should be no need to withhold payment for a contractor with a record of timely submittal of the release discharging the Government from all liabilities, obligations, and claims.


              (iii)  If the ACO determines that it is necessary to withhold payment to protect the Government’s interests, the ACO shall unilaterally issue a modification requiring the contractor to withhold 5 percent of amounts due, up to a maximum of $50,000.  The ACO shall ensure that the modification specifies the percentage and total amount of the withhold.

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