i) By means of cheques payable to the Treasurer of the United States and signed solely by the countersignature agency, withdraw the balance or part of the balance of the special account and apply the amounts to reduce unpaid advance payments and other government claims against the Contractor. In addition to a primary privilege on your particular bank account, the government is protected by a primary privilege on all materials, supplies, equipment and other things purchased for the contract. You are required to identify and separate all equipment and deliveries that are subject to the privilege. The Government may, in its sole discretion, require additional guarantees in the form of personal or corporate notes or guarantees, pledges of guarantees, subordination to other debts, or restrictions on, for example, profit distributions, salaries, bonuses and capital expenditures. In rare cases, a deposit may be requested. (2) The interest costs resulting from the monthly calculation shall be deducted from the payments due to the contractor, with the exception of advance payments. If accrued interest exceeds the payment due, the excess interest is carried forward and deducted from subsequent payments. Interest deferrals are not compounded. Interest on advance payments will no longer accrue once the contract has been satisfactorily concluded or terminated for government reasons. The Contractor charges interest on advance payments to subcontractors in the manner described above and credits the interest to the Government. There is no need to charge interest on advance payments to non-profit teaching or research subcontractors for experimental, development or research work. In the commercial market, the financing is the responsibility of the entrepreneur. However, in some cases, it is common for the buyer to provide financing.
If it is in the best interests of the government, commercial interim payments and commercial advance payments may be approved in accordance with Part 32 of the FAR. The contract agent may either indicate the form of financing available in the invitation or allow the tenderer to propose it. Contractors should be reminded of the abolition of the ”costs paid” rule – Large contractors (small contractors were exempt) could not record costs incurred for the purpose of accounting for advancement unless they were actually paid. As a result, subcontractors were ”advanced” (paid) before they could make an initial payment. Although this cost-paid rule has recently been abolished, ”costs incurred” can now be submitted for advance payment as long as the contagion is in accordance with the contractor`s procedures for cost recognition – the Standard Form (SF) 1443 used to represent progressive payment claims has not been modified to reflect this new rule change. (a) the terms of payment. Advance payments shall be made under this contract (1) on presentation of invoices or supporting documents duly certified by the Contractor and approval by the administrative body, ____ [insert name of designated body in Agency procedures] or (2) after a letter of credit. The amount of the invoice or voucher submitted plus any previously approved advance payment may not exceed _______ The Contractor shall apply conditions similar to this clause to any advance payment to subcontractors. (8) These assurances will continue and will be deemed repeated when each advance payment invoice is submitted.
(7) All information provided by the contractor to the office in respect of each application for advance payment is true and accurate. (i) advances shall be considered as an increase in the unliquidated balance at the time of the control of the advance payment; (iii) require the Contractor to reimburse immediately any unpaid instalments. Progress payments are periodic payments made by the government as the contract is performed. Such payments shall be based either on the costs incurred by the contractor or on a percentage of the completion phase carried out under the contract. Performance-based payments are contractual financing payments of predetermined amounts made when a contractor meets predefined contractual events or criteria. These are not payments for accepted items, but advances based on the work done. Procedural cost-based payments can be ”routine” or ”inappropriate”. Current advance payments are those made under the general guidelines of FAR 32.5 where there is a progressive payment rate, a cost payment and a frequency of payments specified in the progress payment clause of the contract. All other payments are considered ”unusual”. These unusual payments may result in a higher progressive payment rate or frequency than usual and are usually only available if there are significant expenses prior to delivery or if the contractor fully documents the need for unusual payments.
In order to liquidate the principal amount of an advance payment made to the contractor, deductions of ____ per cent are made on all payments made by the Government under the relevant contracts. Variant I (April 1984). If, due to the contractor`s financial strength, good track record and positive experience with cost variances, the Agency wishes to waive the countersignature requirement, please add the following sentence to paragraph (b) of the basic clause, if necessary: However, this contract does not require a countersignature on behalf of the government, unless the administrative body deems it necessary. Alternate II (May 2001). If used in a repayment contract, replace points (c) and (e) and points (f)(1) and (f)(2) with points (c) and (e) and paragraphs (f)(1) and (2) of the basic clause: (c) use of funds. The Contractor may withdraw funds from the Special Account only to pay the eligible costs in accordance with clause ___ of this Agreement. Payment of all other types of expenditure must be approved in writing by the administrative body. e) Maximum payment.
If the sum of all unprocessed advance payments, unpaid interest charges and other payments is equal to the estimated total cost of $___ (excluding lump sums) for the work under this Agreement, the Government will withhold the additional payments to the Contractor. Upon conclusion or termination of the contract, the government deducts from the amount due to the contractor the advance payments and unpaid interest charges. The contractor must pay any default to the government upon request. For the purposes of this paragraph, the estimated costs shall be considered as the estimated costs reported minus any subsequent reduction in the estimated costs plus any increase in the estimated costs that does not exceed ____ in total [Insert an amount not exceeding 10 % of the estimated costs declared inserted in this paragraph]. Estimated costs include, but are not limited to, all reimbursable costs (as estimated by the contract agent) associated with termination for the convenience of government. All payments withheld under this paragraph shall be used to reduce unprocessed advances. When the complete liquidation has taken place, the contract payments will be resumed. (f) interest.
1. The Contractor shall pay interest to the Government on unpaid daily advance payments up to the daily rate referred to in point 3 of paragraph (f) of this clause. Interest is calculated at the end of each calendar month for the actual number of days affected. When calculating interest charges, the following should be taken into account: (i) Advance payments are considered to be an increase in the unliquidated balance at the time of the prepayment check. (ii) refunds made by the control of the contractor shall be deemed to constitute a reduction in the unliquidated balance from the date of receipt of the cheque by the governmental authority designated by the contracting authority. (iii) Liquidations by deduction of payments to the Contractor shall be considered as a reduction of the unliquidated balance from the moment the Contractor provides the Customer with complete and accurate data for the preparation of each certificate. Credits resulting from these deductions will be issued after approval of the reimbursement receipts by the payment agent on the basis of the applicable data officer`s certificate. . . .