12.210
Contract financing
Government contract financing for commercial products and services is allowed if it aligns with customary market practice and follows FAR Part 32 procedures.
Overview
FAR 12.210 addresses contract financing for commercial products and commercial services. It acknowledges that in the commercial marketplace, buyers often provide contract financing as part of standard business practice. The regulation permits contracting officers to offer Government contract financing to contractors, but only in accordance with the policies and procedures outlined in FAR Part 32. This ensures that any Government financing aligns with established rules for risk management, payment, and oversight.
Key Rules
- Customary Market Practice
- Recognizes that contract financing is common in commercial transactions for certain products and services.
- Government Financing Permitted
- Contracting officers may provide Government financing, but must follow the detailed requirements of FAR Part 32.
Responsibilities
- Contracting Officers: Must determine if contract financing is customary for the product/service and ensure any Government financing complies with FAR Part 32.
- Contractors: Should understand that Government financing is possible but subject to specific rules and may need to provide supporting documentation.
- Agencies: Must oversee that financing practices are consistent with both commercial norms and FAR Part 32 requirements.
Practical Implications
- This section allows flexibility for Government contracts to mirror commercial practices, making it easier for commercial vendors to do business with the Government.
- Contractors should be aware that while financing is possible, it is not automatic and must meet regulatory standards.
- Common pitfalls include assuming financing will be provided without following FAR Part 32 or failing to document customary market practices.