32.114
Unusual contract financing
Unusual contract financing requires explicit approval from the agency head or as specified in agency regulations before it can be used.
Overview
FAR 32.114 addresses the use of unusual contract financing arrangements—those that deviate from the standard financing methods outlined in FAR Part 32. Such arrangements are not the norm and require special scrutiny and approval. The regulation mandates that any unusual contract financing must be explicitly authorized by the head of the agency or in accordance with specific agency regulations. This ensures that exceptions to standard financing are carefully considered and controlled, minimizing risk to the government and ensuring compliance with federal acquisition policies.
Key Rules
- Definition of Unusual Contract Financing
- Any contract financing arrangement that does not follow the standard procedures in FAR Part 32 is considered unusual.
- Approval Requirement
- Unusual contract financing can only be used if approved by the head of the agency or as specified in agency regulations.
Responsibilities
- Contracting Officers: Must identify when a proposed financing arrangement is unusual and seek the required approvals before proceeding.
- Contractors: Should be aware that requests for non-standard financing will trigger additional scrutiny and require higher-level approval.
- Agencies: Must establish clear procedures for reviewing and approving unusual contract financing, and ensure compliance with FAR and agency-specific rules.
Practical Implications
- This section exists to prevent unauthorized or risky financing arrangements that could expose the government to unnecessary financial risk.
- It impacts daily contracting by requiring extra steps and approvals for any deviation from standard financing.
- Common pitfalls include failing to recognize when a financing arrangement is unusual or neglecting to obtain the necessary approvals, which can result in contract delays or compliance violations.