32.202
General
FAR 32.202 establishes the foundational policies and procedures for Government financing of commercial product and service purchases, emphasizing market research and risk management.
Overview
FAR 32.202 serves as the general introduction to the rules governing financing for commercial product and commercial service purchases under Subpart 32.2. It outlines the foundational policies, types of payments available, the importance of market research on financing terms, and requirements for security when the Government provides financing. This section sets the stage for more detailed requirements in subsequent sections, ensuring that both contracting officers and contractors understand the general framework for commercial item financing in federal contracts.
Key Rules
- Policy Overview
- Establishes the Government's approach to providing financing for commercial product and service acquisitions.
- Types of Payments
- Identifies allowable payment methods, such as advance payments and installment payments, for commercial purchases.
- Market Research
- Requires market research to determine customary commercial financing terms and conditions.
- Security for Financing
- Addresses the need for security or collateral when the Government provides financing to contractors.
Responsibilities
- Contracting Officers: Must ensure compliance with policies, select appropriate payment types, conduct market research, and secure Government interests when providing financing.
- Contractors: Should be aware of the types of financing available and be prepared to provide security if required.
- Agencies: Oversee adherence to financing policies and ensure proper risk management.
Practical Implications
- This section exists to promote sound financial practices and risk mitigation in commercial item contracting.
- It impacts daily contracting by requiring due diligence in payment structuring and risk assessment.
- Common pitfalls include failing to conduct adequate market research or neglecting to secure Government interests when providing financing.