32.304-1
Application for guarantee
FAR 32.304-1 establishes the step-by-step process for contractors to obtain a Government guarantee for loans needed to perform national defense contracts, ensuring timely financing and Government risk protection.
Overview
FAR 32.304-1 outlines the process for contractors, subcontractors, or suppliers seeking a Government guarantee for loans needed to perform national defense contracts. If a financing institution requires a Government guarantee to extend credit, it can apply through the Federal Reserve Bank, which coordinates with the Federal Reserve Board and the relevant guaranteeing agency. The process includes application submission, contract listing, eligibility determination, and credit investigation to ensure both timely defense financing and protection against Government loss. The Federal Reserve Bank plays a central role in facilitating communication and conducting due diligence before a guarantee is issued.
Key Rules
- Application for Guarantee
- Contractors needing operating funds for defense contracts may apply for a Government guarantee through their financing institution and the Federal Reserve Bank.
- Transmission of Application
- The Federal Reserve Bank forwards the application and contract list to the Federal Reserve Board, which then sends it to the guaranteeing agency for eligibility review.
- Expedited Processing
- The Federal Reserve Bank may send contract lists directly to contracting officers to speed up the process.
- Credit Investigation
- The Federal Reserve Bank conducts credit investigations to support defense financing and protect the Government.
- Reporting and Recommendation
- The Federal Reserve Bank submits its findings and recommendations to the Federal Reserve Board, which relays them to the guaranteeing agency.
Responsibilities
- Contracting Officers: Review contract lists and assist in eligibility determinations as needed.
- Contractors: Apply for guarantees through financing institutions and provide necessary contract information.
- Agencies: Determine eligibility and oversee the guarantee process.
Practical Implications
- This regulation ensures contractors can access necessary financing for defense contracts by providing a clear process for obtaining Government loan guarantees.
- Timely and accurate submission of information is critical to avoid delays.
- Contractors should be prepared for credit investigations and provide complete contract details to facilitate the process.