32.304-4
Guarantee amount and maturity
Agencies and contractors can adjust loan guarantee amounts or maturity dates for defense production contracts, but must follow specific procedures and documentation requirements for each change.
Overview
FAR 32.304-4 outlines the procedures for adjusting the amount or maturity date of a government loan guarantee for defense production contracts. This section allows agencies to modify the guarantee terms if the contractor takes on additional defense production contracts either before the guarantee is authorized or during the term of the guaranteed loan. The adjustments must remain within the limitations specified in FAR 32.304-3. When new contracts are added during the loan term, the guarantee agreement can be amended, but this typically requires submission of updated information and reports, and usually a new certificate of eligibility. The process follows the same procedures as the original guarantee application.
Key Rules
- Adjustment Before Guarantee Authorization
- If new defense production contracts are entered into after application but before guarantee authorization, the agency may adjust the guarantee amount or maturity date to reflect increased financing needs.
- Adjustment During Loan Term
- If new contracts are entered into during the loan term, the guarantee agreement can be amended to cover these, with required documentation and usually a new certificate of eligibility.
Responsibilities
- Contracting Officers: Ensure any changes to guarantee amount or maturity are within regulatory limits and follow required procedures.
- Contractors: Notify the agency of new contracts and provide necessary documentation for adjustments.
- Agencies: Review submissions, process amendments, and ensure compliance with FAR 32.304-3 limitations.
Practical Implications
- This section provides flexibility for contractors to secure additional financing as their defense production workload increases.
- Timely communication and documentation are critical to avoid delays in guarantee adjustments.
- Failure to follow procedures or submit required documents can jeopardize loan guarantee coverage for new contracts.