32.405 Applying Pub.L.85-804 to advance payments under sealed bid contracts
Source: FAR 32.405 on acquisition.gov
Agencies may provide advance payments under sealed bid contracts to support national defense, but bids requiring advance payments as a condition for acceptance must be rejected.
Overview
FAR 32.405 outlines how agencies may apply Public Law 85-804 to provide advance payments under sealed bid contracts, particularly in support of national defense. The regulation clarifies that advance payments can be made at or after contract award, regardless of whether the contract was awarded through sealed bidding or negotiation. Bidders may request advance payments even if the solicitation does not mention them, but bids that require advance payments as a condition for acceptance must be rejected. The contracting officer has discretion to provide, withhold, or deny advance payments based on the contractor's actual need and the agency's approval process. If a request for advance payments is denied and the contractor lacks sufficient funds, the agency may deny the contract award. This section ensures that advance payments are managed in a way that supports national defense needs while maintaining proper oversight and compliance with FAR Part 32 procedures.
Key Rules
- Advance Payments for National Defense
- Agencies may make advance payments under sealed bid or negotiated contracts to facilitate national defense, even if other laws would normally restrict such payments.
- Bidder Requests for Advance Payments
- Bidders can request advance payments before or after award, but bids that make advance payments a condition for acceptance must be rejected.
- Agency Options When Advance Payments Are Requested
- Agencies may: (1) award the contract and provide advance payments per FAR Part 32; (2) award without advance payments if not needed; or (3) deny award if the request is disapproved and the contractor lacks funds.
Responsibilities
- Contracting Officers: Must evaluate requests for advance payments, reject conditional bids, and follow FAR Part 32 procedures for approval or denial.
- Contractors: May request advance payments but cannot make them a condition for bid acceptance; must demonstrate need if requesting advance payments.
- Agencies: Must ensure compliance with FAR and Pub.L.85-804, and document decisions regarding advance payments.
Practical Implications
- This section provides flexibility for agencies to support urgent national defense needs with advance payments, but enforces strict controls to prevent misuse.
- Contractors should not condition their bids on receiving advance payments, and must be prepared to justify their need if requesting them.
- Common pitfalls include submitting non-compliant bids or failing to follow the proper approval process for advance payments.
(a) Actions that designated agencies may take to facilitate the national defense without regard to other provisions of law relating to contracts, as explained in 50.101-1(a), also include making advance payments. These advance payments may be made at or after award of sealed bid contracts, as well as negotiated contracts.
(b) Bidders may request advance payments before or after award, even if the invitation for bids does not contain an advance payment provision. However, the contracting officer shall reject any bid requiring that advance payments be provided as a basis for acceptance.
(c) When advance payments are requested, the agency may-
(1) Enter into the contract and provide for advance payments conforming to this part 32;
(2) Enter into the contract without providing for advance payments if the contractor does not actually need advance payments; or
(3) Deny award of the contract if the request for advance payments has been disapproved under 32.409-2 and funds adequate for performance are not otherwise available to the offeror.