52.232-31 Invitation to Propose Financing Terms
Source: FAR 52.232-31 on acquisition.gov
Offerors may propose their own contract financing terms for commercial contracts, but these must comply with statutory limits and will be evaluated alongside FAR 52.232-29, which takes precedence in case of conflict.
Overview
FAR 52.232-31, "Invitation to Propose Financing Terms," allows offerors to propose their own contract financing terms as part of their proposal for contracts involving commercial products and services. The provision outlines that these proposed terms will be evaluated as part of the overall offer and, if accepted, will be incorporated into the contract alongside FAR 52.232-29. However, any conflict between the offeror's terms and FAR 52.232-29 will be resolved in favor of the latter. The provision also sets statutory limitations on the acceptability of proposed financing, including restrictions on advance payments, requirements for customary commercial practices, and the best interests of the United States. Offerors must provide detailed proposed contractual language and a schedule of payments, which will be used to evaluate the cost impact to the government.
Key Rules
- Offeror May Propose Financing Terms
- Offerors are invited to propose contract financing terms, which will be evaluated as part of their proposal.
- Statutory Limitations on Financing
- Proposed financing must not exceed 15% of the contract price in advance of performance, must be customary in the commercial marketplace, and must be in the government's best interest.
- Conflict Resolution
- If there is a conflict between the offeror's terms and FAR 52.232-29, the latter prevails.
- Required Proposal Details
- Offerors must include proposed contractual language and a detailed payment schedule in their proposal.
- Evaluation of Financing Terms
- The government will evaluate proposed prices and financing terms based on specified interest rates and delivery schedules.
Responsibilities
- Contracting Officers: Must evaluate proposed financing terms for compliance with statutory and regulatory requirements and ensure incorporation of FAR 52.232-29.
- Contractors/Offerors: Must submit detailed, compliant financing proposals and adhere to statutory limitations.
- Agencies: Ensure oversight and proper evaluation of proposed financing terms.
Practical Implications
- This provision gives offerors flexibility to propose financing arrangements but enforces strict statutory and regulatory boundaries.
- Non-compliance with limitations (e.g., exceeding 15% advance payment) will result in rejection of proposed terms.
- Detailed documentation and careful alignment with FAR 52.232-29 are critical to avoid conflicts and ensure acceptance.
As prescribed in 32.205 (b) and 32.206 , insert the following provision:
Invitation to Propose Financing Terms (Dec 2022)
(a) The offeror is invited to propose terms under which the Government shall make contract financing payments during contract performance. The financing terms proposed by the offeror shall be a factor in the evaluation of the offeror’s proposal. The financing terms of the successful offeror and the clause, Terms for Financing of Purchases of Commercial Products and Commercial Services, at Federal Acquisition Regulation (FAR) 52.232-29, shall be incorporated in any resulting contract.
(b) The offeror agrees that in the event of any conflict between the terms proposed by the offeror and the terms in the clause at FAR 52.232-29, Terms for Financing of Purchases of Commercial Products and Commercial Services, the terms of the clause at FAR 52.232-29 shall govern.
(c) Because of statutory limitations (https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title10-section3805&num=0&edition=prelim" target="_blank">10 U.S.C. 3805 and http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section4505&num=0&edition=prelim" target="_blank">41 U.S.C. 4505), the offeror’s proposed financing shall not be acceptable if it does not conform to the following limitations:
(1) Delivery payments shall be made only for supplies delivered and accepted, or services rendered and accepted in accordance with the payment terms of this contract;
(2) Contract financing payments shall not exceed 15 percent of the contract price in advance of any performance of work under the contract;
(3) The terms and conditions of the contract financing must be appropriate or customary in the commercial marketplace; and
(4) The terms and conditions of the contract financing must be in the best interests of the United States.
(d) The offeror’s proposal of financing terms shall include the following:
(1) The proposed contractual language describing the contract financing (see FAR 32.202-2 for appropriate definitions of types of payments); and
(2) A listing of the earliest date and greatest amount at which each contract financing payment may be payable and the amount of each delivery payment. Any resulting contract shall provide that no contract financing payment shall be made at any earlier date or in a greater amount than shown in the offeror’s listing.
(e) The offeror’s proposed prices and financing terms shall be evaluated to determine the cost to the United States of the proposal using the interest rate and delivery schedule specified elsewhere in this solicitation.
(End of provision)