Provide customers with a sound recommendation as
to whether the contractor should be authorized advance payment for
non-commercial items and, where authorized, ensure the
contractor is appropriately paid.
1.1. Advance payment for non-commercial items is a
type of contract financing which customers provide for contractors to
accomplish or maintain progress on essential programs or contracts. Advance payments
are the least preferred
method of contract financing and shall be used
sparingly. DCMA recognizes the risk inherent
in using this type of contract
financing which is secured
only by the contractor's duty
and promise to perform on the
awarded contract.
1.2. ACOs shall review preaward advance payment agreements, when requested, and
develop recommendations for PCOs which include appropriate monitoring
to assure adequate liquidation of advance
payments through timely delivery
of conforming contract products or services.
2.1. The
contractor may apply, in writing, for an advance
payment before or after the
award of a contract (FAR
32.408). Before
processing a
postaward request, the
ACO shall send a copy of the request
to the PCO, with a fully supported
recommendation for concurrence or nonconcurrence.
2.2. The ACO shall
ensure the contractor's request provides information in accordance with FAR
32.409-1 and forward
an evaluation to the PCO of the contractor's:
2.2.1. Current and long-term operating
capital needs as stated in
their cash flow projection
and profit/loss statements
2.2.2. Proposed method and schedule
of advance payment liquidation,
and 2.2.3. In-house financial and operating
controls to assure liquidation
of advance payments.
3.1. Upon receipt of the
request for approval for an advance payment, the ACO shall:
3.1.1. confirm the liquidation requirements
in the advance payment
clause with the contractor,
3.1.2. validate observable liquidation
milestones,
3.1.3. ensure the contractor has a special bank account
established for advance payment withdrawals
IAW FAR
32.411, and 3.1.4. verify
the countersigning procedures
for check withdrawals.
3.2. ACOs shall require the contractor to submit
Cash Flow projections, Profit
and Loss Statements, and Balance
Sheets at stated intervals
for periodic analysis. (See also
DFARS
232.072, Financial Responsibility of Contractors.)
