View Rule

DoD, GSA and NASA are proposing to amend the FAR to harmonize the policy on flowdown requirements at FAR 32.504 with FAR clause 52.232-32 for the financing of subcontracts through performance-based payments. FAR 32.504(f) states that "When financing payments are in the form of performance-based payments, the Performance-Based Payments clause at 52.232-32 requires that the subcontract terms include the substance of the Performance-Based Payments clause, modified to indicate that the contractor, not the Government, awards the subcontract and administers the performance-based payments..." However, FAR clause 52.232-32 does not include instructions to the contractor to flowdown the requirements to the subcontractor. The FAR recognizes that prudent contract financing can be a useful working tool in Government acquisition. Performance-based payments are a form of contract financing authorized by the FAR under certain conditions. The proposed rule would merely make it clear to the contractor under which circumstances the substance of this form of contract financing is required to flow down to the subcontractor, when FAR 52.232-32 is included in its contract.