Matt's CFCM Questions: FAR Part 32. Contract Financing

Supplies or services under a contract conditioned upon the availability of funds can be accepted with the expectation that funds will eventually be available. True or False?

False. A contract conditioned upon the availability of funds CANNOT be accepted until after the CO has given notice that funds are available. FAR 32.7

Contract financing is intended to be self-liquidating through contract performance; consequently, agencies may finance contractor working capital, including the expansion of contractor-owned facilities or acquisitions of fixed assets. True or False?

False. Agencies may finance contractor working capital, BUT NOT the expansion of contractor-owned facilities or acquisitions of fixed assets. FAR Part 32.1

Discounts for prompt payment may be taken only when payments are made within the discount period specified by the contracting officer. True or False?

False. Discounts for prompt payment may be taken only when payments are made within the discount period specified by the CONTRACTOR. FAR 32.9

Before executing a contract, the contracting officer must obtain written assurance from the Banking and Finance Committee that adequate funds are available or expressly condition the contract upon the availability of funds. True or False?

False. Must obtain written assurance from the "responsible fiscal authority" FAR 32.7

In a non-commercial items purchase, offerors may propose any method of contract financing as long as it is in accordance with FAR Part 32.1. True or False?

False. Offerors may propose only the customary contract financing specified in the solicitation.

The contracting officer may treat the contractor's need for contract financing as a handicap in making the contract award, e.g., as a responsibility factor or evaluation criterion, when determining if the offeror meets the standards prescribed for responsible prospective contractors at FAR 9.104. True or False.

False. The contracting officer may NOT treat the contractor's need for contract financing as a handicap AS LONG AS the offeror meets the standards prescribed for responsible prospective contractors at FAR 9.104. FAR 32.1

The signing of contracts, modifications, the exercise of options and other such actions may form the basis for a performance-based payment. True or False?

False. The signing of contracts, modifications, the exercise of options and other such actions may NOT form the basis for a performance-based payment. FAR 32.10

If a contractor failed to indicate a need for contract financing before the contract was awarded, it does not disqualify them from seeking contract financing after award. True or False?

True. FAR 32.1

If the contractor is a small business concern, the contractors receipt of a Certificate of Competency from the Small Business Administration has no bearing on the contractor's need for or entitlement to contract financing. True or False?

True. FAR 32.1

Under FAR 32.2 for Commercial Item Purchase Financing, contract financing can be a subject included in the market research conducted in accordance with FAR Part 10 to determine the extent to which other buyers provide contract financing, the level of financing normally provided, the basis for and frequency of payments, methods of liquidation of contract financing payments, and any special or unusual payment terms applicable to delivery payments. True or False?

True. FAR 32.2

The CO must reject as nonresponsive those bids conditioned on progress payments when the solicitation did not provide for progress payments. True or False?

True. FAR 32.5

Agencies must pay interest for late payments or improperly taken discounts for prompt payment. True or False?

True. FAR 32.9

As it is the least preferred method of contract financing, this method should not be authorized if other types of financing are reasonably available to the contractor, and is limited to contracts described in FAR 32.403. a. Advance Payment b. Progress Payment c. Prompt Payment d. Guaranteed

a. Advance Payment FAR 32.4

This type of payment for commercial items purchases is for accepted supplies or services, including payments for accepted partial deliveries. a. Delivery Payment b. Commercial Interim Payment c. Commercial Advance Payment d. Loan Guarantee

a. Delivery Payment FAR 32.2

Per FAR 32.1 for non-commercial items purchases, this type of contract financing is not intended that the contractor be required to obtain private financing at unreasonable terms or from other agencies. a. Private financing without government guarantee. b. Customary Contract Financing c. Advance Payments d. Loan Guarantees e. Unusual Contract Financing

a. Private financing without government guarantee. FAR Part 32.1

Under FAR 32.2 for Commercial Item Purchase Financing, financing of the contract is normally a. the contractor's responsibility. b. the government's responsibility. c. available only for small business concerns. d. not available.

a. the contractor's responsibility. FAR 32.2

What is the customary progress payment rate for large business concerns? a. 75 b. 80 c. 85 d. 90

b. 80 FAR 32.5

This type of payment for commercial items purchases is given to the contract after some work has been done, but not fully completed. a. Delivery Payment b. Commercial Interim Payment c. Commercial Advance Payment d. Loan Guarantee

b. Commercial Interim Payment FAR 32.2

The transfer of funds, other than a transaction originated by cash, check, or similar paper instrument, that is initiated through electronic terminal, telephone, computer or magnetic tape for the purpose of ordering, instructing, or authorizing a financial institution to debit or credit an account. a. Prompt Payment b. Electronic Funds Transfer (EFT) c. Performance-Based Payment d. Advance Payment

b. Electronic Funds Transfer (EFT) FAR 32.11

What entity(ies) are authorized to act on behalf of guaranteeing agencies (e.g., DOD) as fiscal agents of the United States in the making of loan guarantees for defense production? a. Federal Deposit Insurance Corporation (FDIC) b. Federal Reserve Banks c. International Monetary Fund (IMF) d. World Bank

b. Federal Reserve Banks FAR 32.2

This type of payment method is recouped by the government through the deduction of liquidations from payments that would otherwise be due to the contractor for completed contract items. a. Advance Payment b. Progress Payment c. Prompt Payment d. Guaranteed Loan

b. Progress Payment FAR 32.5

Under FAR 32.2 for Commercial Item Purchase Financing, commercial interim payments and commercial advance payments may be made under the following circumstances, EXCEPT: a. contract item financed is a commercial supply or service. b. contract price does not exceed the simplified acquisition threshold. c. contracting officer determines it is appropriate/customary in the commercial marketplace to make financing payments for the item and determines it is in the best interest of the government. d. if adequate security is obtained.

b. contract price does not exceed the simplified acquisition threshold. Correct answer would be if contract price EXCEEDS the simplified acquisition threshold, then commercial advance payments may be made . far 32.2

Under FAR 32.2 for Commercial Item Purchase Financing, if the provision of financing by the buyer is a common commercial practice, the CO a. shall consider other sources of supply that do not require special financing terms for commercial purposes. b. may include appropriate financing terms in the contracts for commercial purposes when doing so will be in the best interest of the government. c. shall only procure via purchase card or imprest funds. d. may only incorporate preferred government financing terms in the contracts for commercial purposes in order to maintain the best interest of the government.

b. may include appropriate financing terms in the contracts for commercial purposes when doing so will be in the best interest of the government. FAR 32.2

Payments are generally made ___________ days after the designated billing office receives a proper invoice from the contract OR ____________ days after the government acceptance of supplies delivered or services performed by the contractor, whichever is _____________. a. 15, 30, sooner b. 30, 30, sooner c. 30, 30, later d. 30, 45, later

c. 30, 30, later FAR 32.9

What is the customary progress payment rate for small business concerns? a. 75 b. 80 c. 85 d. 90

c. 85 FAR 32.5

The transfer or making over by the contractor to a bank, trust company, or other financing institution as security for a loan to the contractor, of its right to be paid by the government for contract performance. a. Guaranteed Loan b. Electronic Funds Transfer c. Assignment of Claim d. all of the above

c. Assignment of Claim FAR 32.8

This type of payment for commercial items purchases: i. is made before any performance of work under the contract; ii. requires that aggregate payments shall not exceed 15% of the contract price iii. requires that payments are not subject to FAR 32.4, Advance Payments for Non-commercial items. a. Delivery Payment b. Commercial Interim Payment c. Commercial Advance Payment d. Loan Guarantee

c. Commercial Advance Payment FAR 32.2

All government contract payments shall be made via this method, except the provision found at FAR 32.1103(a)(i). a. Cash b. Check c. Electronic Funds Transfer (EFT) d. Automated Clearing House (Wire)

c. Electronic Funds Transfer (EFT)

The Progress Payments clause provides a Government right to reduce or suspend progress payments, or to increase the liquidation rate, under all of the following specified conditions EXCEPT: a. Contractor noncompliance b. Unsatisfactory financial condition c. Low inventory d. Delinquency in payment of costs of performance

c. Low inventory Should be "Excessive inventory." FAR 32.503-6

The basis for this type of payment may be either specifically described events (e.g., milestones), or some measureable criterion of performance. a. Prompt Payment b. Progress Payment c. Performance-Based Payment d. Advance Payment

c. Performance-Based Payment FAR 32.10

This type of payment is a contract financing payment that is not payment for accepted items, is fully recoverable in the event of default, and is the preferred method when the contracting officer finds them practical and the contractor agrees to their use. a. Prompt Payment b. Progress Payment c. Performance-Based Payment d. Advance Payment

c. Performance-Based Payment FAR 32.10

All of the following are FAR Part 32.1 Contract Financing Methods utilized for non-commercial items EXCEPT: a. Advance payments--advances of money to a prime contractor b. Progress payments based on costs--made on the basis of costs incurred by the contract or as work progresses c. Purchase Card payments--more of a payment versus a financing method d. Loan guarantees--guarantees backed by the Federal Reserve designed to enable contractors to obtain financing from private sources

c. Purchase Card payments--more of a payment versus a financing method FAR Part 32.1

The customary progress payment rate for large business concerns is 80% and 85% for small business concerns. Any percentage greater than these is considered a. during discusions. b. a negotiated rate. c. unusual. d. all of the above

c. unusual. FAR 32.5

Please put the following Contract Financing methods in order of preference per FAR 32.1 for non-commercial items purchases. i. Unusual Contract Financing ii. Loan Guarantees iii. Advance Payments iv. Customary Contract Financing v. Private financing without government guarantee. a. v, ii, iii, iv, i b. iv, ii, v, iii, i c. v, iv, ii, i, iii d. iv, v, ii, i, iii

c. v, iv, ii, i, iii FAR Part 32.1

The CO must calculate the time value of proposal-specified contract financing arrangements using the nominal rate specified via ______________________ as the interest rate. a. the Consumer Price Index b. the Office of Federal Procurement Policy Act c. the Federal Funds Rate d. Appendix C of the Office of Management and Budget (OMB) Circular A-94, "Guidelines and Discount Rates for Benefit-Cost Analysis of Federal Program."

d. Appendix C of the Office of Management and Budget (OMB) Circular A-94, "Guidelines and Discount Rates for Benefit-Cost Analysis of Federal Program." FAR 32.2

All of the following are FAR Part 32.1 Contract Financing Methods utilized for non-commercial items EXCEPT: a. Partial payments--more of a payment versus a financing method b. Progress payments based on percentage or stage completion--more of a payment versus a financing method c. Performance-based payments--made on the basis of performance measured by objective, quantifiable methods, accomplishment of defined events, or other quantifiable measures. d. Date-based payments--made on the basis of a monthly payment plan rather than performance or progress

d. Date-based payments--made on the basis of a monthly payment plan rather than performance or progress FAR Part 32.1

This type of loan is essentially the same as a conventional loan made by a private institution, except that the agency is obligated, on demand of the lender, to purchase a stated percentage of the loan and to share any losses in the amount of the agreed upon percentage. a. Advance Payment b. Progress Payment c. Prompt Payment d. Guaranteed

d. Guaranteed FAR 32.3

FAR Part 32, Contract Financing prescribes policies and procedures for all of the following contract financing and other payment matters EXCEPT: a. Payment methods, including electronic funds transfer payments, partial payments and progress payments based on percentage or stage completion b. Loan guarantees, advance payments, and progress payments based on cost c. Administration of debts to the government arising out of contracts. d. Purchase Card statement reconciliation and collection of late payments e. Contract funding, including the use of contract clauses limiting costs or funds

d. Purchase Card statement reconciliation and collection of late payments FAR Part 32

Unusual progress payments may be applied when only when a. the contract necessitates pre-delivery expenditures that are large in relation to the contract price and in relation to the contractor's working capital and credit. b. the contractor fully documents an actual need to supplement any private financing available. c. the contractor's request is approved by the head of the contracting activity. d. all of the above.

d. all of the above. FAR 32.5

Solicitations and contracts must specify a. payment procedures b. payment due dates. c. interest penalties for late invoice payment d. all of the above.

d. all of the above. FAR 32.9

Who may create or authorize an obligation in excess of the funds available, or in advance of appropriations unless otherwise authorized by law (Anti-Deficiency Act). a. The head of the agency b. the head of contracting activity c. the contracting officer d. no officer or employee

d. no officer or employee FAR 32.7

Considering the availability of private financing, government financing is to be provided only to the extent actually needed for a. exercised options. b. any business requiring a cash flow advance. c. small business concerns requiring a cash flow advance. d. prompt and efficient performance.

d. prompt and efficient performance. FAR Part 32.1

Payment will be based on a. goods receipt b. receipt of a proper invoice c. government acceptance criteria d. receipt of a proper invoice and satisfactory contract performance.

d. receipt of a proper invoice and satisfactory contract performance. FAR 32.9

A contractor may assign monies due or to become due under a government order or contract the following instances EXCEPT: a. when its value exceeds $1000 b. when the assignment is made to a bank, trust company, or other financing institution. c. when the contractual document does not prohibit the assignment d. when it is directed by law via bankruptcy, reorganization or other legal mechanism. e. when the assignee sends a written notice of the assignment to the contract officer or the agency head.

d. when it is directed by law via bankruptcy, reorganization or other legal mechanism. This answer isn't real. FAR 32.8

All government contract payments shall be made via EFT, except in the provisions found at FAR 32.1103(a)(i). The following provisions are found at FAR 32.1103(a)(i) EXCEPT: a. The payment is to be received by or on behalf of the contractor outside the United States and Puerto Rico b. A contract is paid in other than United States currency c. EFT payments would be impractical due to security considerations d. The agency does not expect to make more than one payment to the same recipient within a one-year period e. A contractor prefers to be paid via Bitcoin or some other electronic form of currency.

e. A contractor prefers to be paid via Bitcoin or some other electronic form of currency. FAR 32.11

This type of contract financing is any contract financing arrangement that deviates from customary contract financing procedures delineated in FAR Part 32.114. a. Private financing without government guarantee. b. Customary Contract Financing c. Advance Payments d. Loan Guarantees e. Unusual Contract Financing

e. Unusual Contract Financing. FAR Part 32.1

The Progress Payments clause provides a Government right to reduce or suspend progress payments, or to increase the liquidation rate, under all of the following specified conditions: a. Fair value of undelivered work b. Fair value of delivered work c. Loss Contracts d. a & b only e. a & c only

e. a & c only FAR 32.503-6

Although a contract funded by annual appropriations may not generally cross fiscal years, these particular types of contracts may extend beyond the fiscal year in which they began, provided that any specified minimum quantities are ordered in the initial fiscal year and the contract includes the prescribed Availability of Funds for the Next Fiscal Year clause 52.232-19. a. IDIQ b. BOA c. Requirements Contract d. a & b only e. a & c only

e. a & c only FAR 32.7

FAR Part 32, Contract Financing prescribes policies and procedures for contract financing and other payment matters including: a. Assignment of claims to aid private financing b. Selected payment clauses c. Financing of purchases of commercial items d. Performance based payments e. all of the above

e. all of the above FAR Part 32

Performance-Based Payments may only be used when the following conditions are met: a. The contracting officer and offeror are able to agree on the performance based payment terms. b. The contract is a fixed-type contract. c. For IDIQ's, the individual order does not provide for progress payments. d. for other than IDIQ's, the contract does not provide for progress payments. e. all of the above.

e. all of the above. FAR 32.10

Per the Limitation of Cost clause (52.232-20), the CO, upon learning the contractor is approaching the estimated cost or limit of funds allotted, must promptly notify the contractor in writing that a. additional funds have been allotted or the estimated cost has increased. b. the contract will not be further funded. c. the contract is to be terminated. d. the government is considering whether to alot additional funds or increase the estimated amount. e. all of the above.

e. all of the above. FAR 32.7

Under FAR 32.2 for Commercial Item Purchase Financing, commercial interim payments and commercial advance payments may be made under the following circumstances: a. if, prior to any performance of work under thecontract, the aggregate of commercial advance payments shall not exceed 15% of the contract price in a competitive environment. b. the contract price exceeds the simplified acquisition threshold. c. if sole source, adequate consideration it obtained. d. if sole source, concurrance from the payment office regarding liquidation provisions if required. e. all of the above.

e. all of the above. FAR 32.2

The Limitation of Cost clause (52.232-20) is used a. in cost-reimbursement contracts that are fully funded. b. in cost-reimbursement contracts that are partially funded. c. in incrementally funded cost-reimbursement contracts. d. a & c only e. b and c only

e. b and c only FAR 32.7