Any executive agency may—
(1) make advance, partial, progress or other payments under contracts for property or services made by the agency; and
(2) insert in solicitations for procurement of property or services a provision limiting to small business concerns advance or progress payments.
Whenever practicable, payments under subsection (a) of this section shall be made on any of the following bases:
(1) Performance measured by objective, quantifiable methods such as delivery of acceptable items, work measurement, or statistical process controls.
(2) Accomplishment of events defined in the program management plan.
(3) Other quantifiable measures of results.
Payments made under subsection (a) of this section may not exceed the unpaid contract price.
Advance payments under subsection (a) of this section may be made only upon adequate security and a determination by the agency head that to do so would be in the public interest. Such security may be in the form of a lien in favor of the Government on the property contracted for, on the balance in an account in which such payments are deposited, and on such of the property acquired for performance of the contract as the parties may agree. This lien shall be paramount to all other liens and is effective immediately upon the first advancement of funds without filing, notice, or any other action by the United States.
(1) The executive agency shall ensure that any payment for work in progress (including materials, labor, and other items) under a contract of an executive agency that provides for such payments is commensurate with the work accomplished that meets standards established under the contract. The contractor shall provide such information and evidence as the executive agency determines necessary to permit the executive agency to carry out the preceding sentence.
(2) The executive agency shall ensure that progress payments referred to in paragraph (1) are not made for more than 80 percent of the work accomplished under the contract so long as the executive agency has not made the contractual terms, specifications, and price definite.
(3) This subsection applies to any contract in an amount greater than $25,000.
(1) Payments under subsection (a) of this section for commercial items may be made under such terms and conditions as the head of the executive agency determines are appropriate or customary in the commercial marketplace and are in the best interests of the United States. The head of the executive agency shall obtain adequate security for such payments. If the security is in the form of a lien in favor of the United States, such lien is paramount to all other liens and is effective immediately upon the first payment, without filing, notice, or other action by the United States.
(2) Advance payments made under subsection (a) of this section for commercial items may include payments, in a total amount of not more than 15 percent of the contract price, in advance of any performance of work under the contract.
(3) The conditions of subsections (d) and (e) of this section need not be applied if they would be inconsistent, as determined by the head of the executive agency, with commercial terms and conditions pursuant to paragraphs (1) and (2).
(1) In any case in which the remedy coordination official of an executive agency finds that there is substantial evidence that the request of a contractor for advance, partial, or progress payment under a contract awarded by that executive agency is based on fraud, the remedy coordination official shall recommend that the executive agency reduce or suspend further payments to such contractor.
(2) The head of an executive agency receiving a recommendation under paragraph (1) in the case of a contractor's request for payment under a contract shall determine whether there is substantial evidence that the request is based on fraud. Upon making such a determination, the head of the executive agency may reduce or suspend further payments to the contractor under such contract.
(3) The extent of any reduction or suspension of payments by an executive agency under paragraph (2) on the basis of fraud shall be reasonably commensurate with the anticipated loss to the United States resulting from the fraud.
(4) A written justification for each decision of the head of an executive agency whether to reduce or suspend payments under paragraph (2), and for each recommendation received by the executive agency in connection with such decision, shall be prepared and be retained in the files of the executive agency.
(5) The head of each executive agency shall prescribe procedures to ensure that, before the head of the executive agency decides to reduce or suspend payments in the case of a contractor under paragraph (2), the contractor is afforded notice of the proposed reduction or suspension and an opportunity to submit matters to the executive agency in response to such proposed reduction or suspension.
(6) Not later than 180 days after the date on which the head of an executive agency reduces or suspends payments to a contractor under paragraph (2), the remedy coordination official of the executive agency shall—
(A) review the determination of fraud on which the reduction or suspension is based; and
(B) transmit a recommendation to the head of such executive agency whether the suspension or reduction should continue.
(7) The head of each executive agency who receives recommendations made by a remedy coordination official of the executive agency to reduce or suspend payments under paragraph (2) during a fiscal year shall prepare for such year a report that contains the recommendations, the actions taken on the recommendations and the reasons for such actions, and an assessment of the effects of such actions on the Federal Government. Any such report shall be available to any Member of Congress upon request.
(8) The head of an executive agency may not delegate responsibilities under this subsection to any person in a position below level IV of the Executive Schedule.
(9) In this subsection, the term “remedy coordination official”, with respect to an executive agency, means the person or entity in that executive agency who coordinates within that executive agency the administration of criminal, civil, administrative, and contractual remedies resulting from investigations of fraud or corruption related to procurement activities.
(June 30, 1949, ch. 288, title III, §305, 63 Stat. 396; July 12, 1952, ch. 703, §1(m), 66 Stat. 594; Pub. L. 85–800, §4, Aug. 28, 1958, 72 Stat. 966; Pub. L. 103–355, title II, §2051(a)–(e), Oct. 13, 1994, 108 Stat. 3303, 3304; Pub. L. 104–106, div. D, title XLIII, §4321(a)(4), Feb. 10, 1996, 110 Stat. 671.)
Level IV of the Executive Schedule, referred to in subsec. (g)(8), is set out in section 5315 of Title 5, Government Organization and Employees.
1996—Subsecs. (e) to (g). Pub. L. 104–106 made technical correction to directory language of Pub. L. 103–355, §2051(e). See 1994 Amendment note below.
1994—Pub. L. 103–355, §2051(a)(1), inserted section catchline.
Subsec. (a). Pub. L. 103–355, §2051(a)(2), (c), inserted heading and struck out “bid” before “solicitations” in par. (2).
Subsec. (b). Pub. L. 103–355, §2051(a)(5), (b), added subsec. (b) and redesignated former subsec. (b) as (c).
Pub. L. 103–355, §2051(a)(3), inserted heading.
Subsec. (c). Pub. L. 103–355, §2051(a)(5), redesignated subsec. (b) as (c). Former subsec. (c) redesignated (d).
Pub. L. 103–355, §2051(a)(4), inserted heading.
Subsec. (d). Pub. L. 103–355, §2051(d), inserted before period at end of third sentence “and is effective immediately upon the first advancement of funds without filing, notice, or any other action by the United States”.
Pub. L. 103–355, §2051(a)(5), redesignated subsec. (c) as (d).
Subsecs. (e) to (g). Pub. L. 103–355, §2051(e), as amended by Pub. L. 104–106, added subsecs. (e) to (g).
1958—Pub. L. 85–800 authorized advance or other payments under contracts for property or services by agency and insertion in bid solicitations of provision limiting advance or progress payments to small business concerns, restricted payments under subsec. (a) of this section to unpaid contract price, and reworded generally conditions for making advance payments.
1952—Subsecs. (a), (b). Act July 12, 1952, substituted “property” for “supplies” wherever appearing.
Section 4321(a) of Pub. L. 104–106 provided that the amendment made by that section is effective as of Oct. 13, 1994, and as if included in Pub. L. 103–355 as enacted.
For effective date and applicability of amendment by Pub. L. 103–355, see section 10001 of Pub. L. 103–355, set out as a note under section 251 of this title.
Section effective July 1, 1949, see section 605, formerly section 505, of act June 30, 1949, ch. 288, 63 Stat. 403; renumbered by act Sept. 5, 1950, ch. 849, §6(a), (b), 64 Stat. 583.
Functions authorized by Foreign Assistance Act of 1961, as amended, as exempt, see Ex. Ord. No. 11223, eff. May 12, 1965, 30 F.R. 6635, set out as a note under section 2393 of Title 22, Foreign Relations and Intercourse.
Section 2051(f) of Pub. L. 103–355 provided that: “The amendments made by this section [amending this section] are not intended to impair or modify procedures required by the provisions of chapter 39 of title 31, United States Code, and the regulations issued pursuant to such provisions of law (as such procedures are in effect on the date of the enactment of this Act [Oct. 13, 1994]), except that the Government may accept payment terms offered by a contractor offering a commercial item.”
The definitions in section 102 of Title 40, Public Buildings, Property, and Works, apply to this subchapter.