FAR 32.304-4—Guarantee amount and maturity.
Plain-English Summary
FAR 32.304-4 explains when and how the government may change the amount or maturity date of a defense production loan guarantee. It covers two timing scenarios: first, when the contractor takes on additional defense production contracts after applying for a guarantee but before the guarantee is authorized; and second, when the contractor wins new defense production contracts during the term of an already guaranteed loan. The section also ties those changes to the limits in FAR 32.304-3, meaning any adjustment must stay within the program’s governing constraints. In practice, this provision gives agencies flexibility to keep financing aligned with a contractor’s changing defense workload, while still requiring the same core application information and Federal Reserve Bank reports used for the original guarantee request. It also signals that a new certificate of eligibility is normally needed when the guarantee is adjusted for new contracts, which is an important administrative and eligibility checkpoint for both the contractor and the agency.
Key Rules
Adjustments are permitted
The agency may change the guarantee amount or maturity date, but only within the limitations in FAR 32.304-3. This means the agency has discretion, not an automatic obligation, and any change must remain consistent with the program’s legal and policy limits.
New contracts before authorization
If the contractor signs additional defense production contracts after applying for a guarantee but before the guarantee is authorized, the agency may increase the guarantee amount or extend the maturity date. The adjustment is intended to address any significant increase in financing need caused by the added workload.
New contracts during loan term
If the contractor enters into defense production contracts after the guaranteed loan is already in place, the parties may revise the existing guarantee agreement to cover financing for the new contracts. This allows the guarantee to remain useful as the contractor’s defense production obligations expand.
Same application procedures apply
Pertinent information and Federal Reserve Bank reports must be submitted to the guaranteeing agency using the same procedures required for the original guarantee application under FAR 32.304-1. The agency is not expected to rely on informal updates alone when considering a change.
New eligibility certificate usually needed
A new certificate of eligibility is normally required when the guarantee is adjusted for new contracts. This is a key administrative safeguard that confirms the contractor still qualifies for the revised financing support.
Responsibilities
Contracting Officer / Guaranteeing Agency
Evaluate whether a change in guarantee amount or maturity date is justified, ensure the request stays within FAR 32.304-3 limits, and decide whether to approve an adjustment based on the contractor’s changed financing needs.
Contractor
Notify the agency of additional defense production contracts, provide updated pertinent information, and support any request to change the guarantee so the agency can assess the increased financing need.
Federal Reserve Bank
Prepare and submit the reports required for the guarantee review process, following the same procedures used for the original application.
Agency officials handling eligibility
Obtain and review a new certificate of eligibility when required, and confirm that the revised guarantee request remains eligible under the program rules.
Practical Implications
This section matters when a contractor’s defense workload changes after a guarantee application or after the loan is already in place; financing terms may need to be updated quickly to match the new production burden.
A common pitfall is assuming the original guarantee automatically covers later contracts. In many cases, the agency must review the change and a new certificate of eligibility is normally required.
Another risk is failing to submit updated information and Federal Reserve Bank reports through the original application process, which can delay approval of the revised guarantee.
Contractors should watch for whether the added contracts create a significant increase in financing need, because that is the trigger for possible adjustment before authorization.
Contracting officers and agency reviewers should verify that any change stays within the limits of FAR 32.304-3 and that the revised maturity date or amount is properly documented in the guarantee file.
Official Regulatory Text
The agency may change the guarantee amount or maturity date, within the limitations at 32.304-3 , as follows: (a) If the contractor enters into additional defense production contracts after the application for, but before authorization of, a guarantee, the agency may adjust the loan guarantee amount or maturity date to meet any significant increase in financing need. (b) If the contractor enters into defense production contracts during the term of the guaranteed loan, the parties may adjust the existing guarantee agreement to provide for financing the new contracts. Pertinent information and the Federal Reserve Bank reports will be submitted to the guaranteeing agency under the procedures for the original guarantee application, described in 32.304-1 . Normally, a new certificate of eligibility is required.