FAR 32.502-1—Use of customary progress payments.
Plain-English Summary
FAR 32.502-1 addresses when a contracting officer may include a Progress Payments clause in a solicitation or contract and what happens if a bidder conditions its offer on receiving progress payments when the solicitation did not authorize them. In practice, this section is about controlling financing terms in federal procurements: it gives the contracting officer discretion to offer progress payments only in accordance with the progress payments subpart, and it protects the integrity of sealed bidding by requiring rejection of bids that are nonresponsive because they are contingent on progress payments not provided for in the solicitation. The section therefore covers two core topics: the authorized use of progress payments clauses and the responsiveness consequences of bidder-imposed financing conditions. Its practical significance is that financing terms are not something a bidder can add after the fact; if the government did not invite progress payments, a bid that makes award dependent on them cannot be accepted. For contractors, this means they must read the solicitation carefully and avoid attaching financing conditions that conflict with the stated terms. For contracting officers, it means they must decide up front whether progress payments are appropriate and then enforce the solicitation terms consistently.
Key Rules
Progress payments are discretionary
The contracting officer may include a Progress Payments clause in solicitations and contracts, but only in accordance with the progress payments subpart. This means the clause is not automatic and must be used consistently with the regulatory requirements governing progress payments.
Use only when authorized by the subpart
Any use of progress payments must comply with the detailed rules in the applicable subpart. The contracting officer cannot use the clause in a way that conflicts with the governing standards for eligibility, administration, or payment terms.
Bids cannot add financing conditions
If the solicitation did not provide for progress payments, a bid that is conditioned on receiving them is nonresponsive. The bidder is effectively changing a material term of the solicitation, which the government cannot accept in sealed bidding.
Reject nonresponsive bids
The contracting officer must reject as nonresponsive any bid that makes award contingent on progress payments when the solicitation did not include them. This is a mandatory rejection, not a matter of discretion.
Solicitation terms control responsiveness
Whether a bid is acceptable depends on the terms stated in the solicitation. Offerors must submit bids that conform to the government’s stated financing structure, including whether progress payments are available.
Responsibilities
Contracting Officer
Decide whether to include a Progress Payments clause in the solicitation or contract, and do so only in accordance with the progress payments subpart. If a bid is conditioned on progress payments that were not offered in the solicitation, reject the bid as nonresponsive.
Contractor/Bidder
Review the solicitation carefully and submit a bid that conforms to the stated financing terms. Do not condition the bid on progress payments unless the solicitation expressly provides for them.
Agency
Ensure procurement planning and solicitation drafting address whether progress payments will be available, so the contracting officer can apply the clause consistently and avoid avoidable responsiveness issues.
Practical Implications
Contractors should never assume progress payments will be available; if the solicitation is silent, a bid that depends on them can be thrown out.
Contracting officers need to make the financing decision before issuing the solicitation, because adding progress payments later can create responsiveness and fairness problems.
A bidder’s financing condition can be a fatal defect in sealed bidding if it changes the government’s terms, even if the bidder is otherwise low-priced or technically acceptable.
This section helps prevent post-bid negotiations over financing terms, preserving equal treatment among bidders.
Common pitfall: confusing a request for progress payments with a permissible clarification. If the bid is expressly conditioned on them and the solicitation did not allow them, the bid is nonresponsive.
Official Regulatory Text
The contracting officer may use a Progress Payments clause in solicitations and contracts, in accordance with this subpart. The contracting officer must reject as nonresponsive bids conditioned on progress payments when the solicitation did not provide for progress payments.