By Quentin W. Fleming
Covers the topic of development funds in line with expenses incurred, as required via the Federal Acquisition legislation, some distance sub-part 32.5. The publication recommends retaining a linkage among all development funds and the supplier's actual functionality in an effort to reduce dangers.
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Additional resources for A Probus Guide to Subcontract Project Management and Control: Progress Payments
Does the supplier have sufficient financial resources to complete this order, or is there a possibility that they will use these funds to "float" other less profitable orders which do not provide progress payments? What is the relative size of the subcontract which provides the progress payment funding in relation to all other orders in the supplier's plant. What is our past relationship with this supplier, if any? A long-term prime contractor/subcontractor relationship can provide valuable assurances that a prospective new order will be performed well.
Flexible progress payments would now be available to those suppliers who requested them, who couldmeet certain additional criteria requirements specified in the DOD-FAR, and who had a contract with a value of at least $1 million or more. Flexible payments were to be available only for negotiated contracts, not for either formally advertised contracts or on contracts to be performed in their entirety outside of the United States. " The original DOD cash flow model has since been superseded by later cash model versions 11, In, IV,and at the time of this writing, cash model V (the current version).
However, if such groups do not exist, then the buyer should only authorize that rate which is specifically cited in their prime or higher tier subcontract (which gives them the authority to issue payments to their subcontractors). Criteria for Deliveries and Line Item Completion All subcontractor progress payment loans must be repaid in full. This will be accomplished with the delivery of items or the satisfaction of specific contractual line items, which will result in a liquidation (or payback) of such loans.
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