DATE: August 24, 2001

SUBJECT: Defense Federal Acquisition Regulation Supplement (DFARS); Customary Progress Payment Rate for Large Business Concerns

SOURCE: Federal Register, August 24, 2001, Vol. 66, No. 165, page 44588

AGENCIES: Department of Defense (DOD)

ACTION: Proposed Rule

SYNOPSIS: DOD is proposing to amend DFARS 232.501-1, Customary Progress Payment Rates, to increase the customary uniform progress payment rate for large business concerns from 75% to 80%.

DATES: Comments on the proposed rule must be submitted no later than September 24, 2001.

ADDRESSES: Respondents may submit comments directly on http://emissary.acq.osd.mil/dar/dfars.nsf/pubcomm; by e-mail to dfars@acq.osd.mil; to Defense Acquisition Regulations Council, Attn: Ms. Sandra Haberlin, OUSD (AT&L) DP (DAR), IMD 3C132, 3062 Defense Pentagon, Washington, DC 20301-3062; or by fax to 703-602-0350. Cite DFARS Case 2001-D012 when submitting comments.

FOR FURTHER INFORMATION CONTACT: Sandra Haberlin, 703-602-0289.

SUPPLEMENTAL INFORMATION: Section 8155 of the Fiscal Year 1994 Defense Appropriations Act (Public Law 103-139), reduced the customary progress payment rate for large business concerns under Defense contracts from 85% to 75%. The rates for small businesses (90%) and small disadvantaged businesses (95%) performing Defense contracts were not changed. (EDITOR'S NOTE: The customary progress rate for other agencies, as listed in FAR 32.501-1, Customary Progress Payment Rates, is 80% for large businesses and 85% for small businesses.)

DOD has been trying to get the large business progress payment rate increased the last several years because changes to short term borrowing rates have supported an increase, but the budgets submitted by the president and approved by Congress have not permitted such an increase. However, the FY 2002 budget submitted by the president accommodates the progress payment increase. Therefore, this proposed rule would amend DFARS 232.501-1 to reflect the 80% large business progress payment rate currently being used by other agencies. However, the rate change would only be applicable to contract awards made on or after October 1, 2001, with final implementation contingent upon the approval of a DOD budget with the rate in it. Also, contracts awarded before October 1, 2001, will not be modified to include the 80% rate.

To reflect this change, DFARS 252.232-7004, DOD Progress Payment Rates, would be revised to delete paragraph (a), which states that each mention of the progress payment and liquidation rate in FAR 52.232-16, Progress Payment, is changed from 80% to 75%.

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

Copyright 2001 by Panoptic Enterprises. All Rights Reserved.

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