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FAR and DFARS › FAR Part 32: Contract Financing › Subpart 32.1

FAR 32.110 Payment of subcontractors under cost-reimbursement prime contracts.

The codified text (eCFR, as of 2026-10-02). Under the Revolutionary FAR Overhaul ↗, agencies follow class deviations with new text for many parts while the formal rules go through the Federal Register: check the solicitation and your contract's clauses, which rule.

In plain English

This section explains when a contracting officer will treat financing payments a prime contractor makes to a subcontractor as reimbursable costs under a cost-reimbursement prime contract. It matters because it sets conditions the prime contractor must meet for those subcontractor payments to be accepted as reimbursable.

Applies to: Contractors making financing payments to subcontractors under cost-reimbursement prime contracts

What it requires

  • Make payments under the criteria in subpart 32.5 for customary progress payments based on costs, 32.202-1 for commercial product or commercial service purchase financing, or 32.1003 for performance-based payments, as applicable
  • If customary progress payments are made, keep payments within the progress payment rate in 32.501-1 unless unusual progress payments have been approved under 32.501-2
  • If customary progress payments are made, ensure the subcontractor complies with the liquidation principles of 32.503-8, 32.503-9, and 32.503-10
  • If performance-based payments are made, ensure the subcontractor complies with the liquidation principles of 32.1004(d)

Key terms: financing payments · cost-reimbursement prime contract · customary progress payments · performance-based payments · liquidation principles

Written by AI from this section's text. A guide, not legal advice: the text below rules.

The text

If the contractor makes financing payments to a subcontractor under a cost-reimbursement prime contract, the contracting officer should accept the financing payments as reimbursable costs of the prime contract only under the following conditions:

(a) The payments are made under the criteria in subpart 32.5 for customary progress payments based on costs, 32.202-1 for commercial product or commercial service purchase financing, or 32.1003 for performance-based payments, as applicable.

(b) If customary progress payments are made, the payments do not exceed the progress payment rate in 32.501-1, unless unusual progress payments to the subcontractor have been approved in accordance with 32.501-2.

(c) If customary progress payments are made, the subcontractor complies with the liquidation principles of 32.503-8, 32.503-9, and 32.503-10.

(d) If performance-based payments are made, the subcontractor complies with the liquidation principles of 32.1004(d).

(e) The subcontract contains financing payments terms as prescribed in this part.

Sections it refers to

Sections that refer to it

← 32.109 Termination financing. · 32.111 Contract clauses for noncommercial purchases. →

Rule changes for FAR Part 32

Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.

FAR 32.110 Payment of subcontractors under cost-reimbursement prime contracts · SpendQuery