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FAR and DFARS › FAR Part 32: Contract Financing › Subpart 32.5

FAR 32.501-2 Unusual progress payments.

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 may approve unusual progress payments, which are payments above the customary rate. It matters because a contractor must show a genuine, documented need for larger predelivery funding and get high-level approval before receiving them.

Applies to: Contractors requesting progress payments above the customary rate

What it requires

  • Show the contract requires predelivery expenditures that are large relative to the contract price and to the contractor's working capital and credit
  • Fully document an actual need to supplement any private financing available, including guaranteed loans
  • Obtain approval from the head of the contracting activity or a designee

Key terms: unusual progress payments · customary progress payment rate · predelivery expenditures · working capital · letter contracts

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

The text

(a) The contracting officer may provide unusual progress payments only if—

(1) The contract necessitates predelivery expenditures that are large in relation to contract price and in relation to the contractor's working capital and credit;

(2) The contractor fully documents an actual need to supplement any private financing available, including guaranteed loans; and

(3) The contractor's request is approved by the head of the contracting activity or a designee. In addition, see 32.502-2.

(b) The excess of the unusual progress payment rate approved over the customary progress payment rate should be the lowest amount possible under the circumstances.

(c) Progress payments will not be considered unusual merely because they are on letter contracts or the definitive contracts that supersede letter contracts.

Sections it refers to

  • 32.502-2 Contract finance office clearance.

Sections that refer to it

  • 32.110 Payment of subcontractors under cost-reimbursement prime contracts.
  • 32.501 General.
  • 32.501-1 Customary progress payment rates.
  • 32.502-4 Contract clauses.
  • 32.504 Subcontracts under prime contracts providing progress payments.

← 32.501-1 Customary progress payment rates. · 32.501-3 Contract price. →

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 32.501-2 Unusual progress payments · SpendQuery