FAR 32.304-3 Asset formula
Subsection Federal Acquisition Regulation
Facts
- Citation
- FAR 32.304-3
- Type
- Subsection
- Text as of
- FAC 2026-01
- Official text
- acquisition.gov
Text from acquisition.gov. Federal Register history from the Federal Register's records of the rules that amended this subsection.
Text
(a) Under guaranteed loans made primarily for working capital purposes, the agency shall normally limit the guarantee, by use of an asset formula, to an amount that does not exceed a specified percentage (90 percent or less) of the contractor’s investment (e.g., payrolls and inventories) in defense production contracts. The asset formula may include all items under defense contracts for which the contractor would be entitled to payment on performance or termination. The formula shall exclude-
(1) Amounts for which the contractor has not done any work or made any expenditure;
(2) Amounts that would become due as the result of later performance under the contracts; and
(3) Cash collateral or bank deposit balances.
(b) Progress payments are deducted from the asset formula.
(c) The agency may relax the asset formula to an appropriate extent for the time actually necessary for contract performance, if the contractor’s working capital and credit are inadequate.
Quick answers
What is FAR 32.304-3?
FAR 32.304-3 is a subsection of the Federal Acquisition Regulation, titled "Asset formula".
Are changes to FAR 32.304-3 proposed?
No proposed rule from the last 3 years is waiting on a final rule.
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