[Federal Register Volume 87, Number 117 (Friday, June 17, 2022)]
[Notices]
[Pages 36472-36473]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-13047]


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DEPARTMENT OF DEFENSE

Defense Acquisition Regulations System

[Docket Number DARS-2022-0012]


Department of Defense Contract Finance Study

AGENCY: Defense Acquisition Regulations System, Department of Defense 
(DoD).

ACTION: Request for information.

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SUMMARY: The DoD Contract Finance Study is the first comprehensive 
contract finance study since publication of the Defense Financial and 
Investment Review in June 1985. DoD is committed to transparency and is 
interested in obtaining the perspective of companies of all sizes as 
well as individuals on a number of relevant topics to contribute to 
this important study.

DATES: Interested parties should submit written comments to the address 
shown in ADDRESSES on or before July 18, 2022 to be considered in the 
Contract Finance Study.

ADDRESSES: Submit comments to the questions provided below, using any 
of the following methods:
    [cir] Federal eRulemaking Portal: https://www.regulations.gov. 
Search for ``Docket Number DARS-2022-0012.'' Select ``Comment'' and 
follow the instructions to submit a comment. Please include your name, 
company name (if any), and ``Docket Number DARS-2022-0012'' on any 
attached document(s).
    [cir] Email: [email protected]. Include 
``DoD Contract Finance Study'' in the subject line of the message.
    Comments received generally will be posted without change to 
https://www.regulations.gov, including any personal information 
provided. To confirm receipt of your comment(s), please check https://www.regulations.gov, approximately two to three days after submission 
to verify posting.

FOR FURTHER INFORMATION CONTACT: Ms. Sara Higgins, telephone 703-614-
1255.

SUPPLEMENTARY INFORMATION:

A. Background

    The Government Accountability Office (GAO) Final Report, GAO-19-
406, ``CONTRACT FINANCING: DoD Should Comprehensively Assess How Its 
Policies Affect the Defense Industries,'' dated June 27, 2019, 
recommended a comprehensive assessment of the effect that DoD's 
contract financing and profit policies have on the defense industry. 
DoD concurred with this recommendation.
    The Defense Contract Finance Study is being headed by the Defense 
Pricing and Contracting's Director of Price, Cost and Finance. The 
study is comprised of two phases with multiple parts and participants. 
The first phase includes data collection, research, and analysis 
focused on areas of study that include the financial health of the 
Defense Industrial Base, commercial financing trends, the effectiveness 
of current methods of DoD contract financing, and other aspects of 
contract financing. The second phase will commence upon completion of 
the analysis of inputs from the first phase and may include policy 
recommendations. Through initiatives such as the Defense Contract 
Finance study, DoD remains committed to enabling the delivery and 
sustainment of capability to our Warfighters and maintaining a 
resilient Defense Industrial Base.
    This notice requests comments and information from the public, 
specifically companies currently in the Defense Industrial Base, to 
assist DoD with this complex and significant study.

B. Topics

    DoD is particularly interested in comments and information with 
regard to contract finance policies as they affect all levels of the 
defense sector. Note that for the purpose of understanding financial 
health over time, the DoD Contract Finance Study is not covering 
impacts of the coronavirus disease 2019 (COVID-19) pandemic. Therefore, 
unless specifically asked, responses should exclude the period after 
the presidential declaration of a national emergency concerning the 
COVID 19 pandemic (March 13, 2020). DoD is seeking input from all 
business sizes, as identified below, on the following topics:

1. Financial Health

    a. What is your view of the financial health of the Defense 
Industrial Base? Has it improved over the last decade or two? Please 
provide your reasons and a description of any financial metrics that 
you think are relevant to answering these questions.

[[Page 36473]]

    b. How does the Defense Sector compare to relevant commercial 
sectors when it comes to financial health? Please explain.
    c. How important is cash flow and why? In the context of publicly 
traded companies, how do cash flow-related metrics influence executive 
compensation?

2. Financing

    a. For companies who perform work on DoD contracts as either a 
prime contractor or subcontractor, what, if any, obstacles have you 
encountered in obtaining financing? Please explain and also identify 
whether you are a large or small business.
    b. For companies who perform work both for DoD and in the 
commercial sector, what is your view on how financing compares between 
DoD and your commercial customers? Please explain. What about delivery 
terms? For example, DoD's terms to prime contractors are 30 days. How 
does this compare to commercial terms?

3. Prime Contractors (Regardless of Size Status) on Defense Contracts

    a. What is your size status (see Federal Acquisition Regulation 
(FAR) part 19) in the context of your defense work?
    b. What percentage of your suppliers receive contract financing 
(payments prior to delivery) from your firm?
    c. Is the answer different for large business suppliers than for 
small business suppliers? Does one group receive financing more often 
than the other?
    d. What are your criteria for determining which suppliers receive 
financing?
    e. How do your lower-tier suppliers know they are performing under 
a Government prime contract?
    f. If you have been or are receiving a higher progress payment rate 
due to the COVID-19 pandemic, have you accelerated payments to your 
suppliers since the COVID-19 pandemic? If so, by how much time have you 
accelerated payments to your suppliers? Please be specific. Did you 
provide financing (predelivery payments) to suppliers that were not 
receiving financing prior to the COVID-19 pandemic?
    g. If you did not receive a higher progress payment rate due to the 
COVID-19 pandemic, e.g., you do not receive progress payments on your 
defense contract, did you accelerate payments to your suppliers since 
the COVID-19 pandemic? If so, by how much time have you accelerated 
payments to your suppliers? Please be specific and address the extent 
to which you have accelerated payments. Did you provide financing 
(predelivery payments) to suppliers that were not receiving financing 
prior to the COVID-19 pandemic?

4. Subcontractors or Suppliers (Regardless of Size Status) Under a 
Defense Contract

    a. When you are performing as a subcontractor or supplier under a 
defense prime contract, how do you know that the ultimate customer is 
the Federal Government?
    b. Do you know the prime contract number (between the prime and the 
Government)? If so, how? Do you know who the Federal Government 
contracting officer is, or how to contact them? Would you be willing to 
contact the contracting officer if you were experiencing issues getting 
paid?
    c. Have financing payments or payments upon delivery from your 
customer (contractor) been accelerated during the COVID-19 pandemic? 
What are your normal terms and how much time have payments been 
accelerated? Did you receive financing (predelivery payments) from your 
prime or higher-tier contractor that you did not receive prior to the 
COVID-19 pandemic?
    d. Are there any conditions (e.g., changes in terms) associated 
with receiving payments from your prime or higher-tier contractor in a 
more expedited manner?

5. Small Businesses Performing on Defense Contracts

    a. If you are a small business performing as a prime contractor, 
what is your experience regarding receipt of timely payments from DoD?
    b. If you are a small business performing as a supplier or 
subcontractor, are you aware of whether the clause at Defense Federal 
Acquisition Regulation Supplement (DFARS) 252.232-7017, Accelerating 
Payments to Small Business Subcontractors--Prohibition on Fees and 
Consideration, is in the prime's contract? Is the substance of this 
clause in your subcontract?
    c. What are your normal payment terms (e.g., amount of time) for 
financing and for delivery?
    d. Are you receiving accelerated payments from your prime 
contractor? By how many days are payments being accelerated?
    Authority: DoD Instruction 5000.35, Defense Acquisition Regulations 
(DAR) System.

Jennifer D. Johnson,
Editor/Publisher, Defense Acquisition Regulations System.
[FR Doc. 2022-13047 Filed 6-16-22; 8:45 am]
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