232.502 Preaward matters. 232.502-1 Use of customary progress payments. In addition to progress payments, other factors influence a contractor's actual investment in work in process inventory, e.g., delivery schedules, cash management practices, and Government payment practices. Consequently, contractor investments in work in process inventory vary among contractors and contracts. The flexible rate is expressed as a percentage which is applied to costs to determine the amount payable as a progress payment, in the same manner as customary uniform rates are applied.
Total investment is measured by a weighted average of total costs paid by the contractor.
The contractor's investment is the weighted average of the amount not paid by the Government. This minimum investment level is based on the customary uniform progress payment rate and its related investment percentage. Be less than the customary uniform progress payment rate that would have been applied to the contract in the absence of customary flexible progress payments. For contracts or line items that are funded with FY87 appropriations, a contractor must retain at least a 25 percent investment in work in process inventory over the life of the contract or over the contract performance period applicable to the contract line item. The contract contains the clause at FAR 52.232-16, Progress Payments.