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(e) COSTS SPECIFICALLY AUTHORIZED BY EXECUTIVE AGENCY IN PRO-
CEEDING COMMENCED BY STATE.—In the case of a proceeding referred to 
in subsection (b) that is commenced by a State, the executive agency that 
awarded the covered contract involved in the proceeding may allow the costs 
incurred by the contractor in connection with the proceeding as reimburs-
able costs if the executive agency determines, in accordance with the Fed-
eral Acquisition Regulation, that the costs were incurred as a result of— 
(1) a specific term or condition of the contract; or 
(2) specific written instructions of the executive agency. 
(f) OTHER ALLOWABLE COSTS.— 
(1) IN GENERAL.—Except as provided in paragraph (3), costs in-
curred by a contractor in connection with a criminal, civil, or adminis-
trative proceeding commenced by the Federal Government or a State 
in connection with a covered contract may be allowed as reimbursable 
costs under the contract if the costs are not disallowable under sub-
section (b), but only to the extent provided in paragraph (2). 
(2) AMOUNT OF ALLOWABLE COSTS.— 
(A) MAXIMUM AMOUNT ALLOWED.—The amount of the costs al-
lowable under paragraph (1) in any case may not exceed the 
amount equal to 80 percent of the amount of the costs incurred, 
to the extent that the costs are determined to be otherwise allow-
able and allocable under the Federal Acquisition Regulation. 
(B) CONTENT OF REGULATIONS.—Regulations issued for the 
purpose of subparagraph (A) shall provide for appropriate consid-
eration of the complexity of procurement litigation, generally ac-
cepted principles governing the award of legal fees in civil actions 
involving the Federal Government as a party, and other factors as 
may be appropriate. 
(3) WHEN OTHERWISE ALLOWABLE COSTS ARE NOT ALLOWABLE.— 
In the case of a proceeding referred to in paragraph (1), contractor 
costs otherwise allowable as reimbursable costs under this subsection 
are not allowable if— 
(A) the proceeding involves the same contractor misconduct al-
leged as the basis of another criminal, civil, or administrative pro-
ceeding; and 
(B) the costs of the other proceeding are not allowable under 
subsection (b). 
CHAPTER 45—CONTRACT FINANCING 
Sec. 
4501.
Authority of executive agency. 
4502.
Payment. 
4503.
Security for advance payments. 
4504.
Conditions for progress payments. 
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4505.
Payments for commercial items. 
4506.
Action in case of fraud. 
§ 4501. Authority of executive agency 
An executive agency may— 
(1) make advance, partial, progress or other payments under con-
tracts for property or services made by the agency; and 
(2) insert in solicitations for procurement of property or services a 
provision limiting to small business concerns advance or progress pay-
ments. 
§ 4502. Payment 
(a) BASIS FOR PAYMENT.—When practicable, payments under section 
4501 of this title shall be made on any of the following bases: 
(1) Performance measured by objective, quantifiable methods such as 
delivery of acceptable items, work measurement, or statistical process 
controls. 
(2) Accomplishment of events defined in the program management 
plan. 
(3) Other quantifiable measures of results. 
(b) PAYMENT AMOUNT.—Payments made under section 4501 of this title 
may not exceed the unpaid contract price. 
§ 4503. Security for advance payments 
Advance payments under section 4501 of this title may be made only on 
adequate security and a determination by the agency head that to do so 
would be in the public interest. The security may be in the form of a lien 
in favor of the Federal Government on the property contracted for, on the 
balance in an account in which the payments are deposited, and on such 
of the property acquired for performance of the contract as the parties may 
agree. This lien shall be paramount to all other liens and is effective imme-
diately upon the first advancement of funds without filing, notice, or any 
other action by the Federal Government. 
§ 4504. Conditions for progress payments 
(a) PAYMENT COMMENSURATE WITH WORK.—The executive agency shall 
ensure that a payment for work in progress (including materials, labor, and 
other items) under a contract of an executive agency that provides for those 
payments is commensurate with the work accomplished that meets stand-
ards established under the contract. The contractor shall provide informa-
tion and evidence the executive agency determines is necessary to permit the 
executive agency to carry out this subsection. 
(b) LIMITATION.—The executive agency shall ensure that progress pay-
ments referred to in subsection (a) are not made for more than 80 percent 
of the work accomplished under the contract as long as the executive agency 
has not made the contractual terms, specifications, and price definite. 
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