CONTRACT FINANCING.

SEC. 2051. CONTRACT FINANCING. (a) Reorganization of Principal Authority Provision.— Section 305 of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 255) is amended— (1) by striking out the section heading and the section designation and inserting in lieu thereof the following: 108 STAT. 3304 “SEC. 305. CONTRACT FINANCING.”; (2) by inserting “Payment Authority.—” after “(a)” in subsection (a); (3) by inserting “Payment Amount.—” after “(b)” in subsection (b); (4) by inserting “Security for Advance Payments.—” after “(c)” in subsection (c); and (5) by redesignating subsections (b) and (c) as subsections (c) and (d), respectively. (b) Performance-Based Payments.— Such section, as amended by subsection (a), is further amended by inserting after subsection (a) the following new subsection (b): “(b) Performance-Based Payments.— Whenever practicable, payments under subsection (a) 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.”. (c) Terminology Correction.— Subsection (a)(2) of such section is amended by striking out “bid”. (d) Effective Date of Lien Related to Advance Payments.— Such section, as amended by subsection (a)(5), is further amended in subsection (d) by inserting before the period at the end of the third sentence the following: “and is effective immediately upon the first advancement of funds without filing, notice, or any other action by the United States”. (e) Revision of Civilian Agency Provision To Ensure Uniform Requirements for Progress Payments.— Such section is further amended by adding at the end the following new subsections: “(e) Conditions for Progress Payments.— (1) The executive agency shall ensure that any payment for work in progress (including materials, labor, and other items) under a contract of an executive agency that provides for such payments is commensurate with the work accomplished that meets standards established under the contract. The contractor shall provide such information and evidence as the executive agency determines necessary to permit the executive agency to carry out the preceding sentence. “(2) The executive agency shall ensure that progress payments referred to in paragraph (1) are not made for more than 80 percent of the work accomplished under the contract so long as the executive agency has not made the contractual terms, specifications, and price definite. “(3) This subsection applies to any contract in an amount greater than $25,000. “(f) Conditions for Payments for Commercial Items.— (1) Payments under subsection (a) for commercial items may be made under such terms and conditions as the head of the executive agency determines are appropriate or customary in the commercial marketplace and are in the best interests of the United States. The head of the executive agency shall obtain adequate security for such payments. If the security is in the form of a hen in favor of the United States, such lien is paramount to all other 108 STAT. 3305liens and is effective immediately upon the first payment, without filing, notice, or other action by the United States. “(2) Advance payments made under subsection (a) for commercial items may include payments, in a total amount of not more than 15 percent of the contract price, in advance of any performance of work under the contract. “(3) The conditions of subsections (d) and (e) need not be applied if they would be inconsistent, as determined by the head of the executive agency, with commercial terms and conditions pursuant to paragraphs (1) and (2).”. “(g) Action in Case of Fraud.— (1) In any case in which the remedy coordination official of an executive agency finds that there is substantial evidence that the request of a contractor for advance, partial, or progress payment under a contract awarded by that executive agency is based on fraud, the remedy coordination official shall recommend that the executive agency reduce or suspend further payments to such contractor. “(2) The head of an executive agency receiving a recommendation under paragraph (1) in the case of a contractor’s request for payment under a contract shall determine whether there is substantial evidence that the request is based on fraud. Upon making such a determination, the head of the executive agency may reduce or suspend further payments to the contractor under such contract. “(3) The extent of any reduction or suspension of payments by an executive agency under paragraph (2) on the basis of fraud shall be reasonably commensurate with the anticipated loss to the United States resulting from the fraud. “(4) A written justification for each decision of the head of an executive agency whether to reduce or suspend payments under paragraph (2), and for each recommendation received by the executive agency in connection with such decision, shall be prepared and be retained in the files of the executive agency. “(5) The head of each executive agency shall prescribe procedures to ensure that, before the head of the executive agency decides to reduce or suspend payments in the case of a contractor under paragraph (2), the contractor is afforded notice of the pro-posed reduction or suspension and an opportunity to submit matters to the executive agency in response to such proposed reduction or suspension. “(6) Not later than 180 days after the date on which the head of an executive agency reduces or suspends payments to a contractor under paragraph (2), the remedy coordination official of the executive agency shall— “(A) review the determination of fraud on which the reduction or suspension is based; and “(B) transmit a recommendation to the head of such executive agency whether the suspension or reduction should continue. “(7) The head of each executive agency who receives recommendations made by a remedy coordination official of the executive agency to reduce or suspend payments under paragraph (2) during a fiscal year shall prepare for such year a report that contains the recommendations, the actions taken on the recommendations and the reasons for such actions, and an assessment of the effects of such actions on the Federal Government. Any 108 STAT. 3306such report shall be available to any Member of Congress upon request. “(8) The head of an executive agency may not delegate responsibilities under this subsection to any person in a position below level IV of the Executive Schedule. “(9) In this subsection, the term ‘remedy coordination official’, with respect to an executive agency, means the person or entity in that executive agency who coordinates within that executive agency the administration of criminal, civil, administrative, and contractual remedies resulting from investigations of fraud or corruption related to procurement activities.”. (f) Relationship to Prompt Payment Requirements.— The amendments made by this section are not intended to impair or modify procedures required by the provisions of chapter 39 of title 31, United States Code, and the regulations issued pursuant to such provisions of law (as such procedures are in effect on the date of the enactment of this Act), except that the Government may accept payment terms offered by a contractor offering a commercial item.