(a) The contracting officer may provide unusual progress payments only if-

1. (1) The contract necessitates predelivery expenditures that are large in relation to contract price and in relation to the contractor’s working capital and credit;

2. (2) The contractor fully documents an actual need to supplement any private financing available, including guaranteed loans; and

3. (3) The contractor’s request is approved by the head of the contracting activity or a designee. In addition, see 32.502-2.

(b) The excess of the unusual progress payment rate approved over the customary progress payment rate should be the lowest amount possible under the circumstances.

(c) Progress payments will not be considered unusual merely because they are on letter contracts or the definitive contracts that supersede letter contracts.