Because this is a FFP contract, should the CO review the financing agreement and determine reasonableness and can the CO accept a FF above the initial FF based on the particulars of the change order?
The FAR is very clear about paying interest. Interest on borrowing by a contractor (however represented) is not an allowable cost under a contract, FAR 31.205-20. Therefore, the Contracting Officer should not review or approve the financing agreement. The Government is not a party to the Contractor’s private financing agreement. You stated, “A deviation from FAR 31.205-20 has been granted” but failed to provide a copy of the deviation so I cannot provide comment on the deviation other than to say, since the deviation has been granted follow whatever the deviation states. If you need an interpretation of the deviation, you’ll need to request that from the authority that granted the deviation.
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