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10 U.S.C. § 3803 — Security for advance payments
Federal law — U.S. Code and appendices · legal_authorities
Advance payments made under [section 3801 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title10-section3801&num=0&edition=prelim) may be made only if the contractor gives adequate security and after a determination by the head of the agency that to do so would be in the public interest. Such security may be in the form of a lien in favor of the United States on the property contracted for, on the balance in an account in which such payments are deposited, and on such of the property acquired for performance of the contract as the parties may agree. This lien is paramount to any other liens and is effective immediately upon the first advancement of funds without filing, notice, or any other action by the United States.
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Stable record: federal_law:legal_authorities:record_usc_e36b40884730fc195faa758c
Source file: Laws/federal/codes/united-states-code/title-10/section-3803-security-for-advance-payments--9981e740f6.md
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Source location: Title 10, Chapter 277, § 3803; chapter-277-contract-financing.md
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Advance payments made under [section 3801 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title10-section3801&num=0&edition=prelim) may be made only if the contractor gives adequate security and after a determination by the head of the agency that to do so would be in the public interest. Such security may be in the form of a lien in favor of the United States on the property contracted for, on the balance in an account in which such payments are deposited, and on such of the property acquired for performance of the contract as the parties may agree. This lien is paramount to any other liens and is effective immediately upon the first advancement of funds without filing, notice, or any other action by the United States.
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Payment Authority.—** The head of any agency may—
(1) make advance, partial, progress, or other payments under contracts 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 payments.
**(b) Payment Dates for Contractors That Are Small Business Concerns.—**
(1) **Prime contractors.—** — For a prime contractor (as defined in [section 8701 of title 41](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section8701&num=0&edition=prelim)) that is a small business concern (as defined in section 3 of the Small Business Act ([15 U.S.C. 632](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title15-section632&num=0&edition=prelim))), the Secretary of Defense shall, to the fullest extent permitted by law, establish an accelerated payment date with a goal of 15 days after receipt of a proper invoice for the amount due.
(2) **Subcontractors.—** — For a prime contractor that subcontracts with a small business concern, the Secretary of Defense shall, to the fullest extent permitted by law, establish an accelerated payment date with a goal of 15 days after receipt of a proper invoice for the amount due if the prime contractor agrees to make payments to the subcontractor in accordance with the accelerated payment date, to the maximum extent practicable, without any further consideration from or fees charged to the subcontractor.
Source: Supplied U.S. Code snapshot — release unconfirmed · 10 U.S.C. § 3801
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Defense Acquisition System.—** In this part, the term “defense acquisition system” means—
(1) the workforce engaged in carrying out the acquisition of property and services for the Department of Defense;
(2) the management structure responsible for directing and overseeing the acquisition of property and services for the Department of Defense; and
(3) the statutory, regulatory, and policy framework that guides the acquisition of property and services for the Department of Defense.
**(b) Element of the Defense Acquisition System.—** In this part, the term “element of the defense acquisition system” means an organization that—
(1) employs members of the acquisition workforce;
(2) carries out acquisition functions; and
(3) focuses primarily on acquisition.
**(c) Acquisition.—** In this part, the term “acquisition” has the meaning provided in [section 131 of title 41](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section131&num=0&edition=prelim).
Source: Supplied U.S. Code snapshot — release unconfirmed · 10 U.S.C. § 3001
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Federal law — U.S. Code and appendices · legal_authorities
**(a) Terms and Conditions for Payments.—** Payments under [section 3801 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title10-section3801&num=0&edition=prelim) for commercial products and commercial services may be made under such terms and conditions as the head of the agency determines are appropriate or customary in the commercial marketplace and are in the best interests of the United States.
**(b) Security for Payments.—** The head of the agency shall obtain adequate security for such payments. If the security is in the form of a lien in favor of the United States, such lien is paramount to all other liens and is effective immediately upon the first payment, without filing, notice, or other action by the United States.
**(c) Limitation on Advance Payments.—** Advance payments made under [section 3801 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title10-section3801&num=0&edition=prelim) for commercial products and commercial services 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.
**(d) Nonapplication of Certain Conditions.—**
(1) The conditions of sections 3803 and 3804 of this title need not be applied if they would be inconsistent, as determined by the head of the agency, with commercial terms and conditions pursuant to this section.
(2) For the purposes of [section 3803 of this title](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title10-section3803&num=0&edition=prelim), a payment for covered services acquired through a commercially utilized acquisition strategy shall not be considered an advance payment made under [section 3801 of this title](https://uscode.house.gov/view.xhtml?re
Source: Supplied U.S. Code snapshot — release unconfirmed · 10 U.S.C. § 3805
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Federal law — U.S. Code and appendices · legal_authorities
Page 2564
TITLE 10—ARMED FORCES
§ 3803
ceptable items, work measurement, or statis-
tical process controls.
(2) Accomplishment of events defined in the
program management plan.
(3) Other quantifiable measures of results.
(b)
BASIS
FOR
PERFORMANCE-BASED
PAY-
MENTS.—Performance-based payments shall not
be conditioned upon costs incurred in contract
performance but on the achievement of perform-
ance outcomes listed in subsection (a).
(c) CONTRACTOR ACCOUNTING SYSTEMS.—
(1) In order to receive performance-based
payments, a contractor’s accounting system
shall be in compliance with Generally Accept-
ed Accounting Principles, and there shall be
no requirement for a contractor to develop
Government-unique accounting systems or
practices as a prerequisite for agreeing to re-
ceive performance-based payments.
(2) Nothing in this chapter shall be con-
strued to grant the Defense Contract Audit
Agency the authority to audit compliance
with Generally Accepted Accounting Prin-
ciples.
(d) PAYMENT AMOUNT.—Payments made under
section 3801 of this title may not exceed the un-
paid contract price.
(e) ELIGIBILITY
OF NONTRADITIONAL DEFENSE
CONTRACTORS.—The Secretary of Defense shall
ensure that nontraditional defense contractors
and other private sector companies are eligible
for
performance-based
payments,
consistent
with best commercial practices.
(Added and amended Pub. L. 116–283, div. A, title
XVIII, § 1834(a), (c), Jan. 1, 2021, 134 Stat. 4234,
4235.)
Editorial Notes
CODIFICATION
The text of subsec. (b) of section 2307 of this title,
which was transferred to this section, redesignated as
subsecs. (a), (b), (c), and (e), and amended by Pub. L.
116–283, § 1834(c)(1)–(5), (7), was based on Pub. L. 103–355,
title II, § 2001(b), Oct. 13, 1994, 108 Stat
Source: Supplied 2024 U.S. Code historical extraction · 10 U.S.C. § 3803
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