(a) WHAT IS CONTRACT FUNDING?

(1) "Contract funding," for the purpose of this Guide, means committing available funds to be used for a specific program under a specific contract.

(2) "Committing funds" means administratively reserving currently available funds based on a firm procurement request. A commitment authorizes the incurrence of an obligation without further approval by or recourse to the funds certifying official.

(3) "Contract funding process," for the purpose of this Guide, means the steps taken to make funds available for contract performance, culminating in the obligation of funds under a contract.

(4) Contract financing is not the same thing as contract funding. The purpose of contract financing is to balance two needs: (a) to provide the contractor with the working capital and cash flow needed to perform as expected; and (b) to disburse Government funds as gradually as possible so as to, at least theoretically, keep as much as possible in the treasury earning interest. The function of contract financing is to synchronize the funding and payment ground rules for any given contract.