[Federal Register: August 28, 2000 (Volume 65, Number 167)]
[Proposed Rules]
[Page 52243-52257]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28au00-26]
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Part IV
Department of Defense
General Services Administration
National Aeronautics and Space Administration
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48 CFR Parts 2, 32, and 52
Federal Acquisition Regulation; Prompt Payment and the Recovery of
Overpayment; Proposed Rule
[[Page 52244]]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 2, 32, and 52
[FAR Case 1999-023]
RIN 9000-AI89
Federal Acquisition Regulation; Prompt Payment and the Recovery
of Overpayment
AGENCIES: Department of Defense (DoD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Proposed rule.
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council (Councils) are proposing to amend the
Federal Acquisition Regulation (FAR) to:
Reflect changes made to the Office of Management and
Budget (OMB) prompt payment regulations;
Simplify and clarify the prompt payment coverage currently
in the FAR;
Require the contractor to notify the contracting officer
if the contractor becomes aware of an overpayment; and
Write all new and revised text using plain language in
accordance with the White House memorandum, Plain Language in
Government Writing, dated June 1, 1998.
DATES: Interested parties should submit comments in writing on or
before October 27, 2000 to be considered in the formulation of a final
rule.
ADDRESSES: Submit written comments to: General Services Administration,
FAR Secretariat (MVRS), 1800 F Street, NW, Room 4035, ATTN: Laurie
Duarte, Washington, DC 20405.
Submit electronic comments via the Internet to: farcase.1999-
023@gsa.gov
Please submit comments only and cite FAR case 1999-023 in all
correspondence related to this case.
FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, Room 4035, GS
Building, Washington, DC, 20405, at (202) 501-4755 for information
pertaining to status or publication schedules. For clarification of
content, contact Jeremy Olson at (202) 501-0692. Please cite FAR case
1999-023.
SUPPLEMENTARY INFORMATION:
A. Background
This proposed rule revises the FAR to--
Conform the prompt payment coverage to OMB regulations.
The OMB final rule was published in the Federal Register at 64 FR
52580, September 29, 1999. The FAR rule--
1. Replaces references to OMB Circular A-125, Prompt Payment, with
references to 5 CFR part 1315. The OMB rule incorporated Prompt Payment
Act (31 U.S.C. 39) requirements into a new part 1315 of Title 5 of the
Code of Federal Regulations. OMB's issuance of codified regulations has
the effect of superceding and rescinding Circular A-125;
2. Conforms certain FAR definitions related to prompt payment to
those in the new OMB regulations;
3. Revises the requirements for a ``proper invoice''; and
4. Changes policies on interim payments under cost reimbursement
contracts so that prompt payment late payment penalty interest
requirements apply to interim payments made for separately priced
contract line items that have been completed by a contractor and
accepted by the Government.
Simplify and clarify existing language. The rule--
1. Clarifies that prompt payment interest penalties do not apply to
contract financing payments by--
a. Moving contract financing payment coverage from FAR 32.9 to FAR
32.007;
b. Removing contract financing payments coverage from the prompt
payment clauses at FAR 52.232-25, Prompt Payment; FAR 52.232-26, Prompt
Payment for Fixed-Price Architect-Engineer Contracts; and FAR 52.232-
27, Prompt Payment for Construction Contracts; and
c. Adding language regarding payment due dates and the
inapplicability of prompt payment interest penalties to contract
financing clauses; and
2. Removes discussion of the interest penalty calculation at FAR
32.907-1 and in the prompt payment clauses, and replaces the discussion
with a reference to the OMB prompt payment regulations at 5 CFR part
1315.
Implement a General Accounting Office (GAO)
recommendation. In July 1999, the GAO published a report (GAO/NSIAD-99-
131) entitled Greater Attention Needed to Identify and Recover
Overpayments. After examining the process for identifying and
collecting overpayments, GAO concluded in their report that ``Under
current law, there is no requirement for contractors who have been
overpaid to notify the Government of overpayments or to return
overpayments prior to the Government issuing a demand letter'' (i.e.,
formal notification to the contractor to pay money owed to the
Government). One of the recommendations of the report was that DoD
require contractors to promptly notify the Government of overpayments
made to them. Accordingly, the FAR rule adds a paragraph to the prompt
payment clauses that requires the contractor to notify the contracting
officer if the contractor becomes aware of an overpayment; and
Write all new and revised text using plain language in
accordance with the White House memorandum, Plain Language in
Government Writing, dated June 1, 1998.
This is not a significant regulatory action and, therefore, was not
subject to review under Section 6(b) of Executive Order 12866,
Regulatory Planning and Review, dated September 30, 1993. This rule is
not a major rule under 5 U.S.C. 804.
B. Regulatory Flexibility Act
The Councils do not expect this proposed rule to have a significant
economic impact on a substantial number of small entities within the
meaning of the Regulatory Flexibility Act, 5 U.S.C. 601, et seq.,
because, of the three primary changes that are included in this rule,
one is a clarification and not a change in policy and the other two
will not affect a substantial number of small entities. The current FAR
authorizes agencies to collect TIN and EFT banking information in any
manner they choose, such as requiring it to be provided on each
invoice. The clarification of this authority at FAR 32.905 is not new
policy. The proposed amendments addressing late payment penalties for
certain interim payments under cost reimbursement contracts do not
affect a substantial number of small entities because most contracts
awarded to small businesses are awarded on a competitive, fixed-price
basis and the number of small entities receiving cost reimbursement
awards is not substantial. The proposed rule amendments addressing
notification of overpayments is not expected to impact a substantial
number of small entities because the overpayments cited by GAO in their
report 99-131, July 1999, were all related to large businesses. An
Initial Regulatory Flexibility Analysis has, therefore, not been
performed. We invite comments from small businesses and other
interested parties. The Councils will consider comments from small
entities concerning the affected FAR Parts in accordance with 5 U.S.C.
610. Interested parties must submit such comments separately and should
cite 5
[[Page 52245]]
U.S.C. 601, et seq. (FAR case 1999-023), in correspondence.
C. Paperwork Reduction Act
The Paperwork Reduction Act (Pub. L. 104-13) applies because the
proposed rule contains information collection requirements. The
proposed rule increases the collection requirements under the
previously approved OMB Control No. 9000-0070, because the rule
requires contractors to notify the Government of overpayments.
Annual Reporting Burden
Public reporting burden for this collection of information is
estimated to average 5 minutes per response, including the time for
reviewing instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collection of information. Based on findings by the GAO in its draft
report of October 17, 1997, checks received from contractors averaged
roughly 7,000 per year. About 27 percent of the dollar value of these
checks was attributable to payment errors (i.e., not because of
contract changes, modifications, etc.). Therefore, there were about
1,890 checks received due to payment errors. At 5 minutes per
notification, this results in an annual average of approximately 157.5
hours per year, governmentwide. Although this estimated burden requires
approval under the Act, it is so small that it does not impact the
estimated total burden under 9000-0070.
The annual reporting burden under 9000-0070 is estimated as
follows:
Respondents: 80,000.
Responses per respondent: 120.
Total annual responses: 9,600,000.
Preparation hours per response: .025 hrs.
Total response burden hours: 240,000 hrs.
D. Request for Comments Regarding Paperwork Burden
Submit comments, including suggestions for reducing this burden,
not later than October 27, 2000 to: FAR Desk Officer, OMB, Room 10102,
NEOB, Washington, DC 20503, and a copy to the General Services
Administration, FAR Secretariat (MVR), 1800 F Street, NW, Room 4035,
Washington, DC 20405.
Public comments are particularly invited on: Whether this
collection of information is necessary for the proper performance of
functions of the FAR, and whether it will have practical utility;
whether our estimate of the public burden of this collection of
information is accurate, and based on valid assumptions and
methodology; ways to enhance the quality, utility, and clarity of the
information to be collected; and ways in which we can minimize the
burden of the collection of information on those who are to respond,
through the use of appropriate technological collection techniques or
other forms of information technology.
Requester may obtain a copy of the justification from the General
Services Administration, FAR Secretariat (MVR), Room 4035, Washington,
DC 20405, telephone (202) 208-7312. Please cite OMB Control Number
9000-0070, FAR Case 1999-023, Prompt Payment and Recovery of
Overpayment, in all correspondence.
List of Subjects in 48 CFR Parts 2, 32, and 52
Government procurement.
Dated: August 22, 2000.
Jeremy F. Olson,
Acting Director, Federal Acquisition Policy Division.
Therefore, DoD, GSA, and NASA propose that 48 CFR parts 2, 32, and
52 be amended as set forth below:
1. The authority citation for 48 CFR parts 2, 32, and 52 continues
to read as follows:
Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).
PART 2--DEFINITIONS OF WORDS AND TERMS
2. Amend section 2.101 by adding, in alphabetical order, the
definitions ``Proper invoice'' and ``Receiving report'' to read as
follows:
2.101 Definitions.
* * * * *
Proper invoice means an invoice that meets the minimum standards
specified in 32.905(b).
Receiving report means written evidence that indicates Government
acceptance of supplies delivered or services performed (see subpart
46.6). Receiving reports must meet the requirements of 32.905(c).
* * * * *
PART 32--CONTRACT FINANCING
3. Amend section 32.001 by adding an introductory sentence; in the
definition ``Contract action'' by removing ``, as used in this part,'';
and by adding, in alphabetical order, the definitions ``Contract
financing payment'', ``Designated billing office'', ``Designated
payment office'', ``Due date'', and ``Invoice payment'' to read as
follows:
32.001 Definitions.
As used in this part--
* * * * *
Contract financing payment means an authorized Government
disbursement of monies to a contractor prior to acceptance of supplies
or services by the Government.
(1) Contract financing payments include--
(i) Advance payments;
(ii) Performance-based payments;
(iii) Commercial advance and interim payments;
(iv) Progress payments based on cost under the clause at 52.232-16,
Progress Payments;
(v) Progress payments based on a percentage or stage of completion
(see 32.102(e)), except those made under the clause at 52.232-5,
Payments Under Fixed-Price Construction Contracts, or the clause at
52.232-10, Payments Under Fixed-Price Architect-Engineer Contracts; and
(vi) Interim payments on cost-type contracts, except for interim
payments of separately priced contract line items that--
(A) The contractor has completed; and
(B) The Government has accepted.
(2) Contract financing payments do not include--
(i) Invoice payments;
(ii) Payments for partial deliveries; or
(iii) Lease and rental payments.
* * * * *
Designated billing office means the office or person (governmental
or nongovernmental) designated in the contract where the contractor
first submits invoices and contract financing requests. The contract
might designate different offices to receive invoices and contract
financing requests.
The designated billing office might be--
(1) The Government disbursing office;
(2) The contract administration office;
(3) The office accepting the supplies delivered or services
performed by the contractor;
(4) The contract audit office; or
(5) A nongovernmental agent.
Designated payment office means the office designated in the
contract to make invoice payments or contract financing payments.
Normally, this will be the Government disbursing office.
Due date means the date on which payment should be made.
Invoice payment means a Government disbursement of monies to a
contractor under a contract or other authorization for supplies or
services accepted by the Government.
(1) Invoice payments include--
(i) Payments for partial deliveries that have been accepted by the
Government;
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(ii) Final cost or fee payments where amounts owed have been
settled between the Government and the contractor;
(iii) For purposes of subpart 32.9 only, all payments made under
the clause at 52.232-5, Payments Under Fixed-Price Construction
Contracts, and the clause at 52.232-10, Payments Under Fixed-Price
Architect-Engineer Contracts; and
(iv) Interim payments under cost-type contracts for separately
priced contract line items that--
(A) The contractor has completed; and
(B) The Government has accepted.
(2) Invoice payments do not include contract financing payments.
* * * * *
4. Add section 32.007 to read as follows:
32.007 Contract financing payments.
(a)(1) Unless otherwise prescribed in agency policies and
procedures or otherwise specified in paragraph (b) of this section, the
due date for making contract financing payments by the designated
payment office is the 30th day after the designated billing office
receives a proper contract financing request.
(2) If an audit or other review of a specific financing request is
required to ensure compliance with the terms and conditions of the
contract, the designated payment office is not compelled to make
payment by the specified due date.
(3) Agency heads may prescribe shorter periods for payment based on
contract pricing or administrative considerations. For example, a
shorter period may be justified by an agency if the nature and extent
of contract financing arrangements are integrated with agency contract
pricing policies.
(4) Agency heads must not prescribe a period shorter than 7 days or
longer than 30 days.
(b) For advance payments, loans, or other arrangements that do not
involve recurrent submission of contract financing requests, the
designated payment office will make payment in accordance with the
applicable contract financing terms or as directed by the contracting
officer.
(c) A proper contract financing request must comply with the terms
and conditions specified by the contract. The contractor must correct
any defects in requests submitted in the manner specified in the
contract or as directed by the contracting officer.
(d) The designated billing office and designated payment office
must annotate each contract financing request with the date their
respective offices received the request.
(e) The Government will not pay an interest penalty to the
contractor as a result of delayed contract financing payments.
5. Amend section 32.102 by revising paragraph (d) to read as
follows:
32.102 Description of contract financing methods.
* * * * *
(d) Payments for accepted supplies and services that are only a
part of the contract requirements (i.e., partial deliveries) are
authorized under 41 U.S.C. 255 and 10 U.S.C. 2307. In accordance with 5
CFR 1315.4(k), agencies must pay for partial delivery of supplies or
partial performance of services unless specifically prohibited by the
contract. Although payments for partial deliveries generally are
treated as a method of payment and not as a method of contract
financing, using partial delivery payments can assist contractors to
participate in contracts without, or with minimal, contract financing.
When appropriate, contract statements of work and pricing arrangements
must permit acceptance and payment for discrete portions of the work,
as soon as accepted (see 32.906(c)).
* * * * *
Subpart 32.9 [Amended]
6. Amend Subpart 32.9 by--
a. Revising sections 32.900, 32.901, and 32.902;
b. Removing section 32.903;
c. Redesignating sections 32.904, 32.905, and 32.906 as sections
32.903, 32.904, and 32.905, respectively, and revising;
d. Adding section 32.906; and
e. Revising sections 32.907, 32.907-1, 32.907-2, 32.908, and 32.909
to read as follows:
Subpart 32.9 Prompt Payment
Sec.
32.900 Scope of subpart.
32.901 Applicability.
32.902 Definitions.
32.903 Responsibilities.
32.904 Determining payment due dates.
32.905 Payment documentation and process.
32.906 Making payments.
32.907 Interest penalties.
32.908 Contract clauses.
32.909 Contractor inquiries.
Subpart 32.9--Prompt Payment
32.900 Scope of subpart.
This subpart prescribes policies, procedures, and clauses for
implementing Office of Management and Budget (OMB) prompt payment
regulations at 5 CFR part 1315.
32.901 Applicability.
(a) This subpart applies to invoice payments on all contracts,
except contracts with payment terms and late payment penalties
established by other governmental authority (e.g., tariffs).
(b) This subpart does not apply to contract financing payments (see
definition at 32.001).
32.902 Definitions.
As used in this subpart--
Discount for prompt payment means an invoice payment reduction
offered by the contractor for payment prior to the due date.
Mixed invoice means an invoice that contains items with different
payment due dates.
Payment date means the date on which a check for payment is dated
or, for an electronic funds transfer (EFT), the settlement date.
Settlement date, as it applies to EFT, means the date on which an
EFT payment is credited to the contractor's financial institution.
32.903 Responsibilities.
(a) Agency heads--
(1) Must establish the policies and procedures necessary to
implement this subpart;
(2) May prescribe additional standards for establishing invoice
payment due dates (see 32.904) necessary to support agency programs and
foster prompt payment to contractors;
(3) May adopt different payment procedures in order to accommodate
unique circumstances, provided that such procedures are consistent with
the policies in this subpart;
(4) Must inform contractors of points of contact within their
cognizant payment offices to enable contractors to obtain status of
invoices; and
(5) May authorize the use of the accelerated payment methods
specified at 5 CFR 1315.5.
(b) When drafting solicitations and contracts, contracting officers
must identify for each contract line item number, subline item number,
or exhibit line item number--
(1) The applicable Prompt Payment clauses that apply to each item
when the solicitation or contract contains items that will be subject
to different payment terms; and
(2) The applicable Prompt Payment food category (e.g., which item
numbers are meat or meat food products, which are perishable
agricultural commodities), when the solicitation or contract contains
multiple payment terms for various classes of foods and edible
products.
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32.904 Determining payment due dates.
(a) General. Agency procedures must ensure that, when specifying
due dates, contracting officers give full consideration to the time
reasonably required by Government officials to fulfill their
administrative responsibilities under the contract.
(b) Payment due dates. Except as prescribed in paragraphs (c), (d),
and (e) of this section, or as authorized in 32.908 (a)(2) or (c)(2),
the due date for making an invoice payment is as follows:
(1) The later of the following two events:
(i) The 30th day after the designated billing office receives a
proper invoice from the contractor (except as provided in paragraph
((b)(3) of this section).
(ii) The 30th day after Government acceptance of supplies delivered
or services performed.
(A) For a final invoice, when the payment amount is subject to
contract settlement actions, acceptance is deemed to occur on the
effective date of the contract settlement.
(B) For the sole purpose of computing an interest penalty that
might be due the contractor--
(1) Government acceptance is deemed to occur constructively on the
7th day after the contractor delivers supplies or performs services in
accordance with the terms and conditions of the contract, unless there
is a disagreement over quantity, quality, or contractor compliance with
a contract requirement;
(2) If actual acceptance occurs within the constructive acceptance
period, the Government must base the determination of an interest
penalty on the actual date of acceptance;
(3) The constructive acceptance requirement does not compel
Government officials to accept supplies or services, perform contract
administration functions, or make payment prior to fulfilling their
responsibilities; and
(4) Except for a contract for the purchase of a commercial item,
including a brand-name commercial item for authorized resale (e.g.,
commissary items), the contracting officer may specify a longer period
for constructive acceptance in the solicitation and resulting contract,
if required to afford the Government a reasonable opportunity to
inspect and test the supplies furnished or to evaluate the services
performed. The contracting officer must document in the contract file
the justification for extending the constructive acceptance period
beyond 7 days. Extended acceptance periods must not be a routine agency
practice and must be used only when necessary to permit proper
Government inspection and testing of the supplies delivered or services
performed.
(2) If the contract does not require submission of an invoice for
payment (e.g., periodic lease payments), the contracting officer must
specify the due date in the contract.
(3) If the designated billing office fails to annotate the invoice
with the actual date of receipt at the time of receipt, the invoice
payment due date is the 30th day after the date of the contractor's
invoice, provided the designated billing office receives a proper
invoice and there is no disagreement over quantity, quality, or
contractor compliance with contract requirements.
(c) Architect-engineer contracts. (1) The due date for making
payments on contracts that contain the clause at 52.232-10, Payments
Under Fixed-Price Architect-Engineer Contracts, is as follows:
(i) The due date for work or services completed by the contractor
is the later of the following two events:
(A) The 30th day after the designated billing office receives a
proper invoice from the contractor.
(B) The 30th day after Government acceptance of the work or
services completed by the contractor.
(1) For a final invoice, when the payment amount is subject to
contract settlement actions (e.g., release of claims), acceptance is
deemed to occur on the effective date of the settlement.
(2) For the sole purpose of computing an interest penalty that
might be due the contractor, Government acceptance is deemed to occur
constructively on the 7th day after the contractor completes the work
or services in accordance with the terms and conditions of the contract
(see also paragraph (c)(2) of this section). If actual acceptance
occurs within the constructive acceptance period, the Government must
base the determination of an interest penalty on the actual date of
acceptance.
(ii) The due date for progress payments is the 30th day after
Government approval of contractor estimates of work or services
accomplished. For the sole purpose of computing an interest penalty
that might be due the contractor--
(A) Government approval is deemed to occur constructively on the
7th day after the designated billing office receives the contractor
estimates (see also paragraph (c)(2) of this section).
(B) If actual approval occurs within the constructive approval
period, the Government must base the determination of an interest
penalty on the actual date of approval.
(iii) If the designated billing office fails to annotate the
invoice or payment request with the actual date of receipt at the time
of receipt, the payment due date is the 30th day after the date of the
contractor's invoice or payment request, provided the designated
billing office receives a proper invoice or payment request and there
is no disagreement over quantity, quality, or contractor compliance
with contract requirements.
(2) The constructive acceptance and constructive approval
requirements described in paragraphs (c)(1)(i) and (ii) of this section
are conditioned upon receipt of a proper payment request and no
disagreement over quantity, quality, contractor compliance with
contract requirements, or the requested progress payment amount. These
requirements do not compel Government officials to accept work or
services, approve contractor estimates, perform contract administration
functions, or make payment prior to fulfilling their responsibilities.
The contracting officer may specify a longer period for constructive
acceptance or constructive approval, if required to afford the
Government a reasonable opportunity to inspect and test the supplies
furnished or to evaluate the services performed. The contracting
officer must document in the contract file the justification for
extending the constructive acceptance or approval period beyond 7 days.
(d) Construction contracts. (1) The due date for making payments on
construction contracts is as follows:
(i) The due date for making progress payments based on contracting
officer approval of the estimated amount and value of work or services
performed, including payments for reaching milestones in any project,
is 14 days after the designated billing office receives a proper
payment request.
(A) If the designated billing office fails to annotate the payment
request with the actual date of receipt at the time of receipt, the
payment due date is the 14th day after the date of the contractor's
payment request, provided the designated billing office receives a
proper payment request and there is no disagreement over quantity,
quality, or contractor compliance with contract requirements.
(B) The contracting officer may specify a longer period in the
solicitation and resulting contract if required to afford the
Government a reasonable opportunity to adequately inspect the work and
to determine the adequacy of the contractor's performance under the
contract. The contracting officer must document in the contract file
the justification for extending the due date beyond 14 days.
[[Page 52248]]
(C) The contracting officer must not approve progress payment
requests unless the certification and substantiation of amounts
requested are provided as required by the clause at 52.232-5, Payments
Under Fixed-Price Construction Contracts.
(ii) The due date for payment of any amounts retained by the
contracting officer in accordance with the clause at 52.232-5, Payments
Under Fixed-Price Construction Contracts, will be as specified in the
contract or, if not specified, 30 days after approval by the
contracting officer for release to the contractor. The contracting
officer must base the release of retained amounts on the contracting
officer's determination that satisfactory progress has been made.
(iii) The due date for final payments based on completion and
acceptance of all work (including any retained amounts), and payments
for partial deliveries that have been accepted by the Government (e.g.,
each separate building, public work, or other division of the contract
for which the price is stated separately in the contract) is as
follows:
(A) The later of the following two events:
(1) The 30th day after the designated billing office receives a
proper invoice from the contractor.
(2) The 30th day after Government acceptance of the work or
services completed by the contractor. For a final invoice, when the
payment amount is subject to contract settlement actions (e.g., release
of contractor claims), acceptance is deemed to occur on the effective
date of the contract settlement.
(B) If the designated billing office fails to annotate the invoice
with the actual date of receipt at the time of receipt, the invoice
payment due date is the 30th day after the date of the contractor's
invoice, provided the designated billing office receives a proper
invoice and there is no disagreement over quantity, quality, or
contractor compliance with contract requirements.
(2) For the sole purpose of computing an interest penalty that
might be due the contractor for payments described in paragraph
(d)(1)(iii) of this section--
(i) Government acceptance or approval is deemed to occur
constructively on the 7th day after the contractor completes the work
or services in accordance with the terms and conditions of the
contract, unless there is a disagreement over quantity, quality,
contractor compliance with a contract requirement, or the requested
amount;
(ii) If actual acceptance occurs within the constructive acceptance
period, the Government must base the determination of an interest
penalty on the actual date of acceptance;
(iii) The constructive acceptance requirement does not compel
Government officials to accept work or services, approve contractor
estimates, perform contract administration functions, or make payment
prior to fulfilling their responsibilities; and
(iv) The contracting officer may specify a longer period for
constructive acceptance or constructive approval in the solicitation
and resulting contract, if required to afford the Government a
reasonable opportunity to adequately inspect the work and to determine
the adequacy of the contractor's performance under the contract. The
contracting officer must document in the contract file the
justification for extending the constructive acceptance or approval
beyond 7 days.
(3) Construction contracts contain special provisions concerning
contractor payments to subcontractors, along with special contractor
certification requirements. The Office of Management and Budget has
determined that these certifications must not be construed as final
acceptance of the subcontractor's performance. The certification in
52.232-5(c) implements this determination; however, certificates are
still acceptable if the contractor deletes paragraph (c)(4) of 52.232-5
from the certificate.
(4)(i) Paragraph (d) of the clause at 52.232-5, Payments under
Fixed-Price Construction Contracts, and paragraph (e)(6) of the clause
at 52.232-27, Prompt Payment for Construction Contracts, provide for
the contractor to pay interest on unearned amounts in certain
circumstances. The Government must recover this interest from
subsequent payments to the contractor. Therefore, contracting officers
normally must make no demand for payment. Contracting officers must--
(A) Compute the amount in accordance with the clause;
(B) Provide the contractor with a final decision; and
(C) Notify the payment office of the amount to be withheld.
(ii) The payment office is responsible for making the deduction of
interest. Amounts collected in accordance with these provisions revert
to the United States Treasury.
(e) Food and specified items.
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Payment must be made as
If the items delivered are: close as possible to, but
not later than:
------------------------------------------------------------------------
(1) Meat or meat food products. As defined 7th day after product
in section 2(a)(3) of the Packers and delivery.
Stockyard Act of 1921 (7 U.S.C. 182(3)),
and as further defined in Pub. L. 98-181,
including any edible fresh or frozen
poultry meat, any perishable poultry meat
food product, fresh eggs, and any
perishable egg product.
(2) Fresh or frozen fish. As defined in 7th day after product
section 204(3) of the Fish and Seafood delivery.
Promotion Act of 1986 (16 U.S.C. 4003(3)).
(3) Perishable agricultural commodities. 10th day after product
As defined in section 1(4) of the delivery, unless another
Perishable Agricultural Commodities Act date is specified in the
of 1930 (7 U.S.C. 499a(4)). contract.
(4) Dairy products. As defined in section 10th day after a proper
111(e) of the Dairy Production invoice has been received.
Stabilization Act of 1983 (7 U.S.C.
4502(e)), edible fats or oils, and food
products prepared from edible fats or
oils. Liquid milk, cheese, certain
processed cheese products, butter,
yogurt, ice cream, mayonnaise, salad
dressings, and other similar products
fall within this classification. Nothing
in the Act limits this classification to
refrigerated products. If questions arise
regarding the proper classification of a
specific product, the contracting officer
must follow prevailing industry practices
in specifying a contract payment due
date. The burden of proof that a
classification of a specific product is,
in fact, prevailing industry practice is
upon the contractor making the
representation.
------------------------------------------------------------------------
(f) Multiple payment due dates. Contracting officers may encourage,
but not require, contractors to submit separate invoices for products
with different payment due dates under the same contract or order. When
an invoice contains items with different payment due dates (i.e., a
mixed invoice), the payment office will, subject to agency policy--
[[Page 52249]]
(1) Pay the entire invoice on the earliest due date; or
(2) Split invoice payments, making payments by the applicable due
dates.
32.905 Payment documentation and process.
(a) General. Payment will be based on receipt of a proper invoice
and satisfactory contract performance.
(b) Content of invoices. (1) A proper invoice must include the
following items:
(i) Name and address of the contractor.
(ii) Invoice date. (Contractors should date invoices as close as
possible to the date of mailing or transmission.)
(iii) Contract number or other authorization for supplies delivered
or services performed (including order number and contract line item
number).
(iv) Description, quantity, unit of measure, unit price, and
extended price of supplies delivered or services performed.
(v) Shipping and payment terms (e.g., shipment number and date of
shipment, discount for prompt payment terms). Bill of lading number and
weight of shipment will be shown for shipments on Government bills of
lading.
(vi) Name and address of contractor official to whom payment is to
be sent (must be the same as that in the contract or in a proper notice
of assignment).
(vii) Name (where practicable), title, phone number, and mailing
address of person to notify in the event of a defective invoice.
(viii) Taxpayer Identification Number (TIN). The contractor must
include its TIN on the invoice only if required by agency procedures.
(ix) Electronic funds transfer (EFT) banking information.
(A) The contractor must include EFT banking information on the
invoice only if required by agency procedures.
(B) If EFT banking information is not required to be on the
invoice, in order for the invoice to be a proper invoice, the
contractor must have submitted correct EFT banking information in
accordance with the applicable solicitation provision (e.g., 52.232-38,
Submission of Electronic Funds Transfer Information with Offer),
contract clause (e.g., 52.232-33, Payment by Electronic Funds
Transfer--Central Contractor Registration, or 52.232-34, Payment by
Electronic Funds Transfer--Other Than Central Contractor Registration),
or applicable agency procedures.
(C) EFT banking information is not required if the Government
waived the requirement to pay by EFT.
(x) Any other information or documentation required by the contract
(e.g., evidence of shipment).
(2) Contractors should assign an identification number to each
invoice.
(3) If the invoice does not comply with these requirements, the
designated billing office must return it within 7 days after receipt (3
days on contracts for meat, meat food products, or fish; 5 days on
contracts for perishable agricultural commodities, dairy products,
edible fats or oils, and food products prepared from edible fats or
oils), with the reasons why it is not a proper invoice. If such notice
is not timely, then the designated billing office must adjust the due
date for the purpose of determining an interest penalty, if any.
(c) Authorization to pay. All invoice payments must be supported by
a receiving report or other Government documentation authorizing
payment (e.g., Government certified voucher). The agency receiving
official should forward the receiving report or other Government
documentation to the designated payment office by the 5th working day
after Government acceptance or approval, unless other arrangements have
been made. This period of time does not extend the due dates prescribed
in this section. Acceptance should be completed as expeditiously as
possible. The receiving report or other Government documentation
authorizing payment must, as a minimum, include the following:
(1) Contract number or other authorization for supplies delivered
or services performed.
(2) Description of supplies delivered or services performed.
(3) Quantities of supplies received and accepted or services
performed, if applicable.
(4) Date supplies delivered or services performed.
(5) Date that the designated Government official--
(i) Accepted the supplies or services; or
(ii) Approved the progress payment request, if the request is being
made under the clause at 52.232-5, Payments Under Fixed-Price
Construction Contracts, or the clause at 52.232-10, Payments Under
Fixed-Price Architect-Engineer Contracts.
(6) Signature, printed name, title, mailing address, and telephone
number of the designated Government official responsible for acceptance
or approval functions.
(d) Billing office. The designated billing office must immediately
annotate each invoice with the actual date it receives the invoice.
(e) Payment office. The designated payment office will annotate
each invoice and receiving report with the actual date it receives the
invoice.
32.906 Making payments.
(a) General. The Government will not make invoice payments earlier
than 7 days prior to the due dates specified in the contract unless the
agency head determines--
(1) To make earlier payment on a case-by-case basis; or
(2) That the use of accelerated payment methods are necessary (see
32.903(a)(5)).
(b) Payment office. The designated payment office--
(1) Will mail checks on the same day they are dated;
(2) For payments made by EFT, will specify a date on or before the
established due date for settlement of the payment at a Federal Reserve
Bank;
(3) When the due date falls on a Saturday, Sunday, or legal holiday
when Federal Government offices are closed, may make payment on the
following working day without incurring a late payment interest
penalty.
(c) Partial deliveries. (1) Contracting officers must, where the
nature of the work permits, write contract statements of work and
pricing arrangements that allow contractors to deliver and receive
invoice payments for discrete portions of the work as soon as completed
and found acceptable by the Government (see 32.102(d)).
(2) Unless specifically prohibited by the contract, the clause at
52.232-1, Payments, provides that the contractor is entitled to payment
for accepted partial deliveries of supplies or partial performance of
services that comply with all applicable contract requirements and for
which prices can be calculated from the contract terms.
(d) Contractor identifier. If the contractor has assigned a
contractor identifier (e.g., an invoice number) to an invoice, each
payment or remittance advice will use the contractor identifier (in
addition to any Government or contract information) in describing any
payment made.
(e) Discounts. When a discount for prompt payment is taken, the
designated payment office will make payment to the contractor as close
as possible to, but not later than, the end of the discount period. The
discount period is specified by the contractor and is calculated from
the date of the contractor's invoice. If the contractor has not placed
a date on the invoice, the
[[Page 52250]]
due date is calculated from the date the designated billing office
receives a proper invoice, provided the agency annotates such invoice
with the date of receipt at the time of receipt. When the discount date
falls on a Saturday, Sunday, or legal holiday when Government offices
are closed, the designated payment office may make payment on the
following working day and take a discount. Payment terms are specified
in the clause at 52.232-8, Discounts for Prompt Payment.
32.907 Interest penalties.
(a) Late payment. The designated payment office will pay an
interest penalty automatically, without request from the contractor,
when all of the following conditions, if applicable, have been met:
(1) The designated billing office received a proper invoice.
(2) The Government processed a receiving report or other Government
documentation authorizing payment, and there was no disagreement over
quantity, quality, or contractor compliance with any contract
requirement.
(3) In the case of a final invoice, the payment amount is not
subject to further contract settlement actions between the Government
and the contractor.
(4) The designated payment office paid the contractor after the due
date.
(b) Improperly taken discount. The designated payment office will
pay an interest penalty automatically, without request from the
contractor, if the Government takes a discount for prompt payment
improperly. The interest penalty is calculated on the amount of
discount taken for the period beginning with the first day after the
end of the discount period through the date when the contractor is
paid.
(c) Failure to pay interest. (1) The designated payment office will
pay a penalty amount, in addition to the interest penalty amount, only
if--
(i) The Government owes an interest penalty of $1 or more;
(ii) The designated payment office does not pay the interest
penalty within 10 days after the date the invoice amount is paid; and
(iii) The contractor makes a written demand to the designated
payment office for additional penalty payment in accordance with
paragraph (c)(2) of this section, postmarked not later than 40 days
after the date the invoice amount is paid.
(2)(i) Contractors must support written demands for additional
penalty payments with the following data. The Government must not
request additional data. Contractors must--
(A) Specifically assert that late payment interest is due under a
specific invoice, and request payment of all overdue late payment
interest penalty and such additional penalty as may be required;
(B) Attach a copy of the invoice on which the unpaid late payment
interest is due; and
(C) State that payment of the principal has been received,
including the date of receipt.
(ii) If there is no postmark or the postmark is illegible--
(A) The designated payment office that receives the demand will
annotate it with the date of receipt, provided the demand is received
on or before the 40th day after payment was made; or
(B) If the designated payment office fails to make the required
annotation, the Government will determine the demand's validity based
on the date the contractor has placed on the demand; provided such date
is no later than the 40th day after payment was made.
(d) Disagreements. (1) The payment office will not pay interest
penalties if payment delays are due to disagreement between the
Government and contractor concerning--
(i) The payment amount;
(ii) Contract compliance; or
(iii) Amounts temporarily withheld or retained in accordance with
the terms of the contract.
(2) The Government and the contractor must resolve claims involving
disputes, and any interest that may be payable in accordance with the
Disputes clause.
(e) Computation of interest penalties. The Government will compute
interest penalties in accordance with OMB prompt payment regulations at
5 CFR part 1315. These regulations are available via the Internet at
http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.fms.treas.gov/prompt/.
(f) Unavailability of funds. The temporary unavailability of funds
to make a timely payment does not relieve an agency from the obligation
to pay interest penalties.
32.908 Contract clauses.
(a) Insert the clause at 52.232-26, Prompt Payment for Fixed-Price
Architect-Engineer Contracts, in solicitations and contracts that
contain the clause at 52.232-10, Payments Under Fixed-Price Architect-
Engineer Contracts.
(1) As authorized in 32.904(c)(2), the contracting officer may
modify the date in paragraph (a)(4)(i) of the clause to specify a
period longer than 7 days for constructive acceptance or constructive
approval, if required to afford the Government a practicable
opportunity to inspect and test the supplies furnished or evaluate the
services performed.
(2) As provided in 32.903, agency policies and procedures may
authorize amendment of paragraphs (a)(1)(i) and (ii) of the clause to
insert a period shorter than 30 days (but not less than 7 days) for
making contract invoice payments.
(b) Insert the clause at 52.232-27, Prompt Payment for Construction
Contracts, in all solicitations and contracts for construction (see
part 36).
(1) As authorized in 32.904(d)(1)(i)(B), the contracting officer
may modify the date in paragraph (a)(1)(i)(A) of the clause to specify
a period longer than 14 days if required to afford the Government a
reasonable opportunity to adequately inspect the work and to determine
the adequacy of the Contractor's performance under the contract.
(2) As authorized in 32.904(d)(2)(iv), the contracting officer may
modify the date in paragraph (a)(4)(i) of the clause to specify a
period longer than 7 days for constructive acceptance or constructive
approval if required to afford the Government a reasonable opportunity
to inspect and test the supplies furnished or evaluate the services
performed.
(c) Insert the clause at 52.232-25, Prompt Payment, in all other
solicitations and contracts, except when the clause at 52.212-4,
Contract Terms and Conditions--Commercial Items, applies, or when
payment terms and late payment penalties are established by other
governmental authority (e.g., tariffs).
(1) As authorized in 32.904(b)(1)(ii)(B)(4), the contracting
officer may modify the date in paragraph (a)(5)(i) of the clause to
specify a period longer than 7 days for constructive acceptance, if
required to afford the Government a reasonable opportunity to inspect
and test the supplies furnished or to evaluate the services performed,
except in the case of a contract for the purchase of a commercial item,
including a brand-name commercial item for authorized resale (e.g.,
commissary items).
(2) As provided in 32.903, agency policies and procedures may
authorize amendment of paragraphs (a)(1)(i) and (ii) of the clause to
insert a period shorter than 30 days (but not less than 7 days) for
making contract invoice payments.
32.909 Contractor inquiries.
(a) Direct questions involving--
[[Page 52251]]
(1) Delinquent payments to the designated billing office or
designated payment office; and
(2) Disagreements in payment amount or timing to the contracting
officer for resolution. The contracting officer must coordinate within
appropriate contracting channels and seek the advice of other offices
as necessary to resolve disagreements.
(b) Small business concerns may contact the agency's local small
business specialist or representative from the Office of Small and
Disadvantaged Business Utilization to obtain additional assistance
related to payment issues, late payment interest penalties, and
information on the Prompt Payment Act.
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
7. Amend section 52.212-4 by--
a. Revising the date of the clause;
b. Revising paragraph (g) of the clause (and removing the
undesignated paragraph following paragraph (g)); and
c. Revising the second sentence of paragraph (i) of the clause to
read as follows:
52.212-4 Contract Terms and Conditions--Commercial Items.
* * * * *
Contract Terms and Conditions--Commercial Items (Date)
* * * * *
(g) Invoice. (1) The Contractor shall submit an original invoice
and three copies (or electronic invoice, if authorized) to the
address designated in the contract to receive invoices. An invoice
must include--
(i) Name and address of the Contractor;
(ii) Invoice date;
(iii) Contract number, contract line item number and, if
applicable, the order number;
(iv) Description, quantity, unit of measure, unit price and
extended price of the items delivered;
(v) Shipping number and date of shipment, including the bill of
lading number and weight of shipment if shipped on Government bill
of lading;
(vi) Terms of any discount for prompt payment offered;
(vii) Name and address of official to whom payment is to be
sent;
(viii) Name, title, and phone number of person to notify in
event of defective invoice; and
(ix) Taxpayer Identification Number (TIN). The Contractor shall
include its TIN on the invoice only if required elsewhere in this
contract.
(x) Electronic funds transfer (EFT) banking information.
(A) The Contractor shall include EFT banking information on the
invoice only if required elsewhere in this contract.
(B) If EFT banking information is not required to be on the
invoice, in order for the invoice to be a proper invoice, the
Contractor shall have submitted correct EFT banking information in
accordance with the applicable solicitation provision, contract
clause (e.g., 52.232-33, Payment by Electronic Funds Transfer--
Central Contractor Registration, or 52.232-34, Payment by Electronic
Funds Transfer--Other Than Central Contractor Registration), or
applicable agency procedures.
(C) EFT banking information is not required if the Government
waived the requirement to pay by EFT.
(2) Invoices will be handled in accordance with the Prompt
Payment Act (31 U.S.C. 3903) and Office of Management and Budget
(OMB) prompt payment regulations at 5 CFR part 1315. Contractors
should assign an identification number to each invoice.
* * * * *
(i) Payment. * * * The Government will make payment in
accordance with the Prompt Payment Act (31 U.S.C. 3903) and Office
of Management and Budget (OMB) prompt payment regulations at 5 CFR
part 1315. * * *
* * * * *
(End of clause)
8. Amend section 52.216-7 by revising the date of the clause and
paragraph (a) to read as follows:
52.216-7 Allowable Cost and Payment.
* * * * *
Allowable Cost and Payment (Date)
(a) Invoicing. (1) The Government will make payments to the
Contractor when requested as work progresses, but (except for small
business concerns) not more often than once every 2 weeks, in
amounts determined to be allowable by the Contracting Officer in
accordance with Federal Acquisition Regulation (FAR) Subpart 31.2 in
effect on the date of this contract and the terms of this contract.
The Contractor may submit to an authorized representative of the
Contracting Officer, in such form and reasonable detail as the
representative may require, an invoice or voucher supported by a
statement of the claimed allowable cost for performing this
contract.
(2) Interim payments made prior to the final payment under the
contract are contract financing payments, except interim payments
for separately priced contract line items for which the Contractor
provides with the invoice or voucher proof of Government acceptance
and separately identifies the amount requested for accepted supplies
or services. Contract financing payments are not subject to the
interest penalty provisions of the Prompt Payment Act.
(3) The designated payment office will make interim payments for
contract financing on the __________ [Contracting Officer insert day
as prescribed by Agency head; if not prescribed, insert ``30th'']
day after the designated billing office receives a proper payment
request. In the event that the Government requires an audit or other
review of a specific payment request to ensure compliance with the
terms and conditions of the contract, the designated payment office
is not compelled to make payment by the specified due date.
* * * * *
(End of clause)
9. Amend section 52.216-13 by revising the date of the clause and
paragraph (b) to read as follows:
52.216-13 Allowable Cost and Payment--Facilities.
* * * * *
Allowable Cost and Payment--Facilities (Date)
* * * * *
(b) Invoicing. (1) The Government will make payments to the
Contractor when requested once each month. The Contractor may submit
to an authorized representative of the Contracting Officer, in such
form and reasonable detail as the representative may require, an
invoice or voucher supported by a statement of the claimed allowable
cost for the performance of this contract.
(2) Interim payments made prior to the final payment under the
contract are contract financing payments, except interim payments
for separately priced contract line items for which the Contractor
provides with the invoice or voucher proof of Government acceptance
and separately identifies the amount requested for accepted supplies
or services. Contract financing payments are not subject to the
interest penalty provisions of the Prompt Payment Act.
(3) The designated payment office will make interim payments for
contract financing on the __________ [Contracting Officer insert day
as prescribed by Agency head; if not prescribed, insert ``30th'']
day after the designated billing office receives a proper payment
request. In the event that the Government requires an audit or other
review of a specific payment request to ensure compliance with the
terms and conditions of the contract, the designated payment office
is not compelled to make payment by the specified due date.
* * * * *
(End of clause)
10. Amend section 52.232-7 by revising the date of the clause; by
adding paragraph (h); and by revising Alternate II to read as follows:
52.232-7 Payments under Time-and-Materials and Labor-Hour Contracts.
* * * * *
Payments Under Time-and-Materials and Labor-Hour Contracts (Date)
* * * * *
(h) Interim payments. (1) Interim payments made prior to the
final payment under the contract are contract financing payments,
except interim payments for separately priced contract line items
for which the Contractor provides with the invoice or voucher proof
of Government acceptance and separately identifies the amount
requested for accepted supplies or services. Contract financing
payments are not subject to the
[[Page 52252]]
interest penalty provisions of the Prompt Payment Act.
(2) The designated payment office will make interim payments for
contract financing on the __________ [Contracting Officer insert day
as prescribed by Agency head; if not prescribed, insert ``30th'']
day after the designated billing office receives a proper payment
request. In the event that the Government requires an audit or other
review of a specific payment request to ensure compliance with the
terms and conditions of the contract, the designated payment office
is not compelled to make payment by the specified due date.
(End of clause)
* * * * *
Alternate II (Date). If a labor-hour contract is contemplated,
and if no specific reimbursement for materials furnished is
intended, the Contracting Officer may add the following paragraph
(i) to the basic clause:
(i) The terms of this clause that govern reimbursement for
materials furnished are considered to have been deleted.
11. Amend section 52.232-8 by revising the date of the clause and
the last sentence of paragraph (a) to read as follows:
52.232-8 Discounts for Prompt Payment.
* * * * *
Discounts for Prompt Payment (Date)
(a) * * * As an alternative to offering a discount for prompt
payment in conjunction with the offer, offerors awarded contracts
may include discounts for prompt payment on individual invoices.
* * * * *
(End of clause)
12. Amend section 52.232-16 by revising the date of the clause; by
adding paragraph (l) to the end of the clause; and by revising
Alternate II to read as follows:
52.232-16 Progress Payments.
* * * * *
Progress Payments (Date)
(l) Due date. The designated payment office will make progress
payments on the __________ [Contracting Officer insert date as
prescribed by Agency head; if not prescribed, insert ``30th''] day
after the designated billing office receives a proper progress
payment request. In the event that the Government requires an audit
or other review of a specific progress payment request to ensure
compliance with the terms and conditions of the contract, the
designated payment office is not compelled to make payment by the
specified due date. Progress payments are considered contract
financing and are not subject to the interest penalty provisions of
the Prompt Payment Act.
(End of clause)
* * * * *
Alternate II (Date). If the contract is a letter contract, add
paragraphs (m) and (n). The amount specified in paragraph (n) must
not exceed 80 percent applied to the maximum liability of the
Government under the letter contract. Separate limits may be
specified for separate parts of the work.
(m) Progress payments made under this letter contract shall,
unless previously liquidated under paragraph (b) of this clause, be
liquidated under the following procedures:
(1) If this letter contract is superseded by a definitive
contract, unliquidated progress payments made under this letter
contract shall be liquidated by deducting the amount from the first
progress or other payments made under the definitive contract.
(2) If this letter contract is not superseded by a definitive
contract calling for the furnishing of all or part of the articles
or services covered under the letter contract, unliquidated progress
payments made under the letter contract shall be liquidated by
deduction from the amount payable under the Termination clause.
(3) If this letter contract is partly terminated and partly
superseded by a contract, the Government will allocate the
unliquidated progress payments to the terminated and unterminated
portions as the Government deems equitable, and will liquidate each
portion under the relevant procedure in paragraphs (m)(1) and (m)(2)
of this clause.
(4) If the method of liquidating progress payments provided in
this clause does not result in full liquidation, the Contractor
shall immediately pay the unliquidated balance to the Government on
demand.
(n) The amount of unliquidated progress payments shall not
exceed __________ [Contracting Officer specify dollar amount].
* * * * *
13. Revise sections 52.232-25, 52.232-26, and 52.232-27 to read as
follows:
52.232-25 Prompt Payment.
As prescribed in 32.908(c), insert the following clause:
Prompt Payment (Date)
Notwithstanding any other payment clause in this contract, the
Government will make invoice payments under the terms and conditions
specified in this clause. The Government considers payment as being
made on the day a check is dated or the date of an electronic funds
transfer (EFT). Definitions of pertinent terms are set forth in
sections 2.101, 32.001, and 32.902 of the Federal Acquisition
Regulation. All days referred to in this clause are calendar days,
unless otherwise specified. (However, see paragraph (a)(4) of this
clause concerning payments due on Saturdays, Sundays, and legal
holidays.)
(a) Invoice payments--(1) Due date. (i) Except as indicated in
paragraphs (a)(2) and (c) of this clause, the due date for making
invoice payments by the designated payment office is the later of
the following two events:
(A) The 30th day after the designated billing office receives a
proper invoice from the Contractor (except as provided in paragraph
(a)(1)(ii) of this clause).
(B) The 30th day after Government acceptance of supplies
delivered or services performed. For a final invoice, when the
payment amount is subject to contract settlement actions, acceptance
is deemed to occur on the effective date of the contract settlement.
(ii) If the designated billing office fails to annotate the
invoice with the actual date of receipt at the time of receipt, the
invoice payment due date is the 30th day after the date of the
Contractor's invoice, provided the designated billing office
receives a proper invoice and there is no disagreement over
quantity, quality, or Contractor compliance with contract
requirements.
(2) Certain food products and other payments. (i) Due dates on
Contractor invoices for meat, meat food products, or fish;
perishable agricultural commodities; and dairy products, edible fats
or oils, and food products prepared from edible fats or oils are--
(A) For meat or meat food products, as defined in section
2(a)(3) of the Packers and Stockyard Act of 1921 (7 U.S.C. 182(3)),
and as further defined in Pub. L. 98-181, including any edible fresh
or frozen poultry meat, any perishable poultry meat food product,
fresh eggs, and any perishable egg product, as close as possible to,
but not later than, the 7th day after product delivery.
(B) For fresh or frozen fish, as defined in section 204(3) of
the Fish and Seafood Promotion Act of 1986 (16 U.S.C. 4003(3)), as
close as possible to, but not later than, the 7th day after product
delivery.
(C) For perishable agricultural commodities, as defined in
section 1(4) of the Perishable Agricultural Commodities Act of 1930
(7 U.S.C. 499a(4)), as close as possible to, but not later than, the
10th day after product delivery, unless another date is specified in
the contract.
(D) For dairy products, as defined in section 111(e) of the
Dairy Production Stabilization Act of 1983 (7 U.S.C. 4502(e)),
edible fats or oils, and food products prepared from edible fats or
oils, as close as possible to, but not later than, the 10th day
after the date on which a proper invoice has been received. Liquid
milk, cheese, certain processed cheese products, butter, yogurt, ice
cream, mayonnaise, salad dressings, and other similar products, fall
within this classification. Nothing in the Act limits this
classification to refrigerated products. When questions arise
regarding the proper classification of a specific product,
prevailing industry practices will be followed in specifying a
contract payment due date. The burden of proof that a classification
of a specific product is, in fact, prevailing industry practice is
upon the Contractor making the representation.
(ii) If the contract does not require submission of an invoice
for payment (e.g., periodic lease payments), the due date will be as
specified in the contract.
(3) Contractor's invoice. The Contractor shall prepare and
submit invoices to the designated billing office specified in the
contract. A proper invoice must include the items listed in
paragraphs (a)(3)(i) through (a)(3)(x) of this clause. If the
invoice does not comply with these requirements, the designated
billing office will return it within 7 days after receipt (3 days
for meat, meat
[[Page 52253]]
food products, or fish; 5 days for perishable agricultural
commodities, dairy products, edible fats or oils, and food products
prepared from edible fats or oils), with the reasons why it is not a
proper invoice. The Government will take into account untimely
notification when computing any interest penalty owed the
Contractor.
(i) Name and address of the Contractor.
(ii) Invoice date. (The Contractor should date invoices as close
as possible to the date of the mailing or transmission.)
(iii) Contract number or other authorization for supplies
delivered or services performed (including order number and contract
line item number).
(iv) Description, quantity, unit of measure, unit price, and
extended price of supplies delivered or services performed.
(v) Shipping and payment terms (e.g., shipment number and date
of shipment, discount for prompt payment terms). Bill of lading
number and weight of shipment will be shown for shipments on
Government bills of lading.
(vi) Name and address of Contractor official to whom payment is
to be sent (must be the same as that in the contract or in a proper
notice of assignment).
(vii) Name (where practicable), title, phone number, and mailing
address of person to notify in the event of a defective invoice.
(viii) Taxpayer Identification Number (TIN). The Contractor
shall include its TIN on the invoice only if required elsewhere in
this contract.
(ix) Electronic funds transfer (EFT) banking information.
(A) The Contractor shall include EFT banking information on the
invoice only if required elsewhere in this contract.
(B) If EFT banking information is not required to be on the
invoice, in order for the invoice to be a proper invoice, the
Contractor shall have submitted correct EFT banking information in
accordance with the applicable solicitation provision (e.g., 52.232-
38, Submission of Electronic Funds Transfer Information with Offer),
contract clause (e.g., 52.232-33, Payment by Electronic Funds
Transfer--Central Contractor Registration, or 52.232-34, Payment by
Electronic Funds Transfer--Other Than Central Contractor
Registration), or applicable agency procedures.
(C) EFT banking information is not required if the Government
waived the requirement to pay by EFT.
(x) Any other information or documentation required by the
contract (e.g., evidence of shipment).
(xi) The Contractor should assign an identification number to
each invoice.
(4) Interest penalty. The designated payment office will pay an
interest penalty automatically, without request from the Contractor,
if payment is not made by the due date and the conditions listed in
paragraphs (a)(4)(i) through (a)(4)(iii) of this clause are met, if
applicable. However, when the due date falls on a Saturday, Sunday,
or legal holiday, the designated payment office may make payment on
the following working day without incurring a late payment interest
penalty.
(i) The designated billing office received a proper invoice.
(ii) The Government processed a receiving report or other
Government documentation authorizing payment, and there was no
disagreement over quantity, quality, or Contractor compliance with
any contract term or condition.
(iii) In the case of a final invoice for any balance of funds
due the Contractor for supplies delivered or services performed, the
amount was not subject to further contract settlement actions
between the Government and the Contractor.
(5) Computing penalty amount. The Government will compute the
interest penalty in accordance with the Office of Management and
Budget prompt payment regulations at 5 CFR part 1315.
(i) For the sole purpose of computing an interest penalty that
might be due the Contractor, Government acceptance is deemed to
occur constructively on the 7th day (unless otherwise specified in
this contract) after the Contractor delivers the supplies or
performs the services in accordance with the terms and conditions of
the contract, unless there is a disagreement over quantity, quality,
or Contractor compliance with a contract provision. If actual
acceptance occurs within the constructive acceptance period, the
Government will base the determination of an interest penalty on the
actual date of acceptance. The constructive acceptance requirement
does not, however, compel Government officials to accept supplies or
services, perform contract administration functions, or make payment
prior to fulfilling their responsibilities.
(ii) The prompt payment regulations at 5 CFR 1315.10(c) do not
require the Government to pay interest penalties if payment delays
are due to disagreement between the Government and the Contractor
over the payment amount or other issues involving contract
compliance, or on amounts temporarily withheld or retained in
accordance with the terms of the contract. The Government and the
Contractor shall resolve claims involving disputes and any interest
that may be payable in accordance with the clause at FAR 52.233-1,
Disputes.
(6) Discounts for prompt payment. The designated payment office
will pay an interest penalty automatically, without request from the
Contractor, if the Government takes a discount for prompt payment
improperly. The Government will calculate the interest penalty in
accordance with the prompt payment regulations at 5 CFR part 1315.
(7) Additional interest penalty. (i) The designated payment
office will pay a penalty amount, calculated in accordance with the
prompt payment regulations at 5 CFR part 1315 in addition to the
interest penalty amount only if--
(A) The Government owes an interest penalty of $1 or more;
(B) The designated payment office does not pay the interest
penalty within 10 days after the date the invoice amount is paid;
and
(C) The Contractor makes a written demand to the designated
payment office for additional penalty payment, in accordance with
paragraph (a)(7)(ii) of this clause, postmarked not later than 40
days after the invoice amount is paid.
(ii)(A) Contractors shall support written demands for additional
penalty payments with the following data. The Government will not
request any additional data. Contractors shall--
(1) Specifically assert that late payment interest is due under
a specific invoice, and request payment of all overdue late payment
interest penalty and such additional penalty as may be required;
(2) Attach a copy of the invoice on which the unpaid late
payment interest is due; and
(3) State that payment of the principal has been received,
including the date of receipt.
(B) If there is no postmark or the postmark is illegible--
(1) The designated payment office that receives the demand will
annotate it with the date of receipt, provided the demand is
received on or before the 40th day after payment was made; or
(2) If the designated payment office fails to make the required
annotation, the Government will determine the demand's validity
based on the date the Contractor has placed on the demand, provided
such date is no later than the 40th day after payment was made.
(iii) The additional penalty does not apply to payments
regulated by other Government regulations (e.g., payments under
utility contracts subject to tariffs and regulation).
(b) Contract financing payment. If this contract provides for
contract financing, the Government will make contract financing
payments in accordance with the applicable contract financing
clause.
(c) Fast payment procedure due dates. If this contract contains
the clause at 52.213-1, Fast Payment Procedure, payments will be
made within 15 days after the date of receipt of the invoice.
(d) Overpayments. If the Contractor becomes aware of a duplicate
payment or that the Government has otherwise overpaid on an invoice
payment, the Contractor shall immediately notify the Contracting
Officer and request instructions for disposition of the overpayment.
(End of clause)
52.232-26 Prompt Payment for Fixed-Price Architect-Engineer Contracts.
As prescribed in 32.908(a), insert the following clause:
Prompt Payment for Fixed-Price Architect-Engineer Contracts (Date)
Notwithstanding any other payment terms in this contract, the
Government will make invoice payments under the terms and conditions
specified in this clause. The Government considers payment as being
made on the day a check is dated or the date of an electronic funds
transfer. Definitions of pertinent terms are set forth in sections
2.101, 32.001, and 32.902 of the Federal Acquisition Regulation. All
days referred to in this clause are calendar days, unless otherwise
specified. (However, see paragraph (a)(3) of this clause concerning
payments due on Saturdays, Sundays, and legal holidays.)
(a) Invoice payments--(1) Due date. The due date for making
invoice payments is--
(i) For work or services completed by the Contractor, the later
of the following two events:
[[Page 52254]]
(A) The 30th day after the designated billing office receives a
proper invoice from the Contractor (except as provided in paragraph
(a)(1)(iii) of this clause).
(B) The 30th day after Government acceptance of the work or
services completed by the Contractor. For a final invoice, when the
payment amount is subject to contract settlement actions (e.g.,
release of claims), acceptance is deemed to occur on the effective
date of the settlement.
(ii) The due date for progress payments is the 30th day after
Government approval of Contractor estimates of work or services
accomplished.
(iii) If the designated billing office fails to annotate the
invoice or payment request with the actual date of receipt at the
time of receipt, the payment due date is the 30th day after the date
of the Contractor's invoice or payment request, provided the
designated billing office receives a proper invoice or payment
request and there is no disagreement over quantity, quality, or
Contractor compliance with contract requirements.
(2) Contractor's invoice. The Contractor shall prepare and
submit invoices to the designated billing office specified in the
contract. A proper invoice must include the items listed in
paragraphs (a)(2)(i) through (a)(2)(x) of this clause. If the
invoice does not comply with these requirements, the designated
billing office will return it within 7 days after receipt, with the
reasons why it is not a proper invoice. When computing any interest
penalty owed the Contractor, the Government will take into account
if the Government notifies the Contractor of an improper invoice in
an untimely manner.
(i) Name and address of the Contractor.
(ii) Invoice date. (The Contractor should date invoices as close
as possible to the date of mailing or transmission.)
(iii) Contract number or other authorization for work or
services performed (including order number and contract line item
number).
(iv) Description of work or services performed.
(v) Delivery and payment terms (e.g., discount for prompt
payment terms).
(vi) Name and address of Contractor official to whom payment is
to be sent (must be the same as that in the contract or in a proper
notice of assignment).
(vii) Name (where practicable), title, phone number, and mailing
address of person to notify in the event of a defective invoice.
(viii) Taxpayer Identification Number (TIN). The Contractor
shall include its TIN on the invoice only if required elsewhere in
this contract.
(ix) Electronic funds transfer (EFT) banking information.
(A) The Contractor shall include EFT banking information on the
invoice only if required elsewhere in this contract.
(B) If EFT banking information is not required to be on the
invoice, in order for the invoice to be a proper invoice, the
Contractor shall have submitted correct EFT banking information in
accordance with the applicable solicitation provision (e.g., 52.232-
38, Submission of Electronic Funds Transfer Information with Offer),
contract clause (e.g., 52.232-33, Payment by Electronic Funds
Transfer--Central Contractor Registration, or 52.232-34, Payment by
Electronic Funds Transfer--Other Than Central Contractor
Registration), or applicable agency procedures.
(C) EFT banking information is not required if the Government
waived the requirement to pay by EFT.
(x) Any other information or documentation required by the
contract.
(xi) The Contractor should assign an identification number to
each invoice.
(3) Interest penalty. The designated payment office will pay an
interest penalty automatically, without request from the Contractor,
if payment is not made by the due date and the conditions listed in
paragraphs (a)(3)(i) through (a)(3)(iii) of this clause are met, if
applicable. However, when the due date falls on a Saturday, Sunday,
or legal holiday, the designated payment office may make payment on
the following working day without incurring a late payment interest
penalty.
(i) The designated billing office received a proper invoice.
(ii) The Government processed a receiving report or other
Government documentation authorizing payment and there was no
disagreement over quantity, quality, Contractor compliance with any
contract term or condition, or requested progress payment amount.
(iii) In the case of a final invoice for any balance of funds
due the Contractor for work or services performed, the amount was
not subject to further contract settlement actions between the
Government and the Contractor.
(4) Computing penalty amount. The Government will compute the
interest penalty in accordance with the Office of Management and
Budget prompt payment regulations at 5 CFR part 1315.
(i) For the sole purpose of computing an interest penalty that
might be due the Contractor, Government acceptance or approval is
deemed to occur constructively as shown in paragraphs (a)(4)(i)(A)
and (B) of this clause. If actual acceptance or approval occurs
within the constructive acceptance or approval period, the
Government will base the determination of an interest penalty on the
actual date of acceptance or approval. Constructive acceptance or
constructive approval requirements do not apply if there is a
disagreement over quantity, quality, Contractor compliance with a
contract provision, or requested progress payment amounts. These
requirements also do not compel Government officials to accept work
or services, approve Contractor estimates, perform contract
administration functions, or make payment prior to fulfilling their
responsibilities.
(A) For work or services completed by the Contractor, Government
acceptance is deemed to occur constructively on the 7th day after
the Contractor completes the work or services in accordance with the
terms and conditions of the contract.
(B) For progress payments, Government approval is deemed to
occur on the 7th day after the designated billing office receives
the Contractor estimates.
(ii) The prompt payment regulations at 5 CFR 1315.10(c) do not
require the Government to pay interest penalties if payment delays
are due to disagreement between the Government and the Contractor
over the payment amount or other issues involving contract
compliance, or on amounts temporarily withheld or retained in
accordance with the terms of the contract. The Government and the
Contractor shall resolve claims involving disputes, and any interest
that may be payable in accordance with the clause at FAR 52.233-1,
Disputes.
(5) Discounts for prompt payment. The designated payment office
will pay an interest penalty automatically, without request from the
Contractor, if the Government takes a discount for prompt payment
improperly. The Government will calculate the interest penalty in
accordance with 5 CFR part 1315.
(6) Additional interest penalty. (i) The designated payment
office will pay a penalty amount, calculated in accordance with the
prompt payment regulations at 5 CFR part 1315, in addition to the
interest penalty amount only if--
(A) The Government owes an interest penalty of $1 or more;
(B) The designated payment office does not pay the interest
penalty within 10 days after the date the invoice amount is paid;
and
(C) The contractor makes a written demand to the designated
payment office for additional penalty payment, in accordance with
paragraph (a)(6)(ii) of this clause, postmarked not later than 40
days after the date the invoice amount is paid.
(ii)(A) Contractors shall support written demands for additional
penalty payments with the following data. The Government will not
request any additional data. Contractors shall--
(1) Specifically assert that late payment interest is due under
a specific invoice, and request payment of all overdue late payment
interest penalty and such additional penalty as may be required;
(2) Attach a copy of the invoice on which the unpaid late
payment interest is due; and
(3) State that payment of the principal has been received,
including the date of receipt.
(B) If there is no postmark or the postmark is illegible--
(1) The designated payment office that receives the demand will
annotate it with the date of receipt, provided the demand is
received on or before the 40th day after payment was made; or
(2) If the designated payment office fails to make the required
annotation, the Government will determine the demand's validity
based on the date the Contractor has placed on the demand, provided
such date is no later than the 40th day after payment was made.
(iii) The additional penalty does not apply to payments
regulated by other Government regulations (e.g., payments under
utility contracts subject to tariffs and regulation).
(b) Contract financing payments. If this contract provides for
contract financing, the Government will make contract financing
payments in accordance with the applicable contract financing
clause.
(c) Overpayments. If the Contractor becomes aware of a duplicate
payment or that the Government has otherwise overpaid
[[Page 52255]]
on an invoice payment, the Contractor shall immediately notify the
Contracting Officer and request instructions for disposition of the
overpayment.
(End of clause)
52.232-27 Prompt Payment for Construction Contracts.
As prescribed in 32.908(b), insert the following clause:
Prompt Payment for Construction Contracts (Date)
Notwithstanding any other payment terms in this contract, the
Government will make invoice payments under the terms and conditions
specified in this clause. The Government considers payment as being
made on the day a check is dated or the date of an electronic funds
transfer. Definitions of pertinent terms are set forth in sections
2.101, 32.001, and 32.902 of the Federal Acquisition Regulation. All
days referred to in this clause are calendar days, unless otherwise
specified. (However, see paragraph (a)(3) concerning payments due on
Saturdays, Sundays, and legal holidays.)
(a) Invoice payments--(1) Types of invoice payments. For
purposes of this clause, there are several types of invoice payments
that may occur under this contract, as follows:
(i) Progress payments, if provided for elsewhere in this
contract, based on Contracting Officer approval of the estimated
amount and value of work or services performed, including payments
for reaching milestones in any project.
(A) The due date for making such payments is 14 days after the
designated billing office receives a proper payment request. If the
designated billing office fails to annotate the payment request with
the actual date of receipt at the time of receipt, the payment due
date is the 14th day after the date of the Contractor's payment
request, provided the designated billing office receives a proper
payment request and there is no disagreement over quantity, quality,
or Contractor compliance with contract requirements.
(B) The due date for payment of any amounts retained by the
Contracting Officer in accordance with the clause at 52.232-5,
Payments Under Fixed-Price Construction Contracts, is as specified
in the contract or, if not specified, 30 days after approval by the
Contracting Officer for release to the Contractor.
(ii) Final payments based on completion and acceptance of all
work and presentation of release of all claims against the
Government arising by virtue of the contract, and payments for
partial deliveries that have been accepted by the Government (e.g.,
each separate building, public work, or other division of the
contract for which the price is stated separately in the contract).
(A) The due date for making such payments is the later of the
following two events:
(1) The 30th day after the designated billing office receives a
proper invoice from the Contractor.
(2) The 30th day after Government acceptance of the work or
services completed by the Contractor. For a final invoice when the
payment amount is subject to contract settlement actions (e.g.,
release of claims), acceptance is deemed to occur on the effective
date of the contract settlement.
(B) If the designated billing office fails to annotate the
invoice with the date of actual receipt at the time of receipt, the
invoice payment due date is the 30th day after the date of the
Contractor's invoice, provided the designated billing office
receives a proper invoice and there is no disagreement over
quantity, quality, or Contractor compliance with contract
requirements.
(2) Contractor's invoice. The Contractor shall prepare and
submit invoices to the designated billing office specified in the
contract. A proper invoice must include the items listed in
paragraphs (a)(2)(i) through (a)(2)(xi) of this clause.
If the invoice does not comply with these requirements, the
designated billing office must return it within 7 days after
receipt, with the reasons why it is not a proper invoice.
When computing any interest penalty owed the Contractor, the
Government will take into account if the Government notifies the
Contractor of an improper invoice in an untimely manner.
(i) Name and address of the Contractor.
(ii) Invoice date. (The Contractor should date invoices as close
as possible to the date of mailing or transmission.)
(iii) Contract number or other authorization for work or
services performed (including order number and contract line item
number).
(iv) Description of work or services performed.
(v) Delivery and payment terms (e.g., discount for prompt
payment terms).
(vi) Name and address of Contractor official to whom payment is
to be sent (must be the same as that in the contract or in a proper
notice of assignment).
(vii) Name (where practicable), title, phone number, and mailing
address of person to notify in the event of a defective invoice.
(viii) For payments described in paragraph (a)(1)(i) of this
clause, substantiation of the amounts requested and certification in
accordance with the requirements of the clause at 52.232-5, Payments
Under Fixed-Price Construction Contracts.
(ix) Taxpayer Identification Number (TIN). The Contractor shall
include its TIN on the invoice only if required elsewhere in this
contract.
(x) Electronic funds transfer (EFT) banking information.
(A) The Contractor shall include EFT banking information on the
invoice only if required elsewhere in this contract.
(B) If EFT banking information is not required to be on the
invoice, in order for the invoice to be a proper invoice, the
Contractor shall have submitted correct EFT banking information in
accordance with the applicable solicitation provision (e.g., 52.232-
38, Submission of Electronic Funds Transfer Information with Offer),
contract clause (e.g., 52.232-33, Payment by Electronic Funds
Transfer--Central Contractor Registration, or 52.232-34, Payment by
Electronic Funds Transfer--Other Than Central Contractor
Registration), or applicable agency procedures.
(C) EFT banking information is not required if the Government
waived the requirement to pay by EFT.
(xi) Any other information or documentation required by the
contract.
(xii) The Contractor should assign an identification number to
each invoice.
(3) Interest penalty. The designated payment office will pay an
interest penalty automatically, without request from the Contractor,
if payment is not made by the due date and the conditions listed in
paragraphs (a)(3)(i) through (a)(3)(iii) of this clause are met, if
applicable. However, when the due date falls on a Saturday, Sunday,
or legal holiday, the designated payment office may make payment on
the following working day without incurring a late payment interest
penalty.
(i) The designated billing office received a proper invoice.
(ii) The Government processed a receiving report or other
Government documentation authorizing payment and there was no
disagreement over quantity, quality, Contractor compliance with any
contract term or condition, or requested progress payment amount.
(iii) In the case of a final invoice for any balance of funds
due the Contractor for work or services performed, the amount was
not subject to further contract settlement actions between the
Government and the Contractor.
(4) Computing penalty amount. The Government will compute the
interest penalty in accordance with the Office of Management and
Budget prompt payment regulations at 5 CFR part 1315.
(i) For the sole purpose of computing an interest penalty that
might be due the Contractor for payments described in paragraph
(a)(1)(ii) of this clause, Government acceptance or approval is
deemed to occur constructively on the 7th day after the Contractor
has completed the work or services in accordance with the terms and
conditions of the contract. If actual acceptance or approval occurs
within the constructive acceptance or approval period, the
Government will base the determination of an interest penalty on the
actual date of acceptance or approval. Constructive acceptance or
constructive approval requirements do not apply if there is a
disagreement over quantity, quality, or Contractor compliance with a
contract provision. These requirements also do not compel Government
officials to accept work or services, approve Contractor estimates,
perform contract administration functions, or make payment prior to
fulfilling their responsibilities.
(ii) The prompt payment regulations at 5 CFR 1315.10(c) do not
require the Government to pay interest penalties if payment delays
are due to disagreement between the Government and the Contractor
over the payment amount or other issues involving contract
compliance, or on amounts temporarily withheld or retained in
accordance with the terms of the contract. The Government and the
Contractor shall resolve claims involving disputes, and any interest
that may be payable in accordance with the clause at FAR 52.233-1,
Disputes.
(5) Discounts for prompt payment. The designated payment office
will pay an
[[Page 52256]]
interest penalty automatically, without request from the Contractor,
if the Government takes a discount for prompt payment improperly.
The Government will calculate the interest penalty in accordance
with the prompt payment regulations at 5 CFR part 1315.
(6) Additional interest penalty. (i) The designated payment
office will pay a penalty amount, calculated in accordance with the
prompt payment regulations at 5 CFR part 1315 in addition to the
interest penalty amount only if--
(A) The Government owes an interest penalty of $1 or more;
(B) The designated payment office does not pay the interest
penalty within 10 days after the date the invoice amount is paid;
and
(C) The Contractor makes a written demand to the designated
payment office for additional penalty payment, in accordance with
paragraph (a)(6)(ii) of this clause, postmarked not later than 40
days after the date the invoice amount is paid.
(ii)(A) Contractors shall support written demands for additional
penalty payments with the following data. The Government will not
request any additional data. Contractors shall--
(1) Specifically assert that late payment interest is due under
a specific invoice, and request payment of all overdue late payment
interest penalty and such additional penalty as may be required;
(2) Attach a copy of the invoice on which the unpaid late
payment interest was due; and
(3) State that payment of the principal has been received,
including the date of receipt.
(B) If there is no postmark or the postmark is illegible--
(1) The designated payment office that receives the demand will
annotate it with the date of receipt provided the demand is received
on or before the 40th day after payment was made; or
(2) If the designated payment office fails to make the required
annotation, the Government will determine the demand's validity
based on the date the Contractor has placed on the demand, provided
such date is no later than the 40th day after payment was made.
(b) Contract financing payments. If this contract provides for
contract financing, the Government will make contract financing
payments in accordance with the applicable contract financing
clause.
(c) Subcontract clause requirements. The Contractor shall
include in each subcontract for property or services (including a
material supplier) for the purpose of performing this contract the
following:
(1) Prompt payment for subcontractors. A payment clause that
obligates the Contractor to pay the subcontractor for satisfactory
performance under its subcontract not later than 7 days from receipt
of payment out of such amounts as are paid to the Contractor under
this contract.
(2) Interest for subcontractors. An interest penalty clause that
obligates the Contractor to pay to the subcontractor an interest
penalty for each payment not made in accordance with the payment
clause--
(i) For the period beginning on the day after the required
payment date and ending on the date on which payment of the amount
due is made; and
(ii) Computed at the rate of interest established by the
Secretary of the Treasury, and published in the Federal Register,
for interest payments under section 12 of the Contract Disputes Act
of 1978 (41 U.S.C. 611) in effect at the time the Contractor accrues
the obligation to pay an interest penalty.
(3) Subcontractor clause flowdown. A clause requiring each
subcontractor to--
(i) Include a payment clause and an interest penalty clause
conforming to the standards set forth in paragraphs (c)(1) and
(c)(2) of this clause in each of its subcontracts; and
(ii) Require each of its subcontractors to include such clauses
in their subcontracts with each lower-tier subcontractor or
supplier.
(d) Subcontract clause interpretation. The clauses required by
paragraph (c) of this clause shall not be construed to impair the
right of the Contractor or a subcontractor at any tier to negotiate,
and to include in their subcontract, provisions that--
(1) Retainage permitted. Permit the Contractor or a
subcontractor to retain (without cause) a specified percentage of
each progress payment otherwise due to a subcontractor for
satisfactory performance under the subcontract without incurring any
obligation to pay a late payment interest penalty, in accordance
with terms and conditions agreed to by the parties to the
subcontract, giving such recognition as the parties deem appropriate
to the ability of a subcontractor to furnish a performance bond and
a payment bond;
(2) Withholding permitted. Permit the Contractor or
subcontractor to make a determination that part or all of the
subcontractor's request for payment may be withheld in accordance
with the subcontract agreement; and
(3) Withholding requirements. Permit such withholding without
incurring any obligation to pay a late payment penalty if--
(i) A notice conforming to the standards of paragraph (g) of
this clause previously has been furnished to the subcontractor; and
(ii) The Contractor furnishes to the Contracting Officer a copy
of any notice issued by a Contractor pursuant to paragraph (d)(3)(i)
of this clause.
(e) Subcontractor withholding procedures. If a Contractor, after
making a request for payment to the Government but before making a
payment to a subcontractor for the subcontractor's performance
covered by the payment request, discovers that all or a portion of
the payment otherwise due such subcontractor is subject to
withholding from the subcontractor in accordance with the
subcontract agreement, then the Contractor shall--
(1) Subcontractor notice. Furnish to the subcontractor a notice
conforming to the standards of paragraph (g) of this clause as soon
as practicable upon ascertaining the cause giving rise to a
withholding, but prior to the due date for subcontractor payment;
(2) Contracting Officer notice. Furnish to the Contracting
Officer, as soon as practicable, a copy of the notice furnished to
the subcontractor pursuant to subparagraph (e)(1) of this clause;
(3) Subcontractor progress payment reduction. Reduce the
subcontractor's progress payment by an amount not to exceed the
amount specified in the notice of withholding furnished under
subparagraph (e)(1) of this clause;
(4) Subsequent subcontractor payment. Pay the subcontractor as
soon as practicable after the correction of the identified
subcontract performance deficiency, and--
(i) Make such payment within--
(A) Seven days after correction of the identified subcontract
performance deficiency (unless the funds therefor must be recovered
from the Government because of a reduction under subdivision
(e)(5)(i)) of this clause; or
(B) Seven days after the Contractor recovers such funds from the
Government; or
(ii) Incur an obligation to pay a late payment interest penalty
computed at the rate of interest established by the Secretary of the
Treasury, and published in the Federal Register, for interest
payments under section 12 of the Contracts Disputes Act of 1978 (41
U.S.C. 611) in effect at the time the Contractor accrues the
obligation to pay an interest penalty;
(5) Notice to Contracting Officer. Notify the Contracting
Officer upon--
(i) Reduction of the amount of any subsequent certified
application for payment; or
(ii) Payment to the subcontractor of any withheld amounts of a
progress payment, specifying--
(A) The amounts withheld under subparagraph (e)(1) of this
clause; and
(B) The dates that such withholding began and ended; and
(6) Interest to Government. Be obligated to pay to the
Government an amount equal to interest on the withheld payments
(computed in the manner provided in 31 U.S.C. 3903(c)(1)), from the
8th day after receipt of the withheld amounts from the Government
until--
(i) The day the identified subcontractor performance deficiency
is corrected; or
(ii) The date that any subsequent payment is reduced under
subdivision (e)(5)(i) of this clause.
(f) Third-party deficiency reports--(1) Withholding from
subcontractor. If a Contractor, after making payment to a first-tier
subcontractor, receives from a supplier or subcontractor of the
first-tier subcontractor (hereafter referred to as a ``second-tier
subcontractor'') a written notice in accordance with section 2 of
the Act of August 24, 1935 (40 U.S.C. 270b, Miller Act), asserting a
deficiency in such first-tier subcontractor's performance under the
contract for which the Contractor may be ultimately liable, and the
Contractor determines that all or a portion of future payments
otherwise due such first-tier subcontractor is subject to
withholding in accordance with the subcontract agreement, the
Contractor may, without incurring an obligation to pay an interest
penalty under subparagraph (e)(6) of this clause--
(i) Furnish to the first-tier subcontractor a notice conforming
to the standards of paragraph (g) of this clause as soon as
practicable upon making such determination; and
[[Page 52257]]
(ii) Withhold from the first-tier subcontractor's next available
progress payment or payments an amount not to exceed the amount
specified in the notice of withholding furnished under subdivision
(f)(1)(i) of this clause.
(2) Subsequent payment or interest charge. As soon as
practicable, but not later than 7 days after receipt of satisfactory
written notification that the identified subcontract performance
deficiency has been corrected, the Contractor shall--
(i) Pay the amount withheld under paragraph (f)(1)(ii) of this
clause to such first-tier subcontractor; or
(ii) Incur an obligation to pay a late payment interest penalty
to such first-tier subcontractor computed at the rate of interest
established by the Secretary of the Treasury, and published in the
Federal Register, for interest payments under section 12 of the
Contracts Disputes Act of 1978 (41 U.S.C. 611) in effect at the time
the Contractor accrues the obligation to pay an interest penalty.
(g) Written notice of subcontractor withholding. The Contractor
shall issue a written notice of any withholding to a subcontractor
(with a copy furnished to the Contracting Officer), specifying--
(1) The amount to be withheld;
(2) The specific causes for the withholding under the terms of
the subcontract; and
(3) The remedial actions to be taken by the subcontractor in
order to receive payment of the amounts withheld.
(h) Subcontractor payment entitlement. The Contractor may not
request payment from the Government of any amount withheld or
retained in accordance with paragraph (d) of this clause until such
time as the Contractor has determined and certified to the
Contracting Officer that the subcontractor is entitled to the
payment of such amount.
(i) Prime-subcontractor disputes. A dispute between the
Contractor and subcontractor relating to the amount or entitlement
of a subcontractor to a payment or a late payment interest penalty
under a clause included in the subcontract pursuant to paragraph (c)
of this clause does not constitute a dispute to which the Government
is a party. The Government may not be interpleaded in any judicial
or administrative proceeding involving such a dispute.
(j) Preservation of prime-subcontractor rights. Except as
provided in paragraph (i) of this clause, this clause shall not
limit or impair any contractual, administrative, or judicial
remedies otherwise available to the Contractor or a subcontractor in
the event of a dispute involving late payment or nonpayment by the
Contractor or deficient subcontract performance or nonperformance by
a subcontractor.
(k) Non-recourse for prime contractor interest penalty. The
Contractor's obligation to pay an interest penalty to a
subcontractor pursuant to the clauses included in a subcontract
under paragraph (c) of this clause shall not be construed to be an
obligation of the Government for such interest penalty. A cost-
reimbursement claim may not include any amount for reimbursement of
such interest penalty.
(l) Overpayments. If the Contractor becomes aware of a duplicate
payment or that the Government has otherwise overpaid on an invoice
payment, the Contractor shall immediately notify the Contracting
Officer and request instructions for disposition of the overpayment.
(End of clause)
14. Amend section 52.232-29 by revising the date of the clause; by
redesignating paragraph (g) as paragraph (h); by adding a new paragraph
(g); and by revising newly designated paragraph (h) to read as follows:
52.232-29 Terms for Financing of Purchases of Commercial Items.
* * * * *
Terms for Financing of Purchases of Commercial Items (Date)
* * * * *
(g) Dates for payment. A payment under this clause is a contract
financing payment and not subject to the interest penalty provisions
of the Prompt Payment Act. The designated payment office will pay
approved payment requests within 30 days of submittal of a proper
request for payment.
(h) Conflict between terms of offeror and clause. In the event
of any conflict between the terms proposed by the offeror in
response to an invitation to propose financing terms (52.232-31) and
the terms in this clause, the terms of this clause shall govern.
(End of clause)
15. Amend section 52.232-32 by revising the date of the clause and
paragraph (c)(2) to read as follows:
52.232-32 Performance-Based Payments.
* * * * *
Performance-Based Payments (Date)
* * * * *
(c) * * *
(2) A payment under this performance-based payment clause is a
contract financing payment under the Prompt Payment clause of this
contract and not subject to the interest penalty provisions of the
Prompt Payment Act. The designated payment office will pay approved
requests on the __________ [Contracting Officer insert day as
prescribed by Agency head; if not prescribed, insert ``30th''] day
after receipt of the request for performance-based payment. However,
the designated payment office is not required to provide payment if the
Contracting Officer requires substantiation as provided in paragraph
(c)(1) of this clause, or inquires into the status of an event or
performance criterion, or into any of the conditions listed in
paragraph (e) of this clause, or into the Contractor certification. The
payment period will not begin until the Contracting Officer approves
the request.
* * * * *
[FR Doc. 00-21799 Filed 8-25-00; 8:45 am]
BILLING CODE 6820-EP-P