13.402
Conditions for use
Fast payment is only appropriate for qualifying low-dollar supply purchases in remote or communication-limited situations, and only when the contractor accepts responsibility for correcting delivery or quality problems and the agency has controls to monitor abuse.
Overview
- FAR 13.402 sets the conditions under which agencies may use the fast payment procedure for supply purchases. This procedure allows payment before formal evidence of Government acceptance, but only when specific safeguards are in place.
- Its purpose is to support efficient purchasing in situations where distance and poor communications make normal acceptance-based payment impractical.
Key Rules
- Dollar Threshold
- Individual purchasing instruments generally must not exceed $45,000, unless an executive agency authorizes a higher limit for specified activities or items on a case-by-case basis.
- Remote Delivery Conditions
- Deliveries must be made to locations where geographic separation and inadequate communications between receiving and disbursing activities make timely payment based on acceptance evidence impractical.
- Passage of Title
- Title passes to the Government either upon delivery to a post office or common carrier for shipment, or upon Government receipt if shipped by other means.
- Supplier Correction Obligation
- The supplier must agree to replace, repair, or correct supplies that are missing, transit-damaged, or nonconforming.
- Eligible Instruments and Controls
- The instrument must be a firm-fixed-price contract, purchase order, or delivery order for supplies, and the agency must maintain a system for documenting performance, reporting deficiencies, and identifying suppliers that abuse fast payment.
Responsibilities
- Contracting Officers: Confirm all six conditions are met before authorizing fast payment and ensure agency controls exist.
- Contractors: Accept responsibility to correct delivery and quality problems and perform under eligible supply instruments.
- Agencies: Maintain documentation, provide timely deficiency feedback, and track abusive supplier behavior.
Practical Implications
- This section exists to balance payment speed with risk control in remote or hard-to-administer supply deliveries.
- Contractors should expect fast payment only in limited circumstances and should be prepared to remedy shipment or quality issues quickly.
- Common pitfalls include exceeding the dollar limit, using ineligible contract types, or lacking adequate internal controls to monitor supplier performance.