13.402 Conditions for use
Source: FAR 13.402 on acquisition.gov
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.
If the conditions in paragraphs (a) through (f) of this section are present, the fast payment procedure may be used, provided that use of the procedure is consistent with the other conditions of the purchase. The conditions for use of the fast payment procedure are as follows:
(a) Individual purchasing instruments do not exceed $45,000, except that executive agencies may permit higher dollar limitations for specified activities or items on a case-by-case basis.
(b) Deliveries of supplies are to occur at locations where there is both a geographical separation and a lack of adequate communications facilities between Government receiving and disbursing activities that will make it impractical to make timely payment based on evidence of Government acceptance.
(c) Title to the supplies passes to the Government-
(1) Upon delivery to a post office or common carrier for mailing or shipment to destination; or
(2) Upon receipt by the Government if the shipment is by means other than Postal Service or common carrier.
(d) The supplier agrees to replace, repair, or correct supplies not received at destination, damaged in transit, or not conforming to purchase requirements.
(e) The purchasing instrument is a firm-fixed-price contract, a purchase order, or a delivery order for supplies.
(f) A system is in place to ensure-
(1) Documentation of evidence of contractor performance under fast payment purchases;
(2) Timely feedback to the contracting officer in case of contractor deficiencies; and
(3) Identification of suppliers that have a current history of abusing the fast payment procedure (also see subpart 9.1).