32.001
Definitions
Understanding the definitions in FAR 32.001 is critical for correctly applying contract financing rules and ensuring compliance with federal payment procedures.
Overview
FAR 32.001 provides definitions for key terms used throughout Part 32, which governs contract financing in federal acquisitions. Understanding these definitions is essential for both contracting officers and contractors to ensure proper application of contract financing rules, payment procedures, and compliance with government requirements. The section clarifies distinctions between types of payments (e.g., commercial interim, advance, delivery, invoice), contract actions, and the roles of designated billing and payment offices. It also differentiates between customary and unusual contract financing, which affects approval processes and risk management.
Key Rules
- Commercial Interim Payment
- Payment made after some work is performed, but before delivery, not subject to Prompt Payment Act interest penalties.
- Contract Action
- Refers to actions resulting in a contract, including out-of-scope additions, but excludes in-scope modifications or administrative changes.
- Contract Financing Payment
- Government disbursement before acceptance of supplies/services, including various payment types but excluding invoice, partial delivery, and lease/rental payments.
- Customary vs. Unusual Contract Financing
- Customary financing is routine and pre-approved; unusual financing requires higher-level review and approval.
- Designated Billing/Payment Offices
- Specifies where invoices and payments are submitted and processed, which may differ by contract.
- Liquidation
- Process of recouping prior financing payments from delivery payments.
Responsibilities
- Contracting Officers: Must apply these definitions accurately when structuring contract financing and payment terms, and ensure proper designation of billing/payment offices.
- Contractors: Should understand payment types, submission procedures, and how financing payments are liquidated.
- Agencies: Oversee use of customary vs. unusual financing and ensure compliance with approval requirements.
Practical Implications
- These definitions underpin all contract financing actions, affecting payment timing, compliance, and risk. Misunderstanding terms can lead to payment delays, improper financing arrangements, or audit findings. Contractors and contracting officers must use these definitions to interpret and apply Part 32 requirements correctly.