32.006-1 General
Source: FAR 32.006-1 on acquisition.gov
Agency heads may suspend or reduce contractor payments upon substantial evidence of fraud in payment requests, but only at the highest levels and not for certain payment types.
Overview
FAR 32.006-1 outlines the general statutory authority and procedures for reducing or suspending contract payments when there is substantial evidence of fraud in a contractor's request for advance, partial, or progress payments. This authority is derived from 10 U.S.C. 3806 and 41 U.S.C. 4506, and applies to most federal agencies, with specific exclusions for the Coast Guard and certain payment types. The regulation clarifies the scope of agency authority, the non-delegable nature of the decision, and the relationship to other government remedies.
Key Rules
- Statutory Authority and Applicability
- The authority to reduce or suspend payments due to suspected fraud is available to DoD, NASA, and most civilian agencies, but not the Coast Guard. It does not apply to commercial interim or performance-based payments.
- Evidence of Fraud
- Payments may be reduced or suspended if the agency head finds substantial evidence of fraud in payment requests.
- Non-Delegable Authority
- Only agency heads at Level IV of the Executive Schedule or higher may make these determinations; this authority cannot be delegated lower.
- Additional Remedies
- This authority is in addition to other government rights and remedies.
- Scope of Determinations
- Agency head decisions can apply to individual contracts or groups of contracts affected by fraud.
Responsibilities
- Contracting Officers: Must be aware of the agency head's authority and ensure payment requests are scrutinized for fraud indicators.
- Contractors: Must ensure all payment requests are accurate and free from fraudulent claims.
- Agencies: Agency heads must make determinations at the appropriate level and document decisions; cannot delegate below Level IV.
Practical Implications
- This section exists to protect government funds from fraudulent payment requests.
- It impacts contractors by increasing scrutiny on payment submissions and potential for payment suspension if fraud is suspected.
- Common pitfalls include misunderstanding the types of payments covered and the high-level authority required for such actions.
(a) Under https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title10-section3806&num=0&edition=prelim" target="_blank">10 U.S.C. 3806(j), the statutory authority implemented by this section is available to the Department of Defense and the National Aeronautics and Space Administration; this statutory authority is not available to the United States Coast Guard. Under http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section4506&num=0&edition=prelim" target="_blank">41 U.S.C. 4506, this statutory authority is available to all agencies subject to Division C of subtitle I of title 41.
(b) https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title10-section3806&num=0&edition=prelim" target="_blank">10 U.S.C. 3806(c) and http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title41-section4506&num=0&edition=prelim" target="_blank">41 U.S.C. 4506 provide for a reduction or suspension of further payments to a contractor when the agency head determines there is substantial evidence that the contractor's request for advance, partial, or progress payments is based on fraud. This authority does not apply to commercial interim payments under subpart 32.2, or performance-based payments under subpart 32.10.
(c) The agency head may not delegate his or her responsibilities under these statutes below Level IV of the Executive Schedule.
(d) Authority to reduce or suspend payments under these statutes is in addition to other Government rights, remedies, and procedures.
(e) In accordance with these statutes, agency head determinations and decisions under this section may be made for an individual contract or any group of contracts affected by the fraud.