32.006-1
General
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.