32.006-4 Procedures
Source: FAR 32.006-4 on acquisition.gov
Agencies must follow strict procedures, including contractor notification and periodic review, before reducing or suspending payments due to suspected fraud in payment requests.
Overview
FAR 32.006-4 outlines the procedures agencies must follow when there is substantial evidence that a contractor’s request for advance, partial, or progress payments is based on fraud. The regulation details the roles of the remedy coordination official and agency head, the process for recommending and deciding on payment reductions or suspensions, and the contractor’s rights to notification and response. It also addresses inter-agency coordination and documentation requirements, as well as periodic review of any payment reduction or suspension.
Key Rules
- Remedy Coordination Official’s Recommendation
- If substantial evidence of fraud exists, the remedy coordination official must recommend payment reduction or suspension and submit a detailed written report to the agency head.
- Agency Head Determination
- The agency head reviews the recommendation and determines if substantial evidence of fraud exists before taking action.
- Payment Reduction or Suspension
- If fraud is substantiated, the agency head may reduce or suspend payments, proportionate to the anticipated government loss.
- Considerations for Action
- The agency head must consider investigative recommendations, government loss, contractor’s financial condition, essentiality, and all documentation, including the contractor’s response.
- Contractor Notification and Response
- Contractors must be notified in writing and given a chance to respond before any payment action is taken.
- Inter-Agency Coordination
- When multiple agencies are involved, a lead agency may be designated.
- Documentation and Review
- Agencies must retain written justifications and review the decision within 180 days, with recommendations for continuation or termination of the action.
Responsibilities
- Contracting Officers: Ensure procedures are followed, notify contractors, and maintain documentation.
- Contractors: Respond promptly to notifications and provide supporting documentation.
- Agencies: Oversee process, designate lead agency if needed, and conduct periodic reviews.
Practical Implications
- This section ensures due process and transparency when fraud is suspected in payment requests, protecting government interests while allowing contractors to defend themselves. Failure to follow these procedures can result in improper payment actions or legal challenges. Timely communication and thorough documentation are critical for compliance.
(a) In any case in which an agency’s remedy coordination official finds substantial evidence that a contractor’s request for advance, partial, or progress payments under a contract awarded by that agency is based on fraud, the remedy coordination official shall recommend that the agency head reduce or suspend further payments to the contractor. The remedy coordination official shall submit to the agency head a written report setting forth the remedy coordination official’s findings that support each recommendation.
(b) Upon receiving a recommendation from the remedy coordination official under paragraph (a) of this subsection, the agency head shall determine whether substantial evidence exists that the request for payment under a contract is based on fraud.
(c) If the agency head determines that substantial evidence exists, the agency head may reduce or suspend further payments to the contractor under the affected contract(s). Such reduction or suspension shall be reasonably commensurate with the anticipated loss to the Government resulting from the fraud.
(d) In determining whether to reduce or suspend further payment(s), as a minimum, the agency head shall consider-
(1) A recommendation from investigating officers that disclosure of the allegations of fraud to the contractor may compromise an ongoing investigation;
(2) The anticipated loss to the Government as a result of the fraud;
(3) The contractor’s overall financial condition and ability to continue performance if payments are reduced or suspended;
(4) The contractor’s essentiality to the national defense, or to the execution of the agency’s official business; and
(5) Assessment of all documentation concerning the alleged fraud, including documentation submitted by the contractor in its response to the notice required by paragraph (e) of this subsection.
(e) Before making a decision to reduce or suspend further payments, the agency head shall, in accordance with agency procedures-
(1) Notify the contractor in writing of the action proposed by the remedy coordination official and the reasons therefor (such notice must be sufficiently specific to permit the contractor to collect and present evidence addressing the aforesaid reasons); and
(2) Provide the contractor an opportunity to submit information within a reasonable time, in response to the action proposed by the remedy coordination official.
(f) When more than one agency has contracts affected by the fraud, the agencies shall consider designating one agency as the lead agency for making the determination and decision.
(g) The agency shall retain in its files the written justification for each-
(1) Decision of the agency head whether to reduce or suspend further payments; and
(2) Recommendation received by an agency head in connection with such decision.
(h) Not later than 180 calendar days after the date of the reduction or suspension action, the remedy coordination official shall-
(1) Review the agency head’s determination on which the reduction or suspension decision is based; and
(2) Transmit a recommendation to the agency head as to whether the reduction or suspension should continue.