32.006-4
Procedures
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.