32.111 Contract clauses for non-commercial purchases
Source: FAR 32.111 on acquisition.gov
FAR 32.111 mandates the inclusion of specific payment and withholding clauses in non-commercial contracts, tailored to contract type, to ensure clear and compliant payment terms.
Overview
FAR 32.111 prescribes the mandatory contract clauses that must be included in non-commercial government contracts, depending on the contract type and subject matter. The section ensures that payment terms, withholding provisions, and other payment-related requirements are clearly established in solicitations and contracts for supplies, services, construction, research and development, transportation, communication services, and architect-engineer services. Contracting officers are responsible for inserting the appropriate FAR clauses, with modifications as needed for payment due dates, in accordance with agency regulations.
Key Rules
- Required Payment Clauses by Contract Type
- Specific FAR clauses (52.232-1 through 52.232-7) must be included based on whether the contract is for supplies, services, construction, R&D, transportation, communication services, or time-and-materials/labor-hour work.
- Withholding Provisions
- For time-and-materials and labor-hour contracts, the contracting officer may require withholding up to 5% (max $50,000) to protect government interests, with clear modification specifying the amount and percentage.
- Prompt Payment and Withholding Limitations
- Clauses for discounts for prompt payment and limitations on withholding must be included where applicable, especially if multiple withholding provisions exist.
- Architect-Engineer and Extras Clauses
- Special clauses are required for architect-engineer contracts and for handling extras in certain fixed-price contracts.
Responsibilities
- Contracting Officers: Must identify contract type and insert the correct payment and withholding clauses, modifying payment due dates as per agency rules, and issue modifications for withholdings when necessary.
- Contractors: Must comply with the payment, withholding, and prompt payment provisions as set forth in the contract clauses.
- Agencies: Ensure oversight and consistency in application of payment clauses and adherence to agency-specific payment due date regulations.
Practical Implications
- This section standardizes payment and withholding terms across non-commercial contracts, reducing ambiguity and ensuring compliance with federal payment policies.
- Contractors must be aware of which clauses apply to their contracts and understand the implications for payment timing, withholdings, and claims releases.
- Common pitfalls include failure to include the correct clauses, improper modification of payment due dates, or misunderstanding withholding provisions, which can lead to payment delays or disputes.
(a) The contracting officer shall insert the following clauses, appropriately modified with respect to payment due dates, in accordance with agency regulations-
(1) The clause at 52.232-1, Payments, in solicitations and contracts when a fixed-price supply contract, a fixed-price service contract, or a contract for nonregulated communication services is contemplated;
(2) The clause at 52.232-2, Payment under Fixed-Price Research and Development Contracts, in solicitations and contracts when a fixed-price research and development contract is contemplated;
(3) The clause at 52.232-3, Payments under Personal Services Contracts, in solicitations and contracts for personal services;
(4) The clause at 52.232-4, Payments under Transportation Contracts and Transportation-Related Services Contracts, in solicitations and contracts for transportation or transportation-related services;
(5) The clause at 52.232-5, Payments under Fixed-Price Construction Contracts, in solicitations and contracts for construction when a fixed-price contract is contemplated;
(6) The clause at 52.232-6, Payments under Communication Service Contracts with Common Carriers, in solicitations and contracts for regulated communication services by common carriers; and
(7) The clause at 52.232-7, Payments under Time-and-Materials and Labor-Hour Contracts, in solicitations and contracts when a time-and-materials or labor-hour contract is contemplated. If the contracting officer determines that it is necessary to withhold payment to protect the Government’s interests, paragraph (a)(7) of the clause permits the contracting officer to unilaterally issue a modification requiring the contractor to withhold 5 percent of amounts due, up to a maximum of $50,000 under the contract. The contracting officer shall ensure that the modification specifies the percentage and total amount of the withhold payment. Normally, there should be no need to withhold payment for a contractor with a record of timely submittal of the release discharging the Government from all liabilities, obligations, and claims, as required by paragraph (g) of the clause.
(b) The contracting officer shall insert the following clauses, appropriately modified with respect to payment due dates in accordance with agency regulations:
(1) The clause at 52.232-8, Discounts for Prompt Payment, in solicitations and contracts when a fixed-price supply contract or fixed-price service contract is contemplated.
(2) A clause, substantially the same as the clause at 52.232-9, Limitation on Withholding of Payments, in solicitations and contracts when a supply contract, research and development contract, service contract, time-and-materials contract, or labor-hour contract is contemplated that includes two or more terms authorizing the temporary withholding of amounts otherwise payable to the contractor for supplies delivered or services performed.
(c) The contracting officer shall insert the following clauses, appropriately modified with respect to payments due dates in accordance with agency regulations:
(1) The clause at 52.232-10, Payments under Fixed-Price Architect-Engineer Contracts, in fixed-price architect-engineer contracts.
(2) The clause at 52.232-11, Extras, in solicitations and contracts when a fixed-price supply contract, fixed-price service contract, or a transportation contract is contemplated.