32.111
Contract clauses for non-commercial purchases
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.