32.1009
Title
Contractors must ensure and certify that property covered by performance-based payments is free of encumbrances, or risk payment suspension and potential legal action.
Overview
FAR 32.1009 addresses the Government’s title to property under contracts that include the Performance-Based Payments clause (FAR 52.232-32). It requires contracting officers to ensure that the Government’s title to property acquired or affected by performance-based payments is not compromised by any encumbrances, such as liens or claims by third parties. The section outlines the reliance on contractor certification regarding title, the need for additional protections if risks are identified, and the consequences for contractors if encumbrances exist or are undisclosed. It also references potential legal implications under the False Claims Act for failure to disclose such encumbrances.
Key Rules
- Government Title Protection
- Contracting officers must ensure that the Government’s title to property under performance-based payments is free from encumbrances, relying on contractor certification unless there is reason to doubt it.
- Additional Protections
- If any risk to the Government’s title is identified, contracting officers must require further protective measures.
- Consequences of Encumbrances
- Existence of encumbrances violates contract terms and may result in suspension or reduction of payments, and possible legal action under the False Claims Act if not disclosed.
Responsibilities
- Contracting Officers: Monitor for encumbrances, require additional protections if needed, and consult legal counsel for potential False Claims Act violations.
- Contractors: Certify that property is free from encumbrances and disclose any existing encumbrances in payment requests.
- Agencies: Oversee compliance and enforce remedies for violations.
Practical Implications
- Ensures the Government’s financial interests are protected in performance-based payment arrangements.
- Contractors must be diligent in certifying title and disclosing encumbrances to avoid payment issues and legal risks.
- Failure to comply can result in payment suspension, contract breach, and potential liability under the False Claims Act.