32.1009 Title
Source: FAR 32.1009 on acquisition.gov
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.
(a) Since the clause at 52.232-32, Performance-Based Payments, gives the Government title to the property described in paragraph (f) of the clause, the contracting officer shall ensure that the Government title is not compromised by other encumbrances. Ordinarily, the contracting officer, in the absence of reason to believe otherwise, may rely upon the contractor’s certification contained in the payment request.
(b) If the contracting officer becomes aware of any arrangement or condition that would impair the Government’s title to the property affected by the Performance-Based Payments clause, the contracting officer shall require additional protective provisions.
(c) The existence of any such encumbrance is a violation of the contractor’s obligations under the contract, and the contracting officer may, if necessary, suspend or reduce payments under the terms of the Performance-Based Payments clause covering failure to comply with a material requirement of the contract. In addition, if the contractor fails to disclose an existing encumbrance in the certification, the contracting officer should consult with legal counsel concerning possible violation of http://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title31-section3729&num=0&edition=prelim" target="_blank">31 U.S.C.3729, the False Claims Act.