32.1106 EFT mechanisms
Source: FAR 32.1106 on acquisition.gov
FAR 32.1106 mandates specific EFT mechanisms for domestic payments and sets conditions for using EFT in nondomestic or foreign currency transactions, requiring agency head approval for exceptions.
Overview
FAR 32.1106 outlines the acceptable mechanisms for making payments via Electronic Funds Transfer (EFT) in government contracts. It distinguishes between domestic and nondomestic payments, specifying the required EFT systems for U.S.-based transactions and providing guidance for payments outside the U.S. or in foreign currency. The section also allows agency heads to authorize alternative EFT methods under certain conditions, with concurrence from the payment office.
Key Rules
- Domestic EFT Mechanisms
- Payments within the U.S. must use the Automated Clearing House (ACH) or Fedwire Transfer System, as specified in clauses 52.232-33 and 52.232-34. Alternative mechanisms require agency head approval and payment office concurrence.
- Nondomestic and Foreign Currency Payments
- Payments outside the U.S. or in non-U.S. currency are generally not made by EFT unless the agency head, with payment office concurrence, determines that local infrastructure supports EFT or that foreign currency payments can be made safely.
Responsibilities
- Contracting Officers: Ensure the correct EFT clauses are included and that payment mechanisms comply with this section.
- Contractors: Provide accurate banking information and understand which EFT mechanism applies to their contract.
- Agencies: Oversee and approve any deviations from standard EFT mechanisms, ensuring payment security and compliance.
Practical Implications
- This section ensures secure, efficient, and standardized payment processes for government contracts.
- Contractors must be aware of the payment mechanism applicable to their contract location and currency.
- Failure to comply may delay payments or require additional approvals, especially for nondomestic or foreign currency transactions.
(a) Domestic EFT mechanisms. The EFT clauses at 52.232-33 and 52.232-34 are designed for use with the domestic United States banking system, using United States currency, and only the specified mechanisms (U.S. Automated Clearing House, and Fedwire Transfer System) of EFT. However, the head of an agency may authorize the use of any other EFT mechanism for domestic EFT with the concurrence of the office or agency responsible for making payments.
(b) Nondomestic EFT mechanisms and other than United States currency. The Government shall provide payment by other than EFT for payments received by or on behalf of the contractor outside the United States and Puerto Rico or for contracts paid in other than United States currency. However, the head of an agency may authorize appropriate use of EFT with the concurrence of the office or agency responsible for making payments if-
(1) The political, financial, and communications infrastructure in a foreign country supports payment by EFT; or
(2) Payments of other than United States currency may be made safely.