32.1108 Payment by Governmentwide commercial purchase card
Source: FAR 32.1108 on acquisition.gov
Before authorizing payment by Governmentwide commercial purchase card for contracts above the micro-purchase threshold, contracting officers must verify the contractor’s debt status in SAM and follow specific contract clause and payment procedures.
Overview
FAR 32.1108 outlines the procedures and requirements for payment to contractors using the Governmentwide commercial purchase card (GPC). This section explains how the GPC enables immediate payment to contractors via a third-party financial institution, with the Government reimbursing the third party later. It details when and how contractors may request payment by charging the GPC, the necessary contract clauses, and the verification steps contracting officers must take regarding contractor debt status in the System for Award Management (SAM) before authorizing this payment method for contracts above the micro-purchase threshold.
Key Rules
- Payment Authorization and Process
- Contractors may request payment by charging the GPC only when authorized by the contract’s payment clause and for the correct amount. Disputes should only occur if payment would not have been approved otherwise.
- Required Clauses
- Contracts paid by purchase card should include FAR 52.232-36, Payment by Third Party, but payment may still be made by card if the contractor agrees, even if the clause is absent.
- Debt Verification in SAM
- For contracts/orders above the micro-purchase threshold, contracting officers must check SAM for delinquent debt subject to the Treasury Offset Program (TOP) before authorizing GPC payment. If debt is present, GPC payment is not allowed until resolved.
- Contract Information Requirements
- Contracts must identify the third party and the purchase card to be used, but not the account number (which is provided separately).
Responsibilities
- Contracting Officers: Verify contractor debt status in SAM, include required clauses, ensure proper contract identification, and manage payment method changes if debt status changes.
- Contractors: Submit payment requests only as authorized, comply with contract terms, and notify contracting officers if debt status changes.
- Agencies: Oversee compliance with payment procedures and ensure proper use of the GPC.
Practical Implications
- This section ensures secure, timely payments while protecting the Government from paying contractors with unresolved delinquent debts. It requires careful contract drafting, diligent debt checks, and clear communication between contracting officers and contractors. Common pitfalls include failing to check SAM for debt flags or improperly handling payment disputes.
A Governmentwide commercial purchase card charge authorizes the third party (e.g., financial institution) that issued the purchase card to make immediate payment to the contractor. The Government reimburses the third party at a later date for the third party’s payment to the contractor.
(a) The clause at 52.232-36, Payment by Third Party, governs when a contractor submits a charge against the purchase card for contract payment. The clause provides that the contractor shall make such payment requests by a charge to a Government account with the third party at the time the payment clause(s) of the contract authorizes the contractor to submit a request for payment, and for the amount due in accordance with the terms of the contract. To the extent that such a payment would otherwise be approved, the charge against the purchase card should not be disputed when the charge is reported to the Government by the third party. To the extent that such payment would otherwise not have been approved, an authorized individual (see 1.603-3) shall take action to remove the charge, such as by disputing the charge with the third party or by requesting that the contractor credit the charge back to the Government under the contract.
(b)
(1) Written contracts to be paid by purchase card should include the clause at 52.232-36, Payment by Third Party, as prescribed by 32.1110(d). However, payment by a purchase card also may be made under a contract that does not contain the clause to the extent the contractor agrees to accept that method of payment.
(2)
(i) When it is contemplated that the Governmentwide commercial purchase card will be used as the method of payment, and the contract or order is above the micro-purchase threshold, contracting officers are required to verify by looking in the System for Award Management (SAM) whether the contractor has any delinquent debt subject to collection under the Treasury Offset Program (TOP) at contract award and order placement. Information on TOP is available at http://fms.treas.gov/debt/index.html" target="_blank">http://fms.treas.gov/debt/index.html.
(ii) The contracting officer shall not authorize the Governmentwide commercial purchase card as a method of payment during any period the SAM indicates that the contractor has delinquent debt subject to collection under the TOP. In such cases, payments under the contract shall be made in accordance with the clause at 52.232-33, Payment by Electronic Funds Transfer-System for Award Management, or 52.232-34, Payment by Electronic Funds Transfer-Other Than System for Award Management, as appropriate (see FAR 32.1110(d)).
(iii) Contracting officers shall not use the presence of the SAM debt flag indicator to exclude a contractor from receipt of the contract award or issuance or placement of an order.
(iv) The contracting officer may take steps to authorize payment by Governmentwide commercial purchase card when a contractor alerts the contracting officer that the SAM debt flag indicator has been changed to no longer show a delinquent debt.
(c) The clause at 52.232-36, Payment by Third Party, requires that the contract-
(1) Identify the third party and the particular purchase card to be used; and
(2) Not include the purchase card account number. The purchase card account number should be provided separately to the contractor.