32.412 Contract clause
Source: FAR 32.412 on acquisition.gov
Contracting officers must carefully select and insert the appropriate version of the Advance Payments clause (52.232-12) and its alternates based on the contract’s advance payment terms and agency decisions.
Overview
FAR 32.412 prescribes the use of the contract clause at 52.232-12, Advance Payments, in solicitations and contracts where the Government will provide advance payments to contractors. It details when to use the basic clause and when to use one of its five alternates, depending on specific contract circumstances such as waiving countersignature requirements, cost-reimbursement contracts, rapid liquidation, no-interest advances, or elimination of special account requirements. The section ensures that the appropriate version of the clause is included to address the financial and administrative conditions of the contract, thereby protecting government interests while accommodating contractor needs.
Key Rules
- Use of Clause 52.232-12
- Insert the Advance Payments clause in all contracts with advance payments, unless exceptions apply.
- Alternate I
- Use when waiving countersignature due to contractor’s strong financials and performance.
- Alternate II
- Use for cost-reimbursement contracts.
- Alternate III
- Use when more rapid liquidation of advance payments is appropriate.
- Alternate IV
- Use when advance payments are provided at no interest.
- Alternate V
- Use when the special account requirement is eliminated per 32.409-3(e) or (g).
Responsibilities
- Contracting Officers: Must select and insert the correct version of clause 52.232-12 based on contract specifics and agency determinations.
- Contractors: Must comply with the terms of the clause as inserted in their contract.
- Agencies: May determine eligibility for waivers, rapid liquidation, or elimination of special account requirements.
Practical Implications
- Ensures advance payment terms are tailored to contract and contractor circumstances.
- Reduces risk of improper payment handling or administrative errors.
- Common pitfalls include failing to use the correct clause alternate or overlooking agency-specific determinations.
(a) The contracting officer shall insert the clause at 52.232-12, Advance Payments, in solicitations and contracts under which the Government will provide advance payments, except as provided in 32.412(b).
(b) If the agency desires to waive the countersignature requirement because of the contractor’s financial strength, good performance record, and favorable experience concerning cost disallowances, the contracting officer shall use the clause with its Alternate I.
(c) If a cost-reimbursement contract is contemplated, the contracting officer shall use the clause with its AlternateII.
(d) If the agency considers a more rapid liquidation appropriate, the contracting officer shall use the clause with its AlternateIII.
(e) If the agency provides advance payments under the contract at no interest to the prime contractor, the contracting officer shall use the clause with its AlternateIV.
(f) If the requirement for a special account is eliminated in accordance with 32.409-3(e) or (g), the contracting officer shall insert in the solicitation or contract the clause set forth in Alternate V of 52.232-12, Advance Payments, instead of the basic clause.