32.412
Contract clause
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.