32.502-4 Contract clauses
Source: FAR 32.502-4 on acquisition.gov
Always include the correct Progress Payments clause and alternates in contracts, and ensure any special rates or provisions are clearly specified and approved.
Overview
FAR 32.502-4 outlines the requirements for including the Progress Payments clause (FAR 52.232-16) in solicitations and contracts where progress payments based on costs are authorized. It details when to use the standard clause and when to use its alternates or modify its terms, depending on the type of contractor (small business or not), contract type (fixed-price, letter contract, indefinite-delivery), and whether special progress payment rates are approved. The section also addresses how to handle contracts with severable work portions requiring separate progress payment rates and the associated accounting requirements.
Key Rules
- Inclusion of Progress Payments Clause
- Insert FAR 52.232-16 in solicitations and fixed-price contracts providing for progress payments based on costs.
- Customary and Unusual Progress Payment Rates
- Substitute approved rates for the standard clause rates if agency approval is obtained or if unusual rates are approved for the contractor or subcontractor.
- Use of Clause Alternates
- Use Alternate I for small businesses, Alternate II for letter contracts, and Alternate III for non-small businesses under indefinite-delivery contracts or basic ordering agreements.
- Severable Work and Separate Rates
- For contracts with severable work portions, specify separate progress payment rates and require separate payment requests and invoices for each portion.
Responsibilities
- Contracting Officers: Ensure the correct clause and alternates are included, substitute or modify rates as required, and specify special provisions for severable work.
- Contractors: Submit progress payment requests and invoices as specified, especially when separate rates or severable work apply.
- Agencies: Approve non-customary progress payment rates and oversee compliance with clause requirements.
Practical Implications
- This section ensures that progress payments are handled consistently and in accordance with agency approvals and contract specifics. Contractors must pay close attention to which clause version applies and follow special instructions for severable work or non-standard rates. Failure to comply can result in payment delays or contract disputes.
(a)
(1) Insert the clause at 52.232-16, Progress Payments, in-
(i) Solicitations that may result in contracts providing for progress payments based on costs; and
(ii) Fixed-price contracts under which the Government will provide progress payments based on costs.
(2) If advance agency approval has been given in accordance with 32.501-1, the contracting officer may substitute a different customary rate for other than small business concerns for the progress payment and liquidation rate indicated.
(3) If an unusual progress payment rate is approved for the prime contractor (see 32.501-2), substitute the approved rate for the customary rate in paragraphs (a)(1), (a)(6), and (b) of the clause.
(4) If the liquidation rate is changed from the customary progress payment rate (see 32.503-8 and 32.503-9), substitute the new rate for the rate in paragraphs (a)(1), (a)(6), and (b) of the clause.
(5) If an unusual progress payment rate is approved for a subcontract (see 32.504(c) and 32.501-2), modify paragraph (j)(6) of the clause to specify the new rate, the name of the subcontractor, and that the new rate shall be used for that subcontractor in lieu of the customary rate.
(b) If the contractor is a small business concern, use the clause with its AlternateI.
(c) If the contract is a letter contract, use the clause with its AlternateII.
(d) If the contractor is not a small business concern, and progress payments are authorized under an indefinite-delivery contract, basic ordering agreement, or their equivalent, use the clause with its AlternateIII.
(e) If the nature of the contract necessitates separate progress payment rates for portions of work that are clearly severable and accounting segregation would be maintained (e.g., annual production requirements), describe the application of separate progress payment rates in a supplementary special provision within the contract. The contractor must submit separate progress payment requests and subsequent invoices for the severable portions of work in order to maintain accounting integrity.