32.503-4 Approval of progress payment requests
Source: FAR 32.503-4 on acquisition.gov
ACOs can rely on a contractor’s certified accounting system for progress payments unless there is a specific reason to doubt its reliability or expect a contract loss.
Overview
FAR 32.503-4 outlines the procedures for approving contractor progress payment requests. It allows the Administrative Contracting Officer (ACO) to rely on the contractor’s established accounting system and certification when approving progress payments, provided the contractor’s reliability and system adequacy have been confirmed. Routine audits of progress payment requests are discouraged unless there is a specific reason to question the contractor’s certification or suspect a potential contract loss. If there is doubt about a portion of a payment request, only the questionable amount should be withheld, while undisputed amounts should be paid promptly.
Key Rules
- Reliance on Contractor Systems
- ACOs may approve progress payments based on the contractor’s accounting system and certification if these have been deemed reliable and adequate.
- Audit Requests
- Audits or reviews of progress payment requests should not be routine but may be required if there are doubts about the contractor’s certification or concerns about contract losses.
- Partial Withholding
- Only the disputed portion of a progress payment request should be withheld pending review or audit; the remainder should be paid without delay.
Responsibilities
- Contracting Officers: Must assess the reliability of the contractor’s accounting system and certification, determine when audits are necessary, and ensure timely payment of undisputed amounts.
- Contractors: Must maintain reliable accounting systems and provide accurate certifications with progress payment requests.
- Agencies: Should oversee the process to ensure compliance and proper use of audits.
Practical Implications
This section ensures efficient processing of progress payments while safeguarding government interests. It minimizes unnecessary audits, encourages reliance on established systems, and prevents undue payment delays. Contractors benefit from prompt payment of undisputed amounts, but must maintain robust accounting practices to avoid scrutiny or payment withholds.
(a) When the reliability of the contractor and the adequacy of the contractor’s accounting system and controls have been established (see 32.503-3 of this section) the ACO may, in approving any particular progress payment request (including initial requests on new contracts), rely upon that accounting system and upon the contractor’s certification, without requiring audit or review of the request before payment.
(b) The ACO should not routinely ask for audits of progress payment requests. However, when there is reason to-
(1) Question the reliability or accuracy of the contractor’s certification; or
(2) Believe that the contract will involve a loss, the ACO should ask for a review or audit of the request before payment is approved or the request is otherwise disposed of.
(c) When there is reason to doubt the amount of a progress payment request, only the doubtful amount should be withheld, subject to later adjustment after review or audit; any clearly proper and due amounts should be paid without awaiting resolution of the differences.