32.606
Debt collection
Contractors must resolve debts within 30 days or face payment withholdings and possible referral to the Department of Treasury after 180 days of delinquency.
Overview
FAR 32.606 outlines the procedures for collecting debts owed by contractors to the government. It establishes timelines and actions for payment offices and contracting officers when a contractor fails to pay a debt, including the initiation of withholding payments and the transfer of delinquent debts to the Department of Treasury. The section also addresses the rights of assignees under the Assignment of Claims Act and requires ongoing follow-up to ensure proper crediting of collected debts.
Key Rules
- Initiation of Withholding
- If a contractor does not pay a debt within 30 days or request payment arrangements, the payment office must begin withholding amounts due, including principal, interest, penalties, and administrative charges.
- Assignment of Claims
- When a contract is assigned, the payment office must respect the rights of the assignee and ensure any withholding is consistent with those rights.
- Transfer to Treasury
- Debts delinquent for more than 180 days must be transferred to the Department of Treasury for collection, as required by law.
- Contracting Officer Follow-Up
- Contracting officers are responsible for periodically checking with the payment office to confirm that debts have been collected and properly credited.
Responsibilities
- Contracting Officers: Must monitor debt collection status and ensure proper crediting of funds.
- Contractors: Must pay debts within 30 days or arrange payment; otherwise, face withholding and potential Treasury collection.
- Agencies/Payment Offices: Must initiate withholding, respect assignment rights, transfer delinquent debts to Treasury, and communicate with contracting officers.
Practical Implications
- Ensures timely government recovery of debts from contractors.
- Contractors risk payment withholdings and Treasury involvement if debts are not resolved promptly.
- Proper coordination between payment offices and contracting officers is essential to avoid misapplied funds or compliance issues.