32.607 Installment payments and deferment of collection
Source: FAR 32.607 on acquisition.gov
Only the agency-designated office—not the contracting officer—can approve or deny contractor requests for installment payments or deferment of contract debt collection, and such agreements must include interest and allow for financial review.
Overview
FAR 32.607 outlines the procedures and requirements for handling contractor requests for installment payments or deferment of collection on contract debts. The section clarifies that contracting officers are not authorized to approve or deny such requests; instead, this responsibility lies with the office designated by agency procedures. The regulation provides guidance on when and how installment or deferment agreements may be arranged, including the need for appropriate covenants, securities, and payment schedules. It also mandates that interest must be included in any such agreement if not already specified in the contract.
Key Rules
- Approval Authority
- Only the agency-designated office, not the contracting officer, can approve or deny requests for installment payments or deferment of collection.
- Conditions for Deferment/Installment
- Agreements may be made if the contractor cannot pay in full or if immediate payment would impair national defense contract operations.
- Agreement Requirements
- Agreements must include a specific payment schedule, allow for periodic financial reviews, and require earlier payments if the contractor’s financial situation improves.
- Interest Requirement
- Interest must be included in any installment or deferment agreement if not already required by the contract.
Responsibilities
- Contracting Officers: Refer requests to the designated agency office; do not approve or deny requests.
- Contractors: Submit proposals for installment or deferment and provide necessary financial information.
- Agencies: Designated office must review, approve/deny requests, structure agreements, and conduct financial reviews.
Practical Implications
- Ensures consistent, centralized handling of debt deferment and installment requests.
- Protects government interests by requiring covenants, securities, and financial oversight.
- Contractors must be prepared for financial scrutiny and possible acceleration of payments if their financial condition improves.
(a) The contracting officer shall not approve or deny a contractor’s request for installment payments or deferment of collections. The office designated in agency procedures is responsible for approving or denying requests for installment payments or deferment of collections.
(b) If a contractor has not appealed the debt or filed an action under the Disputes clause of the contract and the contractor has submitted a proposal for debt deferment or installment payments-
(1) The office designated in agency procedures may arrange for deferment/installment payments if the contractor is unable to pay at once in full or the contractor’s operations under national defense contracts would be seriously impaired. The arrangement shall include appropriate covenants and securities and should be limited to the shortest practicable maturity; and
(2) The deferment/installment agreement shall include a specific schedule or plan for payment. It should permit the Government to make periodic financial reviews of the contractor and to require payments earlier than required by the agreement if the Government considers the contractor’s ability to pay improved. It should also provide for required stated or measurable payments on the occurrence of specific events or contingencies that improve the contractor’s ability to pay.
(c) If not already applicable under the contract terms, interest on contract debt shall be made an element of any agreement entered into for installment payments or deferment of collection.