32.607-2 Deferment of collection
Source: FAR 32.607-2 on acquisition.gov
Contractors must submit a detailed written request and comply with strict requirements to obtain a deferment of debt collection, even when a dispute is pending.
Overview
FAR 32.607-2 outlines the procedures and requirements for contractors to request a deferment of collection on debts owed to the government. The regulation specifies the information that must be included in a written request, the responsibilities of the contracting officer, and the necessary contents of any deferment agreement. It also addresses special considerations for contractors who have appealed the debt under the Disputes clause, as well as protections for small businesses and financially weak contractors. The section ensures that government interests are protected while providing a structured process for contractors facing financial hardship.
Key Rules
- Written Request for Deferment
- Contractors must submit a written request for deferment to the contracting officer, including detailed financial information unless an appeal is pending.
- Disputes Clause Considerations
- Filing an appeal does not suspend collection, but deferment may be considered to avoid overcollections.
- Contracting Officer Actions
- The contracting officer must notify the payment office, review the request, and forward recommendations and supporting documentation to the designated agency office.
- Deferment Agreement Requirements
- Agreements must include specific terms such as debt description, payment office, interest charges, access to records, and provisions for termination upon default or insolvency.
- Special Provisions for Appeals and Small Businesses
- Deferments may be granted to small businesses or financially weak contractors, and agreements must require diligent prosecution of appeals and payment upon resolution.
Responsibilities
- Contracting Officers: Review and process deferment requests, notify payment offices, and forward recommendations and documentation.
- Contractors: Submit complete written requests with required information, comply with deferment agreement terms, and prosecute appeals diligently if applicable.
- Agencies: Designate decision-making offices, authorize deferments, and ensure agreements protect government interests.
Practical Implications
- This section provides a clear process for contractors to seek relief from immediate debt collection, especially during financial hardship or pending disputes.
- It balances contractor needs with government protections, requiring thorough documentation and enforceable agreements.
- Common pitfalls include incomplete requests, failure to provide required information, or misunderstanding that appeals do not automatically halt collections.
(a) All requests for deferment of collection must be submitted in writing to the contracting officer.
(1) If the contractor has appealed the debt under the procedures of the Disputes clause of the contract, the information with the request for deferment may be limited to an explanation of the contractor’s financial condition.
(2) Actions filed by contractors under the Disputes Clause shall not suspend or delay collection.
(3) If there is no appeal pending or action filed under the Disputes clause of the contract, the following information about the contractor should be submitted with the request:
(i) Financial condition.
(ii) Contract backlog.
(iii) Projected cash receipts and requirements.
(iv) The feasibility of immediate payment of the debt.
(v) The probable effect on operations of immediate payment in full.
(b) Upon receipt of the contractor’s written request, the contracting officer shall promptly provide a notification to the payment office and advise the payment office that the contractor’s request is under consideration.
(c)
(1) The contracting officer should consider any information necessary to develop a recommendation on the deferment request.
(2) The contracting officer shall forward the following to the office designated in agency procedures for a decision:
(i) A copy of the contractor’s request for a deferment of collection.
(ii) A written recommendation on the request and the basis for the recommendation including the advisability of deferment to avoid possible overcollections.
(iii) A statement as to whether the contractor has an appeal pending or action filed under the Disputes clause of the contract and the docket number if the appeal has been filed.
(iv) A copy of the contracting officer’s final decision (see 32.605).
(d) The office designated in agency procedures may authorize a deferment pending the resolution of appeal to avoid possible overcollections. The agency is required to use unexpired funds to pay interest on overcollections.
(e) Deferments pending disposition of appeal may be granted to small business concerns and financially weak contractors, balancing the need for Government security against loss and undue hardship on the contractor.
(f) The deferment agreement shall not provide that a claim of the Government will not become due and payable pending mutual agreement on the amount of the claim or, in the case of a dispute, until the decision is reached.
(g) At a minimum, the deferment agreement shall contain the following:
(1) A description of the debt.
(2) The date of first demand for payment.
(3) Notice of an interest charge, in conformity with 32.608 and the FAR clause at 52.232-17, Interest; or, in the case of a debt arising from a defective pricing or a CAS noncompliance overpayment, interest, as prescribed by the applicable Price Reduction for Defective Certified Cost or Pricing Data or CAS clause (see 32.607(c)).
(4) Identification of the office to which the contractor is to send debt payments.
(5) A requirement for the contractor to submit financial information requested by the Government and for reasonable access to the contractor’s records and property by Government representatives.
(6) Provision for the Government to terminate the deferment agreement and accelerate the maturity of the debt if the contractor defaults or if bankruptcy or insolvency proceedings are instituted by or against the contractor.
(7) Protective requirements that are considered by the Government to be prudent and feasible in the specific circumstances. The coverage of protective terms at 32.409 and 32.501-5 may be used as a guide.
(h) If a contractor appeal of the debt determination is pending, the deferment agreement shall also include a requirement that the contractor shall-
(1) Diligently prosecute the appeal; and
(2) Pay the debt in full when the appeal is decided, or when the parties reach agreement on the debt amount.
(i) The deferment agreement may provide for the right to make early payments without prejudice, for refund of overpayments, and for crediting of interest.