32.611
Contract clause
The Interest clause (52.232-17) must be included in most contracts unless a specific exemption applies, making contractors potentially liable for interest on debts owed to the government.
Overview
FAR 32.611 requires contracting officers to include the clause at 52.232-17, Interest, in most solicitations and contracts, except for specific exempted categories. This clause governs the assessment of interest on contractor debts owed to the government. The regulation outlines clear exceptions where the clause is not mandatory, such as contracts at or below the simplified acquisition threshold, contracts with government or certain nonprofit entities, and contracts for paid advertisements. Contracting officers retain discretion to include the clause in exempted contracts if deemed appropriate.
Key Rules
- Mandatory Inclusion of Interest Clause
- The Interest clause (52.232-17) must be included in most contracts unless an exception applies.
- Exceptions to Inclusion
- The clause is not required for contracts at or below the simplified acquisition threshold, with government agencies, state/local/foreign governments, certain nonprofits, paid advertisements, or as otherwise authorized by agency procedures.
- Discretionary Inclusion
- Contracting officers may still include the clause in exempted contracts if circumstances warrant.
Responsibilities
- Contracting Officers: Must determine if the contract falls under an exception and include or exclude the clause accordingly; may use discretion for inclusion in exempted contracts.
- Contractors: Should review solicitations and contracts to confirm whether the Interest clause applies and understand its implications for potential debts.
- Agencies: Should provide guidance on any additional exceptions under agency procedures.
Practical Implications
- Ensures contractors are aware of potential interest liabilities on debts to the government.
- Reduces administrative burden for low-value or government-to-government contracts.
- Contractors should verify clause inclusion and understand when interest may be assessed on debts, avoiding surprises during contract administration.