Prompt Payment
FAR Subpart 32.9 requires agencies to pay contractors promptly and imposes automatic interest penalties for late payments, making timely and accurate invoicing essential for compliance.
Overview
FAR Subpart 32.9, "Prompt Payment," establishes the policies and procedures for ensuring timely payments to contractors by federal agencies. It covers the scope and applicability of prompt payment requirements, defines key terms, outlines the responsibilities of contracting officers and agencies, and details the process for determining payment due dates, required documentation, and the actual payment process. The subpart also addresses the calculation and payment of interest penalties for late payments, prescribes required contract clauses, and provides guidance on handling contractor inquiries regarding payment status. The goal is to promote timely, accurate payments and maintain positive contractor relationships while ensuring compliance with statutory requirements.
Key Rules
- Scope and Applicability
- Defines which contracts and payment types are subject to prompt payment rules.
- Payment Due Dates and Documentation
- Establishes how due dates are determined and what documentation is required for payment processing.
- Interest Penalties
- Requires agencies to pay interest penalties automatically when payments are late, unless exceptions apply.
- Contract Clauses
- Mandates inclusion of specific prompt payment clauses in applicable contracts.
- Contractor Inquiries
- Outlines procedures for contractors to inquire about payment status and agency obligations to respond.
Responsibilities
- Contracting Officers: Ensure contracts include prompt payment clauses, verify payment documentation, and oversee compliance with payment timelines.
- Contractors: Submit accurate and timely invoices and required documentation; follow up on payment status as needed.
- Agencies: Process payments promptly, calculate and pay interest penalties when due, and respond to contractor inquiries.
Practical Implications
- Ensures contractors are paid on time, reducing financial risk and fostering better government-contractor relationships.
- Delays or errors in payment processing can result in mandatory interest penalties and administrative burdens.
- Proper documentation and communication are critical to avoid payment disputes and penalties.