32.904
Determining payment due dates
FAR 32.904 sets clear, enforceable payment due dates for various contract types to ensure prompt contractor payment and minimize interest penalties for late payments.
Overview
FAR 32.904 establishes the rules for determining payment due dates on government contracts, ensuring timely payments to contractors while allowing the government sufficient time for administrative processes. The section provides detailed guidance for various contract types, including standard supply/service contracts, architect-engineer contracts, construction contracts, cost-reimbursement contracts for services, and contracts for perishable food items. It also addresses procedures for mixed invoices and the calculation of interest penalties for late payments.
Key Rules
- General Rule for Payment Due Dates
- Payment is generally due the later of 30 days after the designated billing office receives a proper invoice or 30 days after government acceptance of supplies/services, with exceptions for certain contract types and items.
- Special Rules for Contract Types
- Architect-engineer contracts, construction contracts, cost-reimbursement contracts for services, and contracts for perishable food items have specific due date rules, often shorter than the standard 30 days.
- Constructive Acceptance
- For interest penalty purposes, acceptance is deemed to occur on the 7th day after delivery/performance unless there is a dispute, but this does not compel early acceptance or payment.
- Documentation and Justification
- Any extension of constructive acceptance or payment periods must be justified and documented in the contract file.
- Handling Mixed Invoices
- Agencies may pay mixed invoices on the earliest due date or split payments according to item due dates.
Responsibilities
- Contracting Officers: Must specify and document payment due dates, justify any extensions, ensure proper invoice receipt, and follow special rules for contract types and perishable items.
- Contractors: Must submit proper invoices/payment requests and comply with certification requirements, especially for construction contracts.
- Agencies: Must process payments timely, annotate invoice receipt dates, and calculate/apply interest penalties as required.
Practical Implications
- This section ensures contractors are paid promptly and interest penalties are applied for late payments, reducing financial risk for contractors and promoting government accountability. Delays in invoice processing or acceptance can trigger interest penalties, so both contractors and agencies must adhere to documentation and procedural requirements. Special attention is needed for contracts involving perishable goods, construction, or architect-engineer services due to their unique payment timelines.