32.908 Contract clauses
Source: FAR 32.908 on acquisition.gov
FAR 32.908 mandates the use of specific Prompt Payment clauses based on contract type and allows limited flexibility in payment and acceptance timelines to ensure timely contractor payments.
Overview
FAR 32.908 prescribes the use of specific Prompt Payment contract clauses in government solicitations and contracts, depending on the contract type. It ensures timely payments to contractors and provides flexibility for contracting officers to adjust certain payment timelines to accommodate government inspection and acceptance processes. The section details when to use clauses 52.232-25, 52.232-26, and 52.232-27, and outlines permissible modifications to payment and acceptance periods under certain conditions. It also addresses exceptions for commercial contracts and cost-reimbursement service contracts.
Key Rules
- Prompt Payment Clauses by Contract Type
- Use 52.232-26 for fixed-price architect-engineer contracts, 52.232-27 for construction contracts, and 52.232-25 for all other contracts unless commercial terms or other authorities apply.
- Modifying Acceptance and Payment Periods
- Contracting officers may extend acceptance or approval periods beyond standard days if needed for inspection or evaluation, and may shorten payment periods to as little as 7 days if agency policy allows.
- Special Cases
- For cost-reimbursement service contracts, use 52.232-25 with Alternate I. Do not use 52.232-25 when 52.212-4 or other governmental payment authorities apply.
Responsibilities
- Contracting Officers: Insert the correct prompt payment clause, modify periods as authorized, and ensure compliance with agency policies.
- Contractors: Understand which prompt payment clause applies and the payment/acceptance timelines.
- Agencies: May set policies for shorter payment periods and oversee compliance with prompt payment requirements.
Practical Implications
- Ensures contractors are paid promptly, reducing financial risk.
- Contracting officers must carefully select and, if needed, tailor clauses to contract circumstances.
- Failure to use the correct clause or modify periods appropriately can result in payment delays or noncompliance.
(a) Insert the clause at 52.232-26, Prompt Payment for Fixed-Price Architect-Engineer Contracts, in solicitations and contracts that contain the clause at 52.232-10, Payments Under Fixed-Price Architect-Engineer Contracts.
(1) As authorized in 32.904(c)(2), the contracting officer may modify the date in paragraph (a)(4)(i) of the clause to specify a period longer than 7 days for constructive acceptance or constructive approval, if required to afford the Government a practicable opportunity to inspect and test the supplies furnished or evaluate the services performed.
(2) As provided in 32.903, agency policies and procedures may authorize amendment of paragraphs (a)(1)(i) and (ii) of the clause to insert a period shorter than 30 days (but not less than 7 days) for making contract invoice payments.
(b) Insert the clause at 52.232-27, Prompt Payment for Construction Contracts, in all solicitations and contracts for construction (see part 36).
(1) As authorized in 32.904(d)(1)(i)(B), the contracting officer may modify the date in paragraph (a)(1)(i)(A) of the clause to specify a period longer than 14 days if required to afford the Government a reasonable opportunity to adequately inspect the work and to determine the adequacy of the Contractor’s performance under the contract.
(2) As authorized in 32.904(d)(2)(iv), the contracting officer may modify the date in paragraph (a)(4)(i) of the clause to specify a period longer than 7 days for constructive acceptance or constructive approval if required to afford the Government a reasonable opportunity to inspect and test the supplies furnished or evaluate the services performed.
(c) Insert the clause at 52.232-25, Prompt Payment, in all other solicitations and contracts, except when the clause at 52.212-4, Contract Terms and Conditions-Commercial Products and Commercial Services, applies, or when payment terms and late payment penalties are established by other governmental authority (e.g., tariffs).
(1) As authorized in 32.904(b)(1)(ii)(B)(4), the contracting officer may modify the date in paragraph (a)(5)(i) of the clause to specify a period longer than 7 days for constructive acceptance, if required to afford the Government a reasonable opportunity to inspect and test the supplies furnished or to evaluate the services performed, except in the case of a contract for the purchase of a commercial product or commercial service, including a brand-name commercial product for authorized resale (e.g., commissary items).
(2) As provided in 32.903, agency policies and procedures may authorize amendment of paragraphs (a)(1)(i) and (ii) of the clause to insert a period shorter than 30 days (but not less than 7 days) for making contract invoice payments.
(3) If the contract is a cost-reimbursement contract for services, use the clause with its Alternate I.