49.112-1
Partial payments
FAR 49.112-1 establishes strict procedures and limits for partial payments after contract termination, requiring proper documentation, TCO approval, and safeguards to protect government interests.
Overview
FAR 49.112-1 outlines the procedures and requirements for partial payments to contractors and subcontractors following the termination of a government contract. It details how and when partial payments can be requested, the documentation required, the limits on payment amounts, and the responsibilities of both contractors and the Termination Contracting Officer (TCO). The regulation ensures that partial payments are made fairly, securely, and in accordance with the government’s interests during the settlement process after contract termination.
Key Rules
- Requesting Partial Payments
- Prime contractors may request partial payments using the prescribed form after submitting interim or final settlement proposals. Subcontractors must apply through the prime contractor.
- Limits on Payment Amounts
- The TCO may authorize partial payments up to specified percentages of contract price, subcontract settlements, termination inventory, and allowable costs.
- Assignment of Claims
- If claims are assigned, partial payments must be made to the assignee unless written consent is provided.
- Security for Payments
- The TCO must secure the government’s interest in completed items or inventory through title, liens, or other means.
- Deductions and Overpayments
- Deductions for unliquidated advances and credits must be made, and any overpayments must be repaid with interest.
- Certification and Approval
- Contractors must certify partial payment requests, and the TCO must approve them in writing.
Responsibilities
- Contracting Officers (TCOs): Review and approve partial payment requests, ensure proper deductions, secure government interests, and monitor overpayments.
- Contractors: Submit certified requests for partial payments, ensure proper documentation, and repay any overpayments with interest if required.
- Agencies: Oversee compliance with payment procedures and protect government financial interests.
Practical Implications
- This section provides a structured process for contractors to receive partial payments after contract termination, helping maintain cash flow during settlement. It protects the government from overpayment and ensures proper handling of claims, inventory, and documentation. Common pitfalls include failing to secure proper documentation, not making required deductions, or mishandling assignments of claims.