49.112-2 Final payment
Source: FAR 49.112-2 on acquisition.gov
FAR 49.112-2 establishes the required procedures for contractors and contracting officers to process final payments after contract termination, including documentation, labor checks for construction, and rules on interest.
Overview
FAR 49.112-2 outlines the procedures for final payment to contractors following the settlement of a terminated contract. It details the steps required for both negotiated settlements and settlements by determination, including the submission of vouchers or invoices reflecting the agreed or determined amounts, less any prior payments. For construction contracts, the contracting officer must check for outstanding labor violations before authorizing final payment and may withhold funds if violations exist. The section also clarifies that interest is generally not paid on settlement amounts, except in cases where a contractor successfully appeals a contracting officer’s determination under the Disputes clause.
Key Rules
- Negotiated Settlement
- Contractor submits a voucher/invoice for the agreed amount (minus prior payments); TCO attaches the settlement agreement and forwards for payment.
- Settlement by Determination
- Contractor submits a voucher/invoice for the determined amount (minus prior payments); if appealed, payment is based on the final appeal decision, with interim payments allowed for uncontested charges.
- Construction Contracts
- Contracting officer must check for labor violations and may withhold payment if violations are found.
- Interest
- No interest is paid on settlements, except when a contractor wins an appeal under the Disputes clause.
Responsibilities
- Contracting Officers: Ensure proper documentation, check for labor violations in construction contracts, and process payments accordingly.
- Contractors: Submit accurate vouchers/invoices reflecting settlements and comply with appeal procedures.
- Agencies: Oversee compliance with payment and labor requirements, and ensure proper handling of appeals and interest payments.
Practical Implications
- Ensures a clear process for final payment after contract termination.
- Highlights the importance of documentation and compliance with labor laws for construction contracts.
- Clarifies when interest may or may not be paid, reducing disputes over payment timing.
(a) Negotiated settlement. After execution of a settlement agreement, the contractor shall submit a voucher or invoice showing the amount agreed upon, less any portion previously paid. The TCO shall attach a copy of the settlement agreement to the voucher or invoice and forward the documents to the disbursing officer for payment.
(b) Settlement by determination. If the settlement is by determination and-
(1) There is no appeal within the allowed time, the contractor shall submit a voucher or invoice showing the amount determined due, less any portion previously paid; or
(2) There is an appeal, the contractor shall submit a voucher or invoice showing the amount finally determined due on the appeal, less any portion previously paid. Pending determination of any appeal, the contractor may submit vouchers or invoices for charges that are not directly involved with the portion being appealed, without prejudice to the rights of either party on the appeal.
(c) Construction contracts. In the case of construction contracts, before forwarding the final payment voucher, the contracting officer shall ascertain whether there are any outstanding labor violations. If so, the contracting officer shall determine the amount to be withheld from the final payment (see subpart 22.4).
(d) Interest. The Government shall not pay interest on the amount due under a settlement agreement or a settlement by determination. The Government may, however, pay interest on a successful contractor appeal from a contracting officer’s determination under the Disputes clause at 52.233-1.