Vehicle Lease Payments
Contractors are paid rent only for vehicles that meet contract requirements and are available for government use, with payments prorated and withheld for non-compliance or unavailability.
Overview
FAR 52.208-4, Vehicle Lease Payments, outlines the terms and conditions for payment of rent under government contracts for leasing motor vehicles (except those leased in foreign countries). The clause specifies how and when rent accrues, under what circumstances rent is withheld, and how payments are calculated and processed. It ensures that contractors are paid only for vehicles that meet contract requirements and are available for government use, and provides clear guidance on proration and invoicing.
Key Rules
- Payment Upon Invoice
- The government pays rent for each vehicle at the contract rate upon submission of proper invoices or vouchers.
- Accrual of Rent
- Rent starts from the later of contract start or vehicle delivery and continues until contract expiration or termination, but only while the vehicle is in government possession.
- Non-Compliance Withholding
- Rent does not accrue for vehicles that do not meet contract requirements or the Condition of Leased Vehicles clause until corrected or replaced.
- Unavailability/Unusability
- Rent is not paid for periods when the vehicle is unavailable or unusable due to the contractor’s failure to provide required services.
- Proration of Rent
- Monthly rent is prorated at 1/30th of the monthly rate per day; if mileage provisions apply, payment is as specified in the contract schedule.
Responsibilities
- Contracting Officers: Ensure vehicles meet contract requirements before approving rent payments; withhold rent for non-compliance or unavailability.
- Contractors: Submit proper invoices, maintain vehicles per contract, and ensure vehicles meet all requirements.
- Agencies: Oversee contract compliance and payment processing.
Practical Implications
This clause protects the government from paying for non-compliant or unusable vehicles and ensures contractors are compensated fairly for vehicles in proper condition and use. Contractors must maintain vehicles and documentation to avoid payment delays or disputes. Common issues include disputes over vehicle condition, periods of unavailability, and proper proration of rent.