52.232-17
Interest
Contractors must pay debts to the Government within 30 days to avoid accruing interest at Treasury rates, with strict procedures for demands, disputes, and interest calculation.
Overview
FAR 52.232-17, "Interest," establishes the requirements for charging interest on amounts owed by contractors to the Government under a contract. Unless otherwise specified by clauses related to defective pricing or Cost Accounting Standards, any debt owed by the contractor that is not paid within 30 days of becoming due will accrue simple interest at a rate set by the Secretary of the Treasury. The clause outlines when amounts become due, how interest is calculated, and the process for government demands and final decisions regarding contractor debts. It also provides for possible reduction of interest charges under certain circumstances.
Key Rules
- Interest on Contractor Debts
- All amounts payable by the contractor to the Government accrue simple interest if not paid within 30 days of becoming due, except as otherwise provided by specific clauses.
- Demand for Payment
- The Government may issue a demand for payment when a debt is determined to be due.
- Final Decision Process
- If there is a dispute or delay in payment, the Contracting Officer will issue a final decision per FAR 33.211.
- Due Dates for Amounts Owed
- Amounts are due on the contractually fixed date or the date of the first written demand for payment.
- Interest Calculation
- Interest is calculated based on the actual number of days from the due date until payment or offset.
- Reduction of Interest
- Interest charges may be reduced following procedures in FAR 32.608-2.
Responsibilities
- Contracting Officers: Issue demands for payment, make final decisions on debts, and ensure proper calculation and application of interest.
- Contractors: Pay debts to the Government promptly, respond to demands for payment, and request installment or deferment agreements if needed.
- Agencies: Oversee compliance with interest provisions and maintain accurate records of debts and payments.
Practical Implications
- This clause incentivizes timely payment of debts by contractors and provides a clear process for handling overdue amounts.
- Contractors should monitor payment deadlines closely to avoid accruing interest charges.
- Disputes or delays can trigger formal decisions and additional administrative steps, potentially increasing costs and complexity.