52.232-26
Prompt Payment for Fixed-Price Architect-Engineer Contracts
FAR 52.232-26 ensures architect-engineer contractors are paid promptly and automatically receive interest penalties for late payments, provided they submit proper invoices and meet contract requirements.
Overview
FAR 52.232-26 establishes prompt payment requirements for fixed-price architect-engineer contracts. It outlines the Government’s obligations to pay contractors within specified timeframes, details the requirements for proper invoices, and sets forth procedures for interest penalties if payments are late. The clause also addresses discounts for prompt payment, additional penalties for late interest payments, contract financing payments, and contractor responsibilities in the event of overpayments. The regulation ensures timely payments, protects contractor cash flow, and provides clear procedures for resolving payment disputes.
Key Rules
- Invoice Payment Due Dates
- Payments are due the later of 30 days after the billing office receives a proper invoice or 30 days after Government acceptance of work/services. Progress payments are due 30 days after approval of contractor estimates.
- Proper Invoice Requirements
- Invoices must include specific information (e.g., contractor name, invoice date/number, contract number, work description, payment terms, TIN, EFT info, etc.). Improper invoices must be returned within 7 days with reasons for rejection.
- Interest Penalties
- Automatic interest penalties apply if payments are late, provided a proper invoice is received and there are no disputes. Additional penalties may apply if interest is not paid within 10 days of invoice payment, upon contractor demand.
- Discounts for Prompt Payment
- Interest penalties apply if the Government improperly takes a prompt payment discount.
- Overpayments
- Contractors must promptly remit overpayments and provide supporting documentation to both the payment office and Contracting Officer.
Responsibilities
- Contracting Officers: Ensure contract includes this clause, verify invoice compliance, process payments, and resolve disputes.
- Contractors: Submit proper invoices, monitor payment timelines, remit overpayments, and request additional penalties if applicable.
- Agencies: Oversee payment processing, return improper invoices promptly, and pay interest penalties automatically when due.
Practical Implications
- This clause ensures architect-engineer contractors are paid promptly, reducing financial risk and supporting business operations. Failure to comply can result in automatic interest penalties and administrative complications. Common pitfalls include submitting incomplete invoices, missing deadlines for penalty claims, and failing to remit overpayments properly.