Installment Payments for Commercial Products and Commercial Services
FAR 52.232-30 allows contractors to receive installment payments for commercial products and services, but requires strict adherence to payment schedules, security provisions, and documentation to ensure compliance and protect government interests.
Overview
FAR 52.232-30 establishes the rules and procedures for installment payments on contracts for commercial products and commercial services. This clause allows contractors to request and receive contract financing through installment payments for separately priced units of supply, with specific calculations for the number, timing, and amount of payments. The regulation ensures that installment payments do not exceed 70% of the unit price before delivery and requires proper security from the contractor. It also outlines the process for submitting payment requests, the timing of payments, liquidation of installment payments upon delivery, and the government's rights in the event of contract termination or insufficient security. The clause is designed to facilitate contractor cash flow while protecting government interests.
Key Rules
- Eligibility for Installment Payments
- Contractors may request installment payments if due under the contract, supplies/services will be delivered as agreed, and government security is not impaired.
- Installment Payment Calculation
- The number of payments equals the months from contract award to one month before first delivery; each payment is 70% of the unit price divided by the number of payments.
- Submission and Timing
- Requests must be monthly, itemized, and in a format acceptable to the Contracting Officer; payments are due within 30 days of a proper request.
- Liquidation and Security
- Installment payments are deducted from delivery payments; adequate security is required, and failure to provide it can result in suspension or repayment demands.
- Termination and Government Rights
- If terminated for cause, unliquidated payments must be repaid; government rights are preserved and not waived by payment actions.
Responsibilities
- Contracting Officers: Approve payment requests, ensure security, enforce compliance, and manage liquidation and termination actions.
- Contractors: Submit proper, timely, and itemized payment requests; maintain adequate security; comply with payment and repayment obligations.
- Agencies: Oversee contract financing, ensure prompt payment, and protect government interests in case of default or termination.
Practical Implications
- This clause enables contractors to manage cash flow during contract performance but imposes strict requirements on payment requests, security, and repayment. Failure to comply can result in delayed payments, suspension, or repayment demands. Contractors must carefully track installment schedules, maintain documentation, and communicate with the Contracting Officer to avoid compliance issues.