52.232-5
Payments under Fixed-Price Construction Contracts
FAR 52.232-5 requires contractors to provide detailed, certified payment requests and comply with strict documentation and payment procedures to ensure timely and accurate progress payments on fixed-price construction contracts.
Overview
FAR 52.232-5 outlines the procedures and requirements for payments under fixed-price construction contracts. It establishes how and when contractors are paid, including progress payments, retainage, final payments, and reimbursement for bond premiums. The clause details the documentation and certification required for payment requests, the handling of unearned amounts, and the rights and responsibilities of both the contractor and the government regarding materials and work paid for. It also sets limits on payments for undefinitized work and specifies how interest is calculated on overpayments.
Key Rules
- Progress Payments
- Contractors may request monthly (or more frequent) progress payments based on work completed and approved by the Contracting Officer, with detailed substantiation required.
- Contractor Certification
- Each payment request must include a certification regarding the accuracy of the request and compliance with subcontractor payment requirements.
- Retainage
- The Contracting Officer may withhold up to 10% of payments if progress is unsatisfactory, releasing funds as work is completed or substantially complete.
- Refund of Unearned Amounts
- Contractors must notify the government and pay interest on any overpayments for non-conforming work until corrected or offset.
- Final Payment
- Final payment is made after completion, acceptance, and submission of a release of claims.
- Bond Premiums
- Contractors can be reimbursed for bond premiums upon proof of payment, and retainage does not apply to these amounts.
- Limitation on Undefinitized Work
- Progress payments for undefinitized contract actions are capped at 80% of work accomplished.
Responsibilities
- Contracting Officers: Approve payment requests, determine retainage, and ensure compliance with certification and documentation requirements.
- Contractors: Submit detailed, certified payment requests, notify of and refund unearned amounts, and provide required releases for final payment.
- Agencies: Oversee payment processes, enforce compliance, and protect government interests through retainage and review.
Practical Implications
- This clause ensures timely and accurate payments while protecting the government from overpayment and non-conforming work. Contractors must maintain thorough documentation and be diligent in certifying payment requests. Failure to comply can result in payment delays, withheld funds, or interest penalties. Common pitfalls include incomplete substantiation, failure to pay subcontractors, or not reporting unearned amounts.