Overview
FAR 13.402 establishes the specific criteria that must be met to utilize fast payment procedures, which allow the government to pay a contractor's invoice prior to official verification of receipt and acceptance of supplies.
Key Rules
- Thresholds: Individual purchasing instruments generally cannot exceed $45,000, though executive agencies may approve higher limits for specific cases.
- Logistical Necessity: Usage is restricted to situations where geographical separation or poor communication between the receiving and disbursing offices makes payment based on formal acceptance impractical.
- Transfer of Title: Title to supplies must pass to the Government either upon delivery to a common carrier/post office or upon receipt if shipped by other means.
- Contractor Liability: The supplier must explicitly agree to replace, repair, or correct any supplies that are damaged, lost in transit, or non-conforming.
- Scope of Work: The procedure is limited to firm-fixed-price contracts, purchase orders, or delivery orders for supplies.
- Internal Controls: Agencies must have systems to document performance, provide feedback to Contracting Officers regarding deficiencies, and track suppliers who abuse the procedure.
Practical Implications
- Accelerated Cash Flow: This procedure significantly speeds up payment to contractors by bypassing the traditional "three-way match" (contract, invoice, and receiving report) required before disbursement.
- Risk Management: Because the government pays before inspection, it relies heavily on the contractor’s agreement to remedy defects and the agency’s internal "blacklist" of suppliers who have a history of abusing the fast payment system.