Overview
FAR 32.111 prescribes the specific payment-related clauses that Contracting Officers must include in solicitations and contracts for non-commercial acquisitions. It ensures that payment terms, withholding rights, and prompt payment discounts are standardized based on the specific contract type (e.g., fixed-price, construction, or time-and-materials).
Key Rules
- Mandatory Clause Selection: Contracting Officers (COs) must select the appropriate "Payments" clause (52.232-1 through 52.232-7) based on the contract’s nature, such as R&D, personal services, transportation, fixed-price construction, or communication services.
- Time-and-Materials (T&M) Withholding: Under clause 52.232-7, the CO has the authority to unilaterally issue a modification requiring a 5% withhold of payments (up to a maximum of $50,000) if necessary to protect the Government’s interests.
- Prompt Payment Discounts: Clause 52.232-8 is mandatory for fixed-price supply or service contracts to establish terms for discounts offered by contractors for early payment.
- Limitation on Multiple Withholds: If a contract contains multiple terms allowing for the temporary withholding of payments, the CO must include clause 52.232-9 to limit the aggregate amount of such withholdings.
- Architect-Engineer and Extras: Specific clauses are designated for Architect-Engineer contracts (52.232-10) and to address payment for "Extras" (52.232-11) in supply, service, or transportation contracts.
Practical Implications
- Standardization: This section prevents ambiguity by ensuring that payment rights and obligations are governed by uniform clauses tailored to the specific risks and administrative needs of different industry sectors.
- Administrative Safeguards: The specific withholding provisions for T&M and construction contracts provide COs with financial leverage to ensure contractors fulfill final administrative requirements, such as submitting releases of claims.
- Customization: While the clauses are standard, COs are required to "appropriately modify" them regarding payment due dates to align with specific agency regulations and the Prompt Payment Act.