Overview
FAR 32.1103 establishes that Electronic Funds Transfer (EFT) is the mandatory default method for all federal contract payments, while providing nine specific exceptions where alternative payment methods are permitted.
Key Rules
- Mandatory Default: The government is required to make all contract payments via EFT unless a specific regulatory exception is met.
- Technical/System Failure: If a payment office loses EFT capability, it may revert to alternative methods as authorized by 31 CFR Part 208.
- Geographic and Currency Limits: Exceptions apply to payments received outside the United States and Puerto Rico, or contracts paid in foreign currency.
- Security and Classified Information: EFT is not required if it would compromise national security, classified information, or if security considerations make EFT impractical.
- Emergency and Military Operations: Contracting officers in military contingency operations or emergency response scenarios (e.g., natural disasters) may bypass EFT if it is not feasible or does not support operational objectives.
- Administrative Efficiency: EFT is not required for one-time payments (defined as a single payment to a recipient within a one-year period).
- Urgency and Sole Source: Exceptions exist for cases of "unusual and compelling urgency" or sole-source providers where the government would be seriously injured by the delays associated with EFT.
Practical Implications
- Contractors must ensure their financial information is accurately maintained in the System for Award Management (SAM) to avoid payment delays, as EFT is the standard operating procedure.
- Government agencies retain the flexibility to use cash, checks, or other means in "boots-on-the-ground" scenarios, such as disaster relief or forward-deployed military environments, where banking infrastructure may be non-existent or compromised.