Overview
This section clarifies that Electronic Funds Transfer (EFT) payment instructions cannot be used as a substitute for a formal assignment of claims conducted under FAR subpart 32.8.
Key Rules
- Legal Distinction: EFT payment methods and the formal "assignment of claims" process are legally distinct; one does not satisfy the requirements of the other.
- Third-Party Recipients: If EFT instructions designate a recipient other than the contractor without a properly executed assignment of claims, the government classifies this as "incorrect EFT information."
- Consequences of Non-compliance: Providing EFT information for a third party without a valid assignment triggers the "Suspension of Payment" provisions under FAR clauses 52.232-33 and 52.232-34.
Practical Implications
- Contractors cannot redirect payments to lenders or third parties simply by updating banking details; they must complete the rigorous legal documentation required by FAR 32.8.
- Government certifying officers are authorized to halt payments if they notice a discrepancy between the contractor of record and the bank account holder, protecting the government from liability for improper payment.