Overview
FAR 32.1108 establishes the procedures for using the Governmentwide commercial purchase card as a payment method, where a third-party financial institution pays the contractor and is subsequently reimbursed by the Government. It outlines the regulatory requirements for contract clauses, debt verification, and the protection of sensitive account information.
Key Rules
- Payment Mechanism: A purchase card charge authorizes a third-party issuer to make immediate payment to the contractor, with the Government later reimbursing the issuer.
- Required Clause: FAR 52.232-36, Payment by Third Party, is the primary clause used to govern these transactions; however, contractors may voluntarily agree to accept purchase card payments even if the clause is not in the contract.
- Treasury Offset Program (TOP) Verification: For actions above the micro-purchase threshold, Contracting Officers (COs) must verify in the System for Award Management (SAM) whether the contractor has delinquent debt.
- Mandatory Payment Method Switch: If SAM indicates a contractor has delinquent debt subject to TOP, the CO is prohibited from authorizing the purchase card as a payment method and must use Electronic Funds Transfer (EFT) instead.
- Award Eligibility: The presence of a debt flag in SAM cannot be used as a reason to exclude a contractor from receiving a contract award or order.
- Data Security: While the contract must identify the third party and card type, it must never include the specific purchase card account number, which must be provided to the contractor separately.
Practical Implications
- Contracting Officers must integrate a SAM debt-check into their workflow before authorizing card payments on mid-to-high value orders to ensure the Government maintains the ability to offset payments against federal debts.
- Contractors who prefer the immediate liquidity of purchase card payments must proactively manage their SAM profiles and federal debt status, as a "debt flag" will automatically trigger a shift to slower EFT payment processes.