Overview
FAR 32.603 establishes the responsibility of the Contracting Officer to promptly identify, verify, and quantify any suspected contractor debt to ensure the government avoids financial loss or collection difficulties.
Key Rules
- Prompt Determination: The Contracting Officer (CO) must immediately investigate any indication of contractor debt to determine if a debt actually exists and the specific amount owed.
- Consequences of Delay: Failure to act promptly is explicitly linked to the loss of fund availability for programs, increased difficulty in debt recovery, and direct monetary loss to the Government.
- Basis of Amount: The debt amount must be calculated based strictly on the merits of the specific case.
- Contractual Consistency: The determined indebtedness must be consistent with the established terms and conditions of the contract.
Practical Implications
- Administrative Urgency: Contracting Officers are legally obligated to prioritize debt identification to prevent "expired funds" issues where money can no longer be legally re-obligated to a program.
- Audit Readiness: Because debt must be based on "merits" and "contract terms," COs must maintain detailed documentation to justify the demand for payment, as these determinations are often the first step in a formal dispute or claim.