Overview
FAR 32.611 prescribes the mandatory and discretionary use of the contract clause at 52.232-17, Interest, which establishes the government's right to charge interest on contractor debts.
Key Rules
- Mandatory Inclusion: The Contracting Officer (CO) must insert FAR 52.232-17 in all solicitations and contracts unless a specific exception applies.
- Mandatory Exceptions: The clause is not required for:
- Contracts at or below the Simplified Acquisition Threshold (SAT).
- Contracts with U.S. Government agencies.
- Contracts with State, local, or foreign governments/instrumentalities.
- No-fee/no-profit contracts with non-profit organizations.
- Contracts for paid advertisements.
- Specific exceptions authorized by individual agency procedures.
- Discretionary Authority: Even if a contract falls into one of the exempt categories listed above, the CO retains the authority to include the Interest clause if deemed necessary.
Practical Implications
- Debt Collection: For most standard commercial and large-scale contracts, this section ensures the government has a legal mechanism to recover the time value of money on overpayments or delinquent debts.
- Risk Assessment: Contractors working on small-dollar or non-profit projects should still verify the inclusion of this clause, as COs may exercise their discretionary power to include it even when not mandated.