Overview
FAR 32.904 establishes the mandatory timelines for government payment to contractors to ensure compliance with the Prompt Payment Act. It defines specific due dates based on contract type, the nature of the goods or services (such as perishables or construction), and the timing of invoice receipt and government acceptance.
Key Rules
- Standard Payment Clock: For most contracts, payment is due the later of 30 days after the designated billing office receives a proper invoice or 30 days after government acceptance of supplies or services.
- Constructive Acceptance: To prevent government delays from penalizing contractors, acceptance is "deemed" to occur on the 7th day after delivery for the purpose of calculating interest penalties, unless a longer period is justified and specified in the contract.
- Construction Timelines: Progress payments for construction contracts have an accelerated due date of 14 days after receipt of a proper payment request, while final payments generally follow the 30-day rule.
- Perishable Goods: Specific accelerated timelines apply to food items: 7 days for meat and fish, 10 days for perishable agricultural commodities after delivery, and 10 days for dairy products after invoice receipt.
- Missing Receipt Dates: If the government fails to annotate the actual date an invoice was received, the payment period is calculated starting from the date of the contractor's invoice.
- Architect-Engineer Contracts: Progress payments are due 30 days after government approval of contractor estimates, with a 7-day constructive approval period applied for interest calculations.
Practical Implications
- Contractors should meticulously track delivery and invoice receipt dates, as the "constructive acceptance" rule provides a legal basis for claiming interest if the government exceeds the 7-day window for inspection without a documented justification.
- Because "mixed invoices" containing items with different due dates may be paid entirely on the earliest due date at the agency's discretion, contractors can potentially improve cash flow by grouping items strategically.