Overview
FAR 32.908 prescribes the specific Prompt Payment clauses that must be included in government solicitations and contracts based on the nature of the procurement (Architect-Engineer, Construction, or General). It also defines the conditions under which a Contracting Officer may modify standard timelines for invoice payments and constructive acceptance.
Key Rules
- Clause Selection by Contract Type:
- Architect-Engineer (A-E): Use FAR 52.232-26 for fixed-price A-E contracts.
- Construction: Use FAR 52.232-27 for all construction solicitations and contracts.
- General/Other: Use FAR 52.232-25 for all other contracts, unless the contract is for commercial products/services (which use FAR 52.212-4) or governed by other authorities like tariffs.
- Modifying Constructive Acceptance: The standard 7-day period for "constructive acceptance" (the date the government is deemed to have accepted supplies/services if no actual notice is given) may be extended by the Contracting Officer if required for complex testing or evaluation.
- Modifying Payment Periods: While the standard invoice payment period is 30 days, agency policies may authorize a shorter period (not less than 7 days).
- Cost-Reimbursement Services: For cost-reimbursement contracts for services, FAR 52.232-25 must be used with its Alternate I.
- Commercial Exception: Contracting Officers are prohibited from extending the 7-day constructive acceptance period for commercial products or commercial services under the general Prompt Payment clause.
Practical Implications
- Customized Inspection Windows: Contractors should carefully review Section G or I of their contracts; if the government requires a period longer than 7 days to inspect complex equipment or construction work, the Contracting Officer must explicitly modify the clause to avoid premature interest penalties.
- Interest Trigger Points: Because different clauses (A-E vs. Construction vs. General) have different default rules for payment and acceptance, contractors must identify which clause is present to accurately calculate when the government owes interest on late payments.