Overview
FAR 33.208 establishes the Government’s obligation to pay simple interest on valid contractor claims, beginning from the date the claim is received or the date payment was originally due, until the date the claim is paid.
Key Rules
- Accrual Start Date: Interest begins on the later of two dates: the date the Contracting Officer (CO) receives the claim (properly certified, if required) or the date payment otherwise would have been due.
- Simple Interest Calculation: Interest is calculated as simple interest, not compound, using rates fixed by the Secretary of the Treasury under the Disputes statute.
- Variable Rates: The interest rate is not fixed at the time of the claim; it adjusts every six months based on the rates set by the Treasury Secretary during the pendency of the claim.
- Defective Certifications: For claims with defective certifications, interest generally accrues from the date the CO initially received the claim, provided the defect is later corrected.
- Government Reciprocity: While 33.208 covers interest owed to contractors, the clause at 52.232-17 provides the Government the reciprocal right to collect interest on its own claims against contractors.
Practical Implications
- Importance of Proper Certification: Contractors must ensure claims exceeding $100,000 are properly certified upon submission; failure to do so can delay the accrual of interest.
- Cost of Delay: Because interest rates reset every six months and accrue throughout the duration of a dispute, lengthy litigation or administrative delays can significantly increase the Government's total liability.