Overview
FAR Subpart 13.4 prescribes the policies and procedures for the "Fast Payment Procedure," which allows the government to pay a contractor for supplies prior to formal verification of receipt and acceptance. This procedure is specifically designed to expedite payment cycles in logistical scenarios where geographic separation or communication gaps between receiving and disbursing offices would otherwise cause significant delays.
Key Rules
- Threshold Limitation: Generally restricted to individual purchasing instruments not exceeding $45,000, though executive agencies may approve higher limits on a case-by-case basis.
- Payment Trigger: Payment is made based on the contractor’s submission of an invoice, which serves as a certification that the supplies have been delivered to a carrier or the point of first receipt.
- Transfer of Title: Title to the supplies passes to the Government upon delivery to a post office or common carrier, or upon receipt by the Government if delivered by other means.
- Shipping Requirements: All supplies must be shipped with transportation or postage prepaid by the contractor.
- Contract Type: Restricted to firm-fixed-price (FFP) contracts, purchase orders, or delivery orders for supplies.
- Notification Window: Consignees must notify the purchasing office of non-receipt, damage, or nonconformance promptly, generally within 60 days of the specified delivery date.
Responsibilities
- Contracting Officer (CO):
- Responsible for determining if the conditions for fast payment are met (e.g., geographic separation).
- Determines the amount of debt resulting from a contractor's failure to replace or correct supplies.
- Ensures the inclusion of FAR clause 52.213-1 in applicable solicitations and contracts.
- Contractor:
- Certifies via invoice that supplies have been shipped.
- Assumes the legal obligation to replace, repair, or correct any supplies that are damaged in transit, not received, or non-conforming.
- Consignee:
- Required to notify the purchasing activity of any issues regarding non-receipt or damage within the specified timeframe (usually 60 days).
- Agency/Government Activity:
- Must maintain a system to document contractor performance, provide feedback to the CO, and identify suppliers who abuse the fast payment system.
Practical Implications
In real-world government contracting, the Fast Payment Procedure functions as a "trust-but-verify" mechanism. It is most frequently utilized for small-dollar shipments to remote locations (such as overseas military outposts or isolated research stations) where the administrative burden of waiting for a signed receiving report would exceed the value of the protection that a formal inspection provides.
Contractors benefit from improved cash flow, but they must recognize that they bear the risk of loss during transit and remain liable for the quality of the goods even after payment has been deposited. For the Government, this procedure reduces "Prompt Payment Act" interest penalties that might accrue due to logistical bottlenecks between the person receiving the box and the person cutting the check.