Federal Acquisition Regulation; Payment by Electronic Funds Transfer

Federal RegisterAug 29, 1996

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SUMMARY: The Civilian Agency Acquisition Council and the Defense

Acquisition Regulations Council have agreed on an interim rule to amend

the Federal Acquisition Regulation (FAR) to address the use of

electronic funds transfers (EFT) for Federal contract payments, and to

facilitate implementation of Public Law 104-134 which mandates payment

by EFT in certain situations. This regulatory action was not subject to

Office of Management and Budget review under Executive Order 12866,

dated September 30, 1993, and is not a major rule under 5 U.S.C. 804. A

companion document, the Small Entity Compliance Guide, follows this FAC

and may be located on the Internet at http://www.gsa.gov/far.

DATES: Effective Date: August 29, 1996.

Comment Date: Comments should be submitted to the FAR Secretariat

at the address shown below on or before October 28, 1996 to be

considered in the formulation of a final rule.

ADDRESSES: Interested parties should submit written comments to:

General Services Administration, FAR Secretariat (MVR), 18th & F

Streets, NW, Room 4035, Attn: Ms. Beverly Fayson, Washington, DC 20405.

Please cite FAC 90-42, FAR case 91-118 in all correspondence

related to this case.

FOR FURTHER INFORMATION CONTACT: Mr. Jeremy Olson at (202) 501-3221 in

reference to this FAR case. For general information, contact the FAR

Secretariat, Room 4035, GS Building, Washington, DC 20405 (202) 501-

4755. Please cite FAC 90-42, FAR case 91-118.

SUPPLEMENTARY INFORMATION:

A. Background

Public Law 104-134, the Omnibus Consolidated Rescissions and

Appropriations Act of 1996, contained a separate chapter 10 entitled

Debt Collection Improvements. Subsection (x)(1) of Section 31001, the

Debt Collection Improvement Act of 1996, amended Section 3332 of title

31, United States Code, by adding the following new statutory

requirement: ``(e)(1) Notwithstanding subsections (a) through (d) of

this section, sections 5120(a) and (d) of title 38, and any other

provision of law, all Federal payments to a recipient who becomes

eligible for that type of payment after 90 days after the date of the

enactment of the Debt Collection Improvement Act of 1996 shall be made

by electronic funds transfer.''

The statute further defines Federal payments to include vendor

payments and expense reimbursements, as well as providing exemption for

payments to certain recipients. The effective date of this provision is

July 26, 1996.

Public Law 104-134 also contained provisions for payments by EFT

which become applicable after January 1, 1999.

Under this statute, the Department of the Treasury is responsible

for issuing regulations necessary for carrying out the statute. On July

26, 1996, the Financial Management Service issued an interim rule (61

FR 39254) which added Part 208 to Title 31, Code of Federal

Regulations, to provide a regulation for payments through EFT. This

interim rule reflects the provisions of the Treasury interim rule with

respect to vendor payments.

The Councils are committed to advancing the use of EFT as the

standard method of payment under Federal contracts, and believe that

the use of EFT will ultimately reduce the administrative burden

currently associated with contract invoice or financing payments made

by check for both the Government and contractors. The rule, therefore,

provides a contract clause which requires contractor submission of the

information needed for payment by EFT as a condition of payment. With

certain limited exceptions, this is the clause that will normally be

used. However, some Government offices involved in certifying invoices

and disbursing contract payments are not currently capable of using EFT

as the standard method of payment. The rule provides a contract clause

for contractor optional submission of EFT information where that is

appropriate and consistent with the statute. The determination whether

a particular payment must be made by EFT is that of the payment

official.

The rule recognizes that contracts using non-United States currency

and contracts issued outside the United States and Puerto Rico are

currently not capable of being paid by EFT through the domestic banking

system of the United States. In addition, certain classified contracts

and certain contracts related to military operations and emergency

situations will not be appropriate for payment by EFT. In accordance

with the Treasury interim rule, these contracts have been excepted from

the requirement for payment by EFT.

The Treasury Department has stated that a credit card transaction

is an electronic payment. The rule, therefore, directs that contracts

to be paid through use of a Governmentwide commercial purchase card

will not include either EFT clause.

The statute provides that until January 1, 1999, recipients of

payments who certify they do not have an account with a financial

institution or an authorized payment agent shall be paid by other than

EFT. To implement this statutory right, the clause at 52.232-33 (the

mandatory EFT information clause) provides for non-EFT payment upon

receipt of a contractor certification. Note that the certification is

an explicit statutory requirement of 31 U.S.C. 3332(e)(2).

In addition to the provisions taking effect on July 26, 1996 (31

U.S.C. 3332(e)), Public Law 104-134 contained provisions which take

effect after January 1, 1999 (31 U.S.C. 3332(f), et al.).

The most significant is a requirement that all payments after that

date be made by EFT. While the statute provides for waivers of the

applicable subsection by the Secretary of the Treasury after January 1,

1999, detailed regulations regarding these waivers have not been

established. Therefore, both contract clauses provide that, after

January 1, 1999, contractors shall provide EFT information for the

contracts containing the clauses established in this rule.

A significant difference between EFT contract payments and EFT

beneficiary or payroll payments is the additional information which

must be provided by the Government to contractor recipients for

contract payments. In order for a business receiving a contract payment

to maintain its accounting books and records, it must obtain

information such as invoice numbers, discounts taken, interest paid,

and other payment adjustments with the payment. With paper checks, this

information has normally been provided as an ``advice of

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payment'', or other paper notice forwarded with the check. However, if

this information is provided electronically, using appropriate formats,

contractors can use more advanced accounting systems which do not

require manual entry and processing of payment information. The

contract clauses in this interim rule authorize the Government, at its

option, to forward this information electronically, with the EFT

payment, as provided for in the domestic banking system. However, the

Government is aware that many banks and financial institutions do not

yet provide their customers with this information electronically. In

response to the proposed rule published in the Federal Register on

October 3, 1995 (60 FR 51766), a significant issue raised was the

desire to receive this remittance information electronically. The

particular methods used for forwarding this information are specific to

individual agencies and payment offices. Companies desiring payment

information in specific formats should express their preferences to the

agencies concerned, and their banks or financial institutions.

The rule adds a new FAR Subpart 32.11, Electronic Funds Transfer,

which provides policy and procedures for Government payment by EFT. The

rule replaces the contract clause at 52.232-28, Electronic Funds

Transfer Payment Methods, with two new clauses at 52.232-33, Mandatory

Information for Electronic Funds Transfer Payment, and 52.232-34,

Optional Information for Electronic Funds Transfer Payment. Under the

clause at 52.232-33, the contractor is required to provide the EFT

information, prior to the submission of the first request for payment,

as a condition of payment under the contract. The clause at 52.232-34

is used if EFT may become a viable method of payment during the period

of contract performance, and the clause becomes effective if the

Government and contractor agree to commence EFT.

Three sources submitted public comments in response to the proposed

rule published on October 3, 1995. All comments were considered in

developing this interim rule.

B. Regulatory Flexibility Act

An Initial Regulatory Flexibility Analysis has been prepared and

submitted to the Chief Counsel for Advocacy of the Small Business

Administration. A copy of the Analysis may be obtained from the FAR

Secretariat at the General Services Administration, 18th & F Streets,

NW., Room 4035, Washington, DC 20405. The Analysis is summarized as

follows:

This interim rule amends the Federal Acquisition Regulation (FAR)

to address the use of electronic funds transfer (EFT) for payments to

contractors under Government contracts. When fully implemented, it is

expected that the use of EFT for contract payments will reduce the

administrative burden that is currently associated with contract

invoice or financing payments made by check. The objective of the rule

is to facilitate implementation of Section 31001(x)(1) of the Debt

Collection Improvement Act of 1996 (Pub. L. 104-134). Section

31001(x)(1) amends 31 U.S.C. 3332 to require that, effective July 26,

1996, payment to newly eligible vendors must be made by EFT. The rule

will apply to all small businesses who enter into Government contracts

that (1) Will not be paid through use of the Governmentwide commercial

purchase card; (2) are issued by a contracting officer within the

United States or Puerto Rico; (3) are denominated and paid in U.S.

dollars, and (4) do not involve certain classified information or

military or emergency operations. To date, no supporting data has been

collected; therefore, there is no available estimate of the number of

small businesses that will be subject to the rule.

The Councils considered several alternatives which include

permitting a transition period before requiring contractors to receive

payment by EFT, and excluding, or making voluntary, EFT payments for

certain types of contracts. The Councils selected the alternative that,

within the constraints and objectives of the Debt Collection

Improvement Act and the Treasury regulations, allows small entities to

take advantage of the benefits of the EFT method of payment but also

provides flexibility with regard to the needs of small entities. In

accordance with 31 U.S.C. 3332, the rule provides for exemption of EFT

requirements until January 1, 1999, for contractors who certify that

they do not have an account with a financial institution or an

authorized payment agent. As indicated above, the rule also exempts

certain classes of contracts. The mandatory information clause

contained in the rule requires contractors to submit identification and

account number information, prior to the submission of the first

request for payment, as a condition of payment under the contract. This

clause permits a Contractor who does not wish to receive payment by EFT

methods to submit a request to the payment office. The decision to

grant the request, however, is solely that of the Government. The rule

also contains an optional information clause which, if included in a

contract, would permit a contractor to request EFT payment after award

of the contract. However, in accordance with the EFT statute, under the

optional clause, the contractor is required to furnish EFT information

for any payment to be made after January 1, 1999. The Federal Register

notice containing the Treasury interim rule states that, after this

date, the Secretary is authorized to waive the EFT requirement for

individuals or classes of individuals for whom compliance imposes a

hardship, for certain categories of checks, and in other circumstances

deemed necessary.

Comments are invited. Comments from small entities concerning the

affected FAR subparts will also be considered in accordance with 5

U.S.C. 610. Such comments should be submitted separately and should

cite FAR Case 91-118 in correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act of 1995 (Pub. L. 104-13) applies

because the interim rule contains information collection requirements.

Accordingly, a request for approval of an information collection

concerning Electronic Funds Transfer (9000-0144) has been submitted to

the Office of Management and Budget (OMB) and approved through August

31, 1999.

D. Determination To Issue an Interim Rule

A determination has been made under the authority of the Secretary

of Defense (DoD), the Administrator of General Services (GSA), and the

Administrator of the National Aeronautics and Space Administration

(NASA) that compelling reasons exist to promulgate this interim rule

without prior opportunity for public comment. This rule is necessary

for effective implementation of Section 31001(x)(1) of the Debt

Collection Improvement Act of 1996 (Pub. L. 104-134), which requires

that beginning 90 days (July 26, 1996) after enactment of the Act

(April 26, 1996), payments to newly eligible vendors must be made by

electronic funds transfer. Comments received in response to the

publication of this interim rule will be considered in formulating the

final rule.

E. Determination of Applicability of Section 31001(x)(1) of Public Law

104-134 to Contracts Not Greater Than the Simplified Acquisition

Threshold and Procurements of Commercial Items

In accordance with 41 U.S.C. 429 and 41 U.S.C. 430, the Federal

Acquisition

[[Page 45772]]

Regulatory Council has determined that it would not be in the best

interest of the Federal Government to exempt contracts in amounts not

greater than the simplified acquisition threshold, or contracts for the

procurement of commercial items, from the applicability of Section

31001(x)(1) of the Debt Collection Improvement Act of 1996 (Pub. L.

104-134). Section 31001(x)(1) amends 31 U.S.C. 3332 to require that,

beginning July 26, 1996, payments to newly eligible vendors must be

made by electronic funds transfer. Electronic funds transfer payment

methods, when fully implemented, are expected to significantly reduce

the administrative burden that is currently associated with contract

payments made by check and, therefore, should apply to all Federal

contracts.

List of Subjects in 48 CFR Parts 12, 13, 32, and 52

Government procurement.

Dated: August 23, 1996.

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

Therefore, 48 CFR parts 12, 13, 32, and 52 are amended as set forth

below:

1. The authority citation for 48 CFR parts 12, 13, 32, and 52

continues to read as follows:

Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42

U.S.C. 2473(c).

PART 12--ACQUISITION OF COMMERCIAL ITEMS

12.302 [Amended]

2. Section 12.302 is amended in paragraph (b)(3) by adding

``(except as provided in subpart 32.11)'' after ``Payment''.

PART 13--SIMPLIFIED ACQUISITION PROCEDURES

3. Section 13.501 is amended by adding paragraph (i) to read as

follows:

13.501 General.

* * * * *

(i) In accordance with 31 U.S.C. 3332, payment under contracts may

be required to be made by electronic funds transfer (EFT). See 32.1103

for instructions for use of the appropriate clause in purchase orders.

When obtaining verbal quotes, the contracting officer shall inform the

offeror of the EFT clause that will be in any resulting purchase order.

Contracting officers shall not accept EFT payment data. All such data

shall be provided by the contractor directly to the payment office.

PART 32--CONTRACT FINANCING

4. Section 32.000 is amended in paragraph (g) by removing the word

``and''; in paragraph (h) by removing the period and inserting ``;

and'' in its place; and adding paragraph (i) to read as follows:

32.000 Scope of part.

* * * * *

(i) Electronic funds transfer payments.

5. Section 32.002 is amended by adding paragraph (a)(7) to read as

follows:

32.002 Applicability of subparts.

(a) * * *

(7) Subpart 32.11, Electronic Funds Transfer.

* * * * *

6. Section 32.902 is amended by revising the definition ``Payment

date'' and adding, in alphabetical order, the definition ``Specified

payment date'' to read as follows:

32.902 Definitions.

* * * * *

Payment date means the date on which a check for payment is dated

or, for an electronic funds transfer, the specified payment date.

* * * * *

Specified payment date, as it applies to electronic funds transfer

(EFT), means the date which the Government has placed in the EFT

payment transaction instruction given to the Federal Reserve System as

the date on which the funds are to be transferred to the contractor's

account by the financial agent. If no date has been specified in the

instruction, the specified payment date is 3 business days after the

payment office releases the EFT payment transaction instruction.

7. Section 32.903 is amended by adding the following three

sentences at the end of the section:

32.903 Policy.

* * * For payments made by electronic funds transfer, the specified

payment date, included in the Government's order to pay the contractor,

is the date of payment for prompt payment purposes, whether or not the

Federal Reserve System actually makes the payment by that date, and

whether or not the contractor's financial agent credits the

contractor's account on that date. However, a specified payment date

must be a valid date under the rules of the Federal Reserve System. For

example, if the Federal Reserve System requires 2 days' notice before a

specified payment date to process a transaction, release of a payment

transaction instruction to the Federal Reserve Bank 1 day before the

specified payment date could not constitute a valid date under the

rules of the Federal Reserve System.

32.908 [Amended]

8. Section 32.908 is amended by removing paragraph (d).

9. Subpart 32.11, consisting of sections 32.1100 through 32.1103,

is added to read as follows:

SUBPART 32.11--ELECTRONIC FUNDS TRANSFER

Sec.

32.1100 Scope of subpart.

32.1101 Policy.

32.1102 Assignment of claims.

32.1103 Contract clauses.

32.1100 Scope of subpart.

This subpart provides policy and procedures for Government payment

by electronic funds transfer (EFT).

32.1101 Policy.

(a) 31 U.S.C. 3332(e) requires payment by EFT in certain

situations. The payment office, not the contracting officer, determines

if payment is to be made by EFT. The payment office may determine not

to require submission of EFT information in accordance with paragraph

(j) of the contract clauses at 52.232-33 and 52.232-34.

(b) The Government will protect against improper disclosure of a

contractor's EFT information. The clauses at 52.232-33 and 52.232-34

require the contractor to submit such information directly to the

payment office.

States financial institution or an authorized payment agent are

exempted by 31 U.S.C. 3332 until January 1, 1999, from the requirement

to be paid by EFT. The clause at 52.232-33 provides for the contractor

to submit a certification to that effect directly to the payment office

in lieu of the EFT information otherwise required by the clause.

(d) Payment by EFT is the preferred method of contract payment in

normal contracting situations. However, in accordance with 31 CFR

208.3(c), certain classes of contracts have been authorized specific

limited exceptions as listed in paragraphs (d) (1) through (4) of this

section. In these situations, the method of payment shall be specified

by the payment office, either through agency regulations or by specific

agreement.

(1) Contracts awarded by contracting officers outside the United

States and Puerto Rico shall provide for payment by other than EFT.

However, payment

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by EFT is acceptable for this type of contract if the contractor agrees

and the payment office concurs.

(2) Contracts denominated or paid in other than United States

dollars shall provide for payment by other than EFT.

(3) Classified contracts (see 4.401) shall provide for payment by

other than EFT where payment by EFT could compromise the safeguarding

of classified information or national security, or where arrangements

for appropriate EFT payments would be impractical due to security

considerations.

(4) Contracts executed by deployed contracting officers in the

course of military operations, including, but not limited to,

contingency operations as defined in 10 U.S.C. 101(a)(13), or contracts

executed by any contracting officer in the conduct of emergency

operations, such as responses to natural disasters or national or civil

emergencies, shall provide for payment by other than EFT where (i) EFT

payment is not known to be possible, or (ii) EFT payment would not

support the objectives of the operation. Contracting officers

predesignated to perform contracting duties in the event of these

operations shall include coordinated plans for payment arrangements as

part of the pre-contingency contract operations planning.

32.1102 Assignment of claims.

The use of EFT payment methods is not a substitute for a properly

executed assignment of claims in accordance with subpart 32.8. EFT

information which shows the ultimate recipient of the transfer to be

other than the contractor, in the absence of a proper assignment of

claims, is considered to be incorrect EFT information within the

meaning of the ``Suspension of Payment'' paragraphs of the EFT clauses

at 52.232-33 and 52.232-34.

32.1103 Contract clauses.

(a) Unless instructed otherwise by the cognizant payment office or

agency guidance, the contracting officer shall insert the clause at

52.232-33, Mandatory Information for Electronic Funds Transfer Payment,

in all solicitations and resulting contracts which (1) will not be paid

through use of the Governmentwide commercial purchase card (see

13.103(e)); and (2) are not otherwise excepted in accordance with

32.1101(d). The clause may be inserted in other contracts if the

contractor requests payment by EFT and the payment office concurs.

(b) Unless instructed otherwise by agency guidance, the contracting

officer shall insert the clause at 52.232-34, Optional Information for

Electronic Funds Transfer Payment, in all solicitations and resulting

contracts which (1) Do not contain the clause at 52.232-33; (2) Will

not be paid through use of the Governmentwide commercial purchase card

(see 13.103(e)); and (3) Are not otherwise excepted in accordance with

32.1101(d).

and Conditions--Commercial Items, if the clause at 52.232-33, Mandatory

Information for Electronic Funds Transfer Payment, will not be included

in the contract in accordance with paragraph (a) of this section, the

contracting officer shall attach an addendum to the contract that

deletes the clause at 52.232-33 and--

(1) If required by paragraph (b) of this section, incorporates the

clause at 52.232-34, Optional Information for Electronic Funds Transfer

Payment, in the contract; or

(2) If the clause at 52.232-34 is not required, specifies that the

Government will make payment under the contract by check.

(d) If more than one disbursing office will make payment under a

contract, the contracting officer shall include the EFT clause

appropriate for each office and shall identify the applicability by

disbursing office and contract line item.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

10. Section 52.212-4 is amended by revising the date of the clause;

and in paragraph (i) by revising the third and fifth sentences to read

as follows:

52.212-4 Contract Terms and Conditions-Commercial Items.

* * * * *

CONTRACT TERMS AND CONDITIONS--COMMERCIAL ITEMS (AUG 1996)

* * * * *

(i) * * * Unless otherwise provided by an addendum to this

contract, the Government shall make payment in accordance with the

clause at FAR 52.232-33, Mandatory Information for Electronic Funds

Transfer Payment, which is incorporated herein by reference. * * *

For the purpose of computing the discount earned, payment shall be

considered to have been made on the date which appears on the

payment check or the specified payment date if an electronic funds

transfer payment is made.

* * * * *

52.232-28 [Reserved]

11. Section 52.232-28 is removed and reserved.

12. Section 52.232-33 and 52.232-34 are added to read as follows:

52.232-33 Mandatory Information for Electronic Funds Transfer Payment.

As prescribed in 32.1103(a) and (c), insert the following clause:

MANDATORY INFORMATION FOR ELECTRONIC FUNDS TRANSFER PAYMENT (AUG 1996)

(a) Method of payment. Payments by the Government under this

contract, including invoice and contract financing payments, may be

made by check or electronic funds transfer (EFT) at the option of

the Government. If payment is made by EFT, the Government may, at

its option, also forward the associated payment information by

electronic transfer. As used in this clause, the term ``EFT'' refers

to the funds transfer and may also include the information transfer.

(b) Mandatory submission of Contractor's EFT information. (1)

The Contractor is required, as a condition to any payment under this

contract, to provide the Government with the information required to

make payment by EFT as described in paragraph (d) of this clause,

unless the payment office determines that submission of the

information is not required. However, until January 1, 1999, in the

event the Contractor certifies in writing to the payment office that

the Contractor does not have an account with a financial institution

or an authorized payment agent, payment shall be made by other than

EFT. For any payments to be made after January 1, 1999, the

Contractor shall provide EFT information as described in paragraph

(d) of this clause.

(2) If the Contractor provides EFT information applicable to

multiple contracts, the Contractor shall specifically state the

applicability of this EFT information in terms acceptable to the

payment office.

first request for payment (whether for invoice or contract financing

payment) under this contract, the Contractor shall provide the

information required to make contract payment by EFT, as described

in paragraph (d) of this clause, directly to the Government payment

office named in this contract. If more than one payment office is

named for the contract, the Contractor shall provide a separate

notice to each office. In the event that the EFT information

changes, the Contractor shall be responsible for providing the

changed information to the designated payment office(s).

(d) Required EFT information. The Government may make payment by

EFT through either an Automated Clearing House (ACH) subject to the

banking laws of the United States or the Federal Reserve Wire

Transfer System at the Government's option. The Contractor shall

provide the following information for both methods in a form

acceptable to the designated payment office. The Contractor may

supply this data for this or multiple contracts (see paragraph (b)

of this clause).

(1) The contract number to which this notice applies.

(2) The Contractor's name and remittance address, as stated in

the contract, and account number at the Contractor's financial

agent.

(3) The signature (manual or electronic, as appropriate), title,

and telephone number of

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the Contractor official authorized to provide this information.

(4) For ACH payments only:

(i) Name, address, and 9-digit Routing Transit Number of the

Contractor's financial agent.

(ii) Contractor's account number and the type of account

(checking, saving, or lockbox).

(5) For Federal Reserve Wire Transfer System payments only:

(i) Name, address, telegraphic abbreviation, and the 9-digit

Routing Transit Number for the Contractor's financial agent.

(ii) If the Contractor's financial agent is not directly on-line

to the Federal Reserve Wire Transfer System and, therefore, not the

receiver of the wire transfer payment, the Contractor shall also

provide the name, address, and 9-digit Routing Transit Number of the

correspondent financial institution receiving the wire transfer

payment.

(e) Suspension of payment. (1) Notwithstanding the provisions of

any other clause of this contract, the Government is not required to

make any payment under this contract until after receipt, by the

designated payment office, of the correct EFT payment information

from the Contractor or a certificate submitted in accordance with

paragraph (b) of this clause. Until receipt of the correct EFT

information, any invoice or contract financing request shall be

deemed not to be a valid invoice or contract financing request as

defined in the Prompt Payment clause of this contract.

(2) If the EFT information changes after submission of correct

EFT information, the Government shall begin using the changed EFT

information no later than the 30th day after its receipt to the

extent payment is made by EFT. However, the Contractor may request

that no further payments be made until the changed EFT information

is implemented by the payment office. If such suspension would

result in a late payment under the Prompt Payment clause of this

contract, the Contractor's request for suspension shall extend the

due date for payment by the number of days of the suspension.

(f) Contractor EFT arrangements. The Contractor shall designate

a single financial agent capable of receiving and processing the

electronic funds transfer using the EFT methods described in

paragraph (d) of this clause. The Contractor shall pay all fees and

charges for receipt and processing of transfers.

(g) Liability for uncompleted or erroneous transfers. (1) If an

uncompleted or erroneous transfer occurs because the Government

failed to use the Contractor-provided EFT information in the correct

manner, the Government remains responsible for (i) making a correct

payment, (ii) paying any prompt payment penalty due, and (iii)

recovering any erroneously directed funds.

(2) If an uncompleted or erroneous transfer occurs because

Contractor-provided EFT information was incorrect at the time of

Government release of the EFT payment transaction instruction to the

Federal Reserve System, and--

(i) If the funds are no longer under the control of the payment

office, the Government is deemed to have made payment and the

Contractor is responsible for recovery of any erroneously directed

funds; or

(ii) If the funds remain under the control of the payment

office, the Government retains the right to either make payment by

mail or suspend the payment in accordance with paragraph (e) of this

clause.

(h) EFT and prompt payment. (1) A payment shall be deemed to

have been made in a timely manner in accordance with the Prompt

Payment clause of this contract if, in the EFT payment transaction

instruction given to the Federal Reserve System, the date specified

for settlement of the payment is on or before the prompt payment due

date, provided the specified payment date is a valid date under the

rules of the Federal Reserve System.

(2) When payment cannot be made by EFT because of incorrect EFT

information provided by the Contractor, no interest penalty is due

after the date of the uncompleted or erroneous payment transaction,

provided that notice of the defective EFT information is issued to

the Contractor within 7 days after the Government is notified of the

defective EFT information.

(i) EFT and assignment of claims. If the Contractor assigns the

proceeds of this contract as provided for in the Assignment of

Claims clause of this contract, the assignee shall provide the

assignee EFT information required by paragraph (d) of this clause.

In all respects, the requirements of this clause shall apply to the

assignee as if it were the Contractor. EFT information which shows

the ultimate recipient of the transfer to be other than the

Contractor, in the absence of a proper assignment of claims

acceptable to the Government, is incorrect EFT information within

the meaning of paragraph (e) of this clause.

(j) Payment office discretion. If the Contractor does not wish

to receive payment by EFT methods for one or more payments, the

Contractor may submit a request to the designated payment office to

refrain from requiring EFT information or using the EFT payment

method. The decision to grant the request is solely that of the

Government.

(k) Change of EFT information by financial agent. The Contractor

agrees that the Contractor's financial agent may notify the

Government of a change to the routing transit number, Contractor

account number, or account type. The Government shall use the

changed data in accordance with paragraph (e)(2) of this clause. The

Contractor agrees that the information provided by the agent is

deemed to be correct information as if it were provided by the

Contractor. The Contractor agrees that the agent's notice of changed

EFT data is deemed to be a request by the Contractor in accordance

with paragraph (e)(2) that no further payments be made until the

changed EFT information is implemented by the payment office.

(End of clause)

52.232-34 Optional Information for Electronic Funds Transfer Payment.

As prescribed in 32.1103 (b) and (c), insert the following clause:

OPTIONAL INFORMATION FOR ELECTRONIC FUNDS TRANSFER PAYMENT (AUG 1996)

(a) Method of payment. (1) Except as provided in paragraph

(a)(2) of this clause, after the Contractor provides the information

described in paragraph (d) of this clause, in accordance with

paragraph (b) of this clause, payments by the Government under this

contract, including invoice and contract financing payments, may be

made by check or electronic funds transfer (EFT) at the option of

the Government. If payment is made by EFT, the Government may, at

its option, also forward the associated payment information by

electronic transfer. As used in this clause, the term ``EFT'' refers

to the funds transfer and may also include the information transfer.

(2) Notwithstanding the provision of this clause making the

furnishing of EFT information optional, the Contractor shall furnish

the EFT information described in paragraph (d) for any payment to be

made after January 1, 1999.

(b) Contractor consent. (1) If the Contractor is willing to be

paid by EFT, the Contractor shall provide the EFT information

described in paragraph (d) of this clause. The Contractor agrees

that, after providing EFT information in accordance with this

clause, the Contractor cannot withdraw the Government's right to

make payment by EFT for this contract.

(2) If the Contractor provides EFT information applicable to

multiple contracts, the Contractor shall specifically state the

applicability of this EFT information in terms acceptable to the

payment office.

first request for payment (whether for invoice or contract financing

payment) under this contract, for which the Contractor desires EFT

payment, the Contractor shall provide the information required to

make contract payment by EFT, as described in paragraph (d) of this

clause, directly to the Government payment office named in this

contract. If more than one payment office is named for the contract,

the Contractor shall provide a separate notice to each office. In

the event that the EFT information changes, the Contractor shall be

responsible for providing the changed information to the designated

payment office(s).

(d) Required EFT information. The Government may make payment by

EFT through either an Automated Clearing House (ACH) subject to the

domestic banking laws of the United States or the Federal Reserve

Wire Transfer System at the Government's option. The Contractor

shall provide the following information for both methods in a form

acceptable to the designated payment office. The Contractor may

supply this data for this or multiple contracts (see paragraph (b)

of this clause).

(1) The contract number to which this notice applies.

(2) The Contractor's name and remittance address, as stated in

the contract, and account number at the Contractor's financial

agent.

(3) The signature (manual or electronic, as appropriate), title,

and telephone number of

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the Contractor official authorized to provide this information.

(4) For ACH payment only:

(i) Name, address, and 9-digit Routing Transit Number of the

Contractor's financial agent.

(ii) Contractor's account number and the type of account

(checking, saving, or lockbox).

(5) For Federal Reserve Wire Transfer System payments only:

(i) Name, address, telegraphic abbreviation, and the 9-digit

Routing Transit Number for the Contractor's financial agent.

(ii) If the Contractor's financial agent is not directly on-line

to the Federal Reserve Wire Transfer System and, therefore, not the

receiver of the wire transfer payment, the Contractor shall also

provide the name, address, and 9-digit Routing Transit Number of the

correspondent financial institution receiving the wire transfer

payment.

(e) Suspension of payment. (1) Notwithstanding the provisions of

any other clause of this contract, if, after receipt of the

Contractor's EFT information in accordance with paragraph (b) of

this clause, the EFT information is found to be incorrect, or, for

payment after January 1, 1999, if EFT information has not been

furnished, then until receipt by the designated payment office of

the correct EFT information from the Contractor, (i) the Government

is not required to make any further payment under this contract; and

(ii) any invoice or contract financing request shall be deemed not

to be a valid invoice or contract financing request as defined in

the Prompt Payment clause of this contract.