Federal Acquisition Regulation; Prompt Payment

Federal RegisterMar 17, 1997

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DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 32 and 52

[FAC 90-46; FAR Case 91-091; Item X]

RIN 9000-AF61

Federal Acquisition Regulation; Prompt Payment

AGENCIES: Department of Defense (DOD), General Services Administration

(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: The Civilian Agency Acquisition Council and the Defense

Acquisition Regulations Council have agreed on a final rule amending

the Federal Acquisition Regulation (FAR) to incorporate changes

required by the Prompt Payment Act Amendments of 1988. This regulatory

action was not subject to Office of Management and Budget (OMB) review

under Executive Order 12866, dated September 30, 1993, and is not a

major rule under 5 U.S.C. 804.

EFFECTIVE DATE: May 16, 1997.

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 90-46, FAR case 91-091.

SUPPLEMENTARY INFORMATION:

A. Background

Federal Acquisition Circular (FAC) 84-45 contained a final rule

which was published in the Federal Register at 54 FR 13332, March 31,

1989, to incorporate changes required by the Prompt Payment Act

Amendments of 1988 (Public Law 100-496). OMB implemented the statutory

requirements by revising OMB Circular A-125, Prompt Payment. The OMB

Circular was published as a final rule in the Federal Register on

December 21, 1989, and became effective 30 days after publication.

OMB's final guidance differed somewhat from earlier proposed coverage

which served as the basis for the FAR changes published in FAC 84-45.

This final rule amends the FAR to reflect the changes in the OMB

circular.

A proposed FAR rule to implement the guidance published in OMB

Circular A-125 (Revised) was published in the Federal Register at 59 FR

23776, May 6, 1994. Ten sources submitted public comments. These

comments were considered in developing the final rule.

B. Regulatory Flexibility Act

A Final Regulatory Flexibility Analysis (FRFA) has been performed.

A copy of the FRFA may be obtained from the FAR Secretariat. The FRFA

is summarized as follows:

The need for, and the objectives of, the final rule, are to

implement changes made in Office of Management and Budget (OMB)

Circular A-125 (Revised), dated December 12, 1989, to comply with

the Prompt Payment Act Amendments of 1988 (Public Law 100-496). The

Prompt Payment Act, as amended, requires Executive departments and

agencies to make payments on time, to pay interest penalties when

payments are late, and to take discounts only when payments are made

on or before the discount date. We did not receive any public

comments in response to the Initial Regulatory Flexibility Analysis.

This rule will apply to all small entities that are awarded

Government contracts, except contracts with payment terms and late

payment penalties established by other Governmental authority (e.g.,

tariffs). The rule will also apply to all small entities that enter

into construction contracts with contractors holding prime Federal

construction contracts. 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 Federal

Procurement Data System Federal Procurement Report for Fiscal Year

(FY) 1995 states that 203,241 awards and contract modifications

valued at more than $25,000 were placed with small entities in FY

1995. However, information is not available as to the number of

small entities that received these awards, the number of small

entities that receive awards not subject to this rule, or the number

of small entities that enter into construction contracts with

contractors holding prime Federal construction contracts. The

corresponding information for actions valued at $25,000 or less is

also not available. There are no significant alternatives that could

accomplish the objectives of this rule.

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the changes to

the FAR do not impose recordkeeping or information collection

requirements, or collections of information from offerors, contractors,

or members of the public which require the approval of the Office of

Management and Budget under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Parts 32 and 52

Government procurement.

[[Page 12706]]

Dated: March 7, 1997.

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

Therefore, 48 CFR Parts 32 and 52 are amended as set forth below:

1. The authority citation for 48 CFR Parts 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 32--CONTRACT FINANCING

2. Section 32.102 is amended by revising paragraph (d) to read as

follows:

32.102 Description of contract financing methods.

* * * * *

(d) Partial payments for accepted supplies and services that are

only a part of the contract requirements are authorized under 41 U.S.C.

255 and 10 U.S.C. 2307. Office of Management and Budget Circular A-125,

Prompt Payment, requires agencies to pay for partial delivery of

supplies or partial performance of services unless specifically

prohibited by the contract. Although partial payments generally are

treated as a method of payment and not as a method of contract

financing, using partial payments can assist contractors to participate

in Government contracts without, or with minimal, contract financing.

When appropriate, contract statements of work and pricing arrangements

shall be designed to permit acceptance and payment for discrete

portions of the work, as soon as accepted (but see 32.903(f)(2)).

* * * * *

3. Section 32.902 is amended by revising the definitions of

``Day'', ``Designated billing office'', and ``Discount for prompt

payment''; and by adding a definition of ``Invoice'' to read as

follows:

32.902 Definitions.

* * * * *

Day, as used in this subpart, means calendar day, including

weekends and holidays, unless otherwise indicated. (However, see

32.903(e)(3) concerning payments due on Saturdays, Sundays, and legal

holidays.)

Designated billing office, as used in this subpart, means the

office or person (governmental or nongovernmental) designated in the

contract where the contractor first submits invoices and contract

financing requests. This might be the Government disbursing office,

contract administration office, office accepting the supplies delivered

or services performed by the contractor, contract audit office, or a

nongovernmental agent. In some cases, different offices might be

designated to receive invoices and contract financing requests.

* * * * *

Discount for prompt payment means an invoice payment reduction

voluntarily offered by the contractor, in conjunction with the clause

at 52.232-8, Discounts for Prompt Payment, if payment is made by the

Government prior to the due date. The due date is calculated from the

date of the contractor's invoice. If the contractor has not placed a

date on the invoice, the due date is calculated from the date the

designated billing office receives a proper invoice, provided the

agency annotates such invoice with the date of receipt at the time of

receipt. When the discount date falls on a Saturday, Sunday, or legal

holiday when Federal Government offices are closed and Government

business is not expected to be conducted, payment may be made on the

following business day and a discount may be taken.

* * * * *

Invoice means a contractor's bill or written request for payment

under the contract for supplies delivered or services performed.

* * * * *

4. Sections 32.903, 32.904, and 32.905 are revised to read as

follows:

32.903 Policy.

(a) All solicitations and contracts subject to this subpart shall

specify payment procedures, payment due dates, and interest penalties

for late invoice payment.

(b) The Government shall not make invoice and contract financing

payments earlier than 7 days prior to the due dates specified in the

contract unless the agency head, or designee, determines to make

earlier payment on a case-by-case basis (see 32.908 for required

clauses).

contract financing request and satisfactory contract performance.

(d) Agency procedures shall ensure that, when specifying due dates,

full consideration is given to the time reasonably required by

Government officials to fulfill their administrative responsibilities

under the contract.

(e)(1) Checks shall be mailed on the same day they are dated.

(2) For payments made by electronic funds transfer, the date

specified by the Government (see 32.902 for definition of ``specified

payment date'') for settlement of the payment at a Federal Reserve Bank

shall be on or before the established due date.

(3) When the due date falls on a Saturday, Sunday, or legal holiday

when Federal Government offices are closed and Government business is

not expected to be conducted, payment may be made on the following

business day without incurring a late payment interest penalty.

(f)(1) Contracting officers shall, where the nature of the work

permits, write contract statements of work and pricing arrangements

that allow contractors to deliver, and receive invoice payments for,

discrete portions of the work as soon as completed and found acceptable

by the Government (see 32.102(d)).

(2) Unless specifically prohibited by the contract, the contractor

is entitled to payment for accepted partial deliveries of supplies or

partial performance of services that comply with all applicable

contract requirements and for which prices can be calculated from the

contract terms.

(3) Under some types of contracts, such as many cost-reimbursement

contracts, partial payments cannot be made because the invoice price

cannot be determined until after settlement of total contract costs and

other contract-wide final arrangements. However, interim payments or

contract financing payments may be made in accordance with the terms of

the contract.

(g) Discounts for prompt payment offered by the contractor shall be

taken only when payments are made within the discount period specified

by the contractor.

(h) Agencies shall pay an interest penalty, without request from

the contractor, for late invoice payments or improperly taken discounts

for prompt payment. The temporary unavailability of funds to make a

timely payment does not relieve an agency from the obligation to pay

interest penalties or the additional interest penalties discussed in

paragraph (i) of this section and paragraph (g) of 32.907-1.

(i) For contracts awarded after October 1, 1989, if the interest

penalty is not paid within 10 days after it is due and the contractor

makes a written demand for payment within 40 days after payment of the

principal amount due, agencies shall pay an additional penalty amount,

which shall be calculated in accordance with 32.907-1(g).

(j) If the contractor has assigned a contractor identifier (such as

an invoice number) to an invoice or financing request, each payment or

remittance advice shall use the contractor identifier (in addition to

any Government or contract information) in describing any payment made.

[[Page 12707]]

(k) 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.

32.904 Responsibilities.

(a) Agency heads--

(1) Shall establish the policies and procedures necessary to

implement this subpart;

(2) May prescribe additional standards for establishing due dates

on invoice payments (see 32.905) and contract financing payments (see

32.906) necessary to support agency programs and foster prompt payment

to contractors;

(3) May adopt different payment procedures in order to accommodate

unique circumstances, provided that such procedures are consistent with

the policies set forth in this subpart; and

(4) Shall inform contractors of points of contact within their

cognizant payment offices to enable contractors to obtain status of

invoices.

(b) Contracting officers, in drafting solicitations and contracts,

shall identify for each contract line item number, subline item number,

or exhibit line item number--

(1) Which of the applicable Prompt Payment clauses applies to each

item when the solicitation or contract contains items that will be

subject to different payment terms; and

(2) The applicable Prompt Payment food category (e.g., which item

numbers are meat or meat food products, which are perishable

agricultural commodities), when the solicitation or contract contains

multiple payment terms for various classes of foods and edible

products.

32.905 Invoice payments.

(a) General. Except as prescribed in paragraphs (b), (c), and (d)

of this section, the due date for making an invoice payment by the

designated payment office shall be as follows:

(1) The 30th day after the designated billing office has

received a proper invoice from the contractor (except as provided in

paragraph (a)(2) of this section); or the 30th day after

Government acceptance of supplies delivered or services performed by

the contractor, whichever is later.

(i) On a final invoice where the payment amount is subject to

contract settlement actions, acceptance shall be deemed to have

occurred on the effective date of the contract settlement.

(ii) For the sole purpose of computing an interest penalty that

might be due the contractor, Government acceptance shall be deemed to

have occurred constructively on the 7th day after the contractor

has delivered supplies or performed services in accordance with the

terms and conditions of the contract, unless there is a disagreement

over quantity, quality, or contractor compliance with a contract

requirement. In the event that actual acceptance occurs within the

constructive acceptance period, the determination of an interest

penalty shall be based on the actual date of acceptance. The

constructive acceptance requirement does not, however, compel

Government officials to accept supplies or services, perform contract

administration functions, or make payment prior to fulfilling their

responsibilities. Except in the case of a contract for the purchase of

a commercial item as defined in 2.101, including a brand-name

commercial item for authorized resale (e.g., commissary items), the

contracting officer may specify a longer period for constructive

acceptance in the solicitation and resulting contract, if required to

afford the Government a reasonable opportunity to inspect and test the

supplies furnished or to evaluate the services performed. The contract

file shall indicate the justification for extending the constructive

acceptance period beyond 7 days. Extended acceptance periods shall not

be a routine agency practice but shall be used only when necessary to

permit proper Government inspection and testing of the supplies

delivered or services performed.

(iii) If the contract does not require submission of an invoice for

payment (e.g., periodic lease payments), the due date will be as

specified in the contract.

(2) If the designated billing office fails to annotate the invoice

with the actual date of receipt at the time of receipt, the invoice

payment due date shall be the 30th day after the date of the

contractor's invoice, provided a proper invoice is received and there

is no disagreement over quantity, quality, or contractor compliance

with contract requirements.

(b) Architect-engineer contracts. The due date for making payments

on contracts that contain the clause at 52.232-10, Payments Under

Fixed-Price Architect-Engineer Contracts, shall be as follows:

(1) The due date for work or services completed by the contractor

shall be the later of the following two events:

(i) The 30th day after the designated billing office has

received a proper invoice from the contractor.

(ii) The 30th day after Government acceptance of the work or

services completed by the contractor. On a final invoice where the

payment amount is subject to contract settlement actions (e.g., release

of claims), acceptance shall be deemed to have occurred on the

effective date of the settlement. For the sole purpose of computing an

interest penalty that might be due the contractor, Government

acceptance shall be deemed to have occurred constructively on the

7th day after the contractor has completed the work or services in

accordance with the terms and conditions of the contract (see also

paragraph (b)(4) of this section). In the event that actual acceptance

occurs within the constructive acceptance period, the determination of

an interest penalty shall be based on the actual date of acceptance.

(2) The due date for progress payments shall be the 30th day

after Government approval of contractor estimates of work or services

accomplished. For the sole purpose of computing an interest penalty

that might be due the contractor, Government approval shall be deemed

to have occurred constructively on the 7th day after contractor

estimates have been received by the designated billing office (see also

paragraph (b)(4) of this section). In the event that actual approval

occurs within the constructive approval period, the determination of an

interest penalty shall be based on the actual date of approval.

(3) If the designated billing office fails to annotate the invoice

or payment request with the actual date of receipt at the time of

receipt, the payment due date shall be the 30th day after the date

of the contractor's invoice or payment request, provided a proper

invoice or payment request is received and there is no disagreement

over quantity, quality, or contractor compliance with contract

requirements.

(4) The constructive acceptance and constructive approval

requirements described in paragraphs (b)(1) and (b)(2) of this section

are conditioned upon receipt of a proper payment request and no

disagreement over quantity, quality, contractor compliance with

contract

[[Page 12708]]

requirements, or the requested progress payment amount. These

requirements do not compel Government officials to accept work or

services, approve contractor estimates, perform contract administration

functions, or make payment prior to fulfilling their responsibilities.

The contracting officer may specify a longer period for constructive

acceptance or constructive approval, if required to afford the

Government a reasonable opportunity to inspect and test the supplies

furnished or to evaluate the services performed.

construction contracts shall be as follows:

(i) The due date for making progress payments based on contracting

officer approval of the estimated amount and value of work or services

performed, including payments for reaching milestones in any project,

shall be 14 days after receipt of a proper payment request by the

designated billing office. If the designated billing office fails to

annotate the payment request with the actual date of receipt at the

time of receipt, the payment due date shall be deemed to be the

14th day after the date of the contractor's payment request,

provided a proper payment request is received and there is no

disagreement over quantity, quality, or contractor compliance with

contract requirements. The contracting officer may specify a longer

period in the solicitation and resulting contract if required to afford

the Government a reasonable opportunity to adequately inspect the work

and to determine the adequacy of the contractor's performance under the

contract. The contract file shall indicate the justification for

extending the due date beyond 14 days. The contracting officer or a

representative shall not approve progress payment requests unless the

certification and substantiation of amounts requested are provided as

required by the clause at 52.232-5, Payments Under Fixed-Price

Construction Contracts.

(ii) The due date for payment of any amounts retained by the

contracting officer in accordance with the clause at 52.232-5, Payments

Under Fixed-Price Construction Contracts, shall be as specified in the

contract or, if not specified, 30 days after approval by the

contracting officer for release to the contractor. This release of

retained amounts shall be based on the contracting officer's

determination that satisfactory progress has been made.

(iii) The due date for final payments based on completion and

acceptance of all work (including any retained amounts), and payments

for partial deliveries that have been accepted by the Government (e.g.,

each separate building, public work, or other division of the contract

for which the price is stated separately in the contract) shall be as

follows:

(A) Either the 30th day after receipt by the designated

billing office of a proper invoice from the contractor, or the

30th day after Government acceptance of the work or services

completed by the contractor, whichever is later. If the designated

billing office fails to annotate the invoice with the actual date of

receipt at the time of receipt, the invoice payment due date shall be

deemed to be the 30th day after the date of the contractor's

invoice, provided a proper invoice is received and there is no

disagreement over quantity, quality, or contractor compliance with

contract requirements.

(B) On a final invoice where the payment amount is subject to

contract settlement actions (e.g., release of contractor claims),

acceptance shall be deemed to have occurred on the effective date of

the contract settlement.

(iv) For the sole purpose of computing an interest penalty that

might be due the contractor for payments described in paragraph

(c)(1)(iii)(A) of this section, Government acceptance or approval shall

be deemed to have occurred constructively on the 7th day after the

contractor has completed the work or services in accordance with the

terms and conditions of the contract (see also paragraph (c)(1)(v) of

this section). In the event that actual acceptance occurs within the

constructive acceptance period, the determination of an interest

penalty shall be based on the actual date of acceptance.

(v) The constructive acceptance and constructive approval

requirements described in paragraph (c)(1)(iv) of this section are

conditioned upon receipt of a proper payment request and no

disagreement over quantity, quality, contractor compliance with

contract requirements, or the requested amount. These requirements do

not compel Government officials to accept work or services, approve

contractor estimates, perform contract administration functions, or

make payment prior to fulfilling their responsibilities. The

contracting officer may specify a longer period for constructive

acceptance or constructive approval in the solicitation and resulting

contract, if required to afford the Government a reasonable opportunity

to adequately inspect the work and to determine the adequacy of the

contractor's performance under the contract.

(2) Construction contracts contain special provisions concerning

contractor payments to subcontractors, along with special contractor

certification requirements. The Office of Management and Budget has

determined that these certifications are not to be construed as final

acceptance of the subcontractor's performance. The certification in

52.232-5(c) implements this determination; however, certificates are

still acceptable if the contractor deletes paragraph (c)(4) of 52.232-5

from the certificate.

(3)(i) Paragraph (d) of the clause at 52.232-5, Payments under

Fixed-Price Construction Contracts, and paragraph (e)(6) of the clause

at 52.232-27, Prompt Payment for Construction Contracts, provide for

the contractor to pay interest on unearned amounts in certain

circumstances. This interest shall be recovered from subsequent

payments to the contractor. Therefore, normally no demand for payment

shall be made. Contracting officers shall--

(A) Compute the amount in accordance with the clause;

(B) Provide the contractor with a final decision; and

(ii) The payment office shall be responsible for making the

deduction of interest. Amounts collected in accordance with these

provisions shall revert to the Treasury of the United States.

(d) Food and specified items. Due dates for payments of contractor

invoices for meat, meat food products, or fish; perishable agricultural

commodities; and dairy products, edible fats or oils, and food products

prepared from edible fats or oils are as follows:

(1) For meat or meat food products, as defined in section 2(a)(3)

of the Packers and Stockyard Act of 1921 (7 U.S.C. 182(3)), and as

further defined in Public Law 98-181, including any edible fresh or

frozen poultry meat, any perishable poultry meat food product, fresh

eggs, and any perishable egg product, as close as possible to, but not

later than, the 7th day after product delivery.

(2) For fresh or frozen fish, as defined in section 204(3) of the

Fish and Seafood Promotion Act of 1986 (16 U.S.C. 4003(3)), as close as

possible to, but not later than, the 7th day after product

delivery.

(3) For perishable agricultural commodities, as defined in section

1(4) of the Perishable Agricultural Commodities Act of 1930 (7 U.S.C.

499a(4)), as close as possible to, but not later than, the 10th

day after product delivery, unless another date is specified in the

contract.

(4) For dairy products (as defined in section 111(e) of the Dairy

Production

[[Page 12709]]

Stabilization Act of 1983 (7 U.S.C. 4502(e)), edible fats or oils, and

food products prepared from edible fats or oils, as close as possible

to, but not later than, the 10th day after the date on which a

proper invoice has been received. Liquid milk, cheese, certain

processed cheese products, butter, yogurt, ice cream, mayonnaise, salad

dressings, and other similar products, fall within this classification.

Nothing in the Act limits this classification to refrigerated products.

When questions arise regarding the proper classification of a specific

product, prevailing industry practices should be followed in specifying

a contract payment due date. The burden of proof that a classification

of a specific product is, in fact, prevailing industry practice is upon

the contractor making the representation.

(e) Content of invoices. A proper invoice must include the items

listed in paragraphs (e)(1) through (e)(8) of this section. If the

invoice does not comply with these requirements, it shall be returned

within 7 days after the date the designated billing office received the

invoice (3 days on contracts for meat, meat food products, or fish; 5

days on contracts for perishable agricultural commodities, dairy

products, edible fats or oils, and food products prepared from edible

fats or oils), with a statement of the reasons why it is not a proper

invoice. If such notice is not timely, then an adjusted due date for

the purpose of determining an interest penalty, if any, will be

established in accordance with 32.907-1(b):

(1) Name and address of the contractor.

(2) Invoice date. (Contractors are encouraged to date invoices as

close as possible to the date of mailing or transmission.)

(3) Contract number or other authorization for supplies delivered

or services performed (including order number and contract line item

number).

(4) Description, quantity, unit of measure, unit price, and

extended price of supplies delivered or services performed.

(5) Shipping and payment terms (e.g., shipment number and date of

shipment, prompt payment discount terms). Bill of lading number and

weight of shipment will be shown for shipments on Government bills of

lading.

(6) Name and address of contractor official to whom payment is to

be sent (must be the same as that in the contract or in a proper notice

of assignment).

(7) Name (where practicable), title, phone number, and mailing

address of person to be notified in the event of a defective invoice.

(8) Any other information or documentation required by the contract

(such as evidence of shipment).

(9) While not required, contractors are strongly encouraged to

assign an identification number to each invoice.

(f) Authorization to pay. All invoice payments shall be supported

by a receiving report or any other Government documentation authorizing

payment. The agency receiving official should forward the receiving

report or other Government documentation to the designated payment

office by the 5th working day after Government acceptance or

approval, unless other arrangements have been made. This period of time

does not extend the due dates prescribed in this section. Acceptance

should be completed as expeditiously as possible. The receiving report

or other Government documentation authorizing payment shall, as a

minimum, include the following:

(1) Contract number or other authorization for supplies delivered

or services performed.

(2) Description of supplies delivered or services performed.

(3) Quantities of supplies received and accepted or services

performed, if applicable.

(4) Date supplies delivered or services performed.

(5) Date supplies or services were accepted by the designated

Government official (or progress payment request was approved if being

made under the clause at 52.232-5, Payments Under Fixed-Price

Construction Contracts, or the clause at 52.232-10, Payments Under

Fixed-Price Architect-Engineer Contracts).

(6) Signature, or when permitted by agency regulations, electronic

equivalent, printed name, title, mailing address, and telephone number

of the designated Government official responsible for acceptance or

approval functions.

(7) If the contract provides for the use of Government certified

invoices in lieu of a separate receiving report, the Government

certified invoice also must contain the information described in

paragraphs (f)(1) through (f)(6) of this section.

(g) Discounts. When a discount for prompt payment is to be taken,

payment will be made as close as possible to, but not later than, the

end of the discount period. Payment terms are specified in the clause

at 52.232-8, Discounts for Prompt Payment.

(h) Billing office. The designated billing office shall immediately

annotate each invoice with the actual date it receives the invoice.

(i) Payment office. The designated payment office shall annotate

each invoice and receiving report with the date a proper invoice or

receiving report was received by the designated payment office.

(j) Multiple payment rates. Contractors may be encouraged, but

cannot be required, to submit separate invoices for products with

different payment due dates under the same contract or order. When an

invoice is received that contains items with different payment periods

(a mixed invoice), the payment office shall comply with all contractual

and statutory payment provisions. In dealing with mixed invoices the

payment office may, subject to agency policy--

(1) Pay all items at the later of the due dates, provided

applicable interest penalties also are paid;

(2) Pay all items at the earlier of the due dates; or

(3) Split invoice payments, making payment by the due date

applicable to each payment class.

5. Section 32.906 is amended by revising the first sentence of

paragraph (a) to read as follows:

32.906 Contract financing payments.

(a) Unless otherwise prescribed in policies and procedures issued

by the agency head, or designee, the due date for making contract

financing payments by the designated payment office will be the

30th day after the designated billing office has received a proper

request. * * *

* * * * *

6. Section 32.907-1 is amended by revising paragraphs (a), (b),

(d), and (g) to read as follows:

32.907-1 Late invoice payment.

(a) An interest penalty shall be paid automatically by the

designated payment office, without request from the contractor, when

all of the following conditions, if applicable, have been met:

(1) A proper invoice was received by the designated billing office.

(2) A receiving report or other Government documentation

authorizing payment was processed, and there was no disagreement over

quantity, quality, or contractor compliance with any contract

requirement.

(3) In the case of a final invoice, the payment amount is not

subject to further contract settlement actions between the Government

and the contractor.

(4) The designated payment office paid the contractor after the due

date.

(b) The interest penalty computation shall not include--

(1) The time taken by the Government to notify the contractor of a

defective

[[Page 12710]]

invoice, unless it exceeds the periods prescribed in 32.905(e);

(2) The time taken by the contractor to correct the invoice. If the

designated billing office failed to notify the contractor of a

defective invoice within the periods prescribed in 32.905(e), the due

date on the corrected invoice will be adjusted by subtracting from such

date the number of days taken beyond the prescribed notification of

defects period. Any interest penalty owed the contractor will be based

on this adjusted due date; and

(3) The period between the date of an attempted electronic funds

transfer and the date the contractor furnishes correct electronic funds

transfer data; provided the Government notifies the contractor of the

defective data within 7 days after the Government receives notice that

the transfer could not be completed because of defective data.

* * * * *

(d) The interest penalty shall be at the rate established by the

Secretary of the Treasury under section 12 of the Contract Disputes Act

of 1978 (41 U.S.C. 611) that is in effect on the day after the due

date, except where the interest penalty is prescribed by other

governmental authority (e.g., tariffs). The rate in effect on the day

after the due date shall remain fixed during the period for which an

interest penalty is calculated. This rate is referred to as the

``Renegotiation Board Interest Rate,'' and it is published in the

Federal Register semiannually on or about January 1 and July 1.

Information concerning this interest rate can be obtained from the

Department of the Treasury, Financial Management Service, Washington,

DC 20227, telephone (202) 874-6995. Interest calculations shall be

based upon a 360-day year. The interest penalty shall accrue daily on

the invoice principal payment amount approved by the Government until

the payment date of such approved principal amount; and will be

compounded in 30-day increments inclusive from the first day after the

due date through the payment date. That is, interest accrued at the end

of any 30-day period will be added to the approved invoice principal

payment amount and will be subject to interest penalties if not paid in

the succeeding 30-day period. The interest penalty amount, the interest

rate, and the period for which the interest penalty was computed, will

be stated separately by the designated payment office on the check, in

accompanying remittance advice, or, for an electronic funds transfer,

by an appropriate electronic or other remittance advice. Adjustments

will be made by the designated payment office for errors in calculating

interest penalties.

* * * * *

(g)(1) For contracts awarded on or after October 1, 1989, a penalty

amount (calculated in accordance with subparagraph (g)(3) of this

section) shall be paid, in addition to the interest penalty amount,

only if the contractor--

(i) Is owed an interest penalty of $1 or more;

(ii) Is not paid the interest penalty within 10 days after the date

the invoice amount is paid; and

(iii) Makes a written demand to the designated payment office for

additional penalty payment in accordance with paragraph (g)(2) of this

section, postmarked not later than 40 days after the date the invoice

amount is paid.

(2)(i) Contractors shall support written demands for additional

penalty payments with the following data. No additional data shall be

required. Contractors shall--

(A) Specifically assert that late payment interest is due under a

specific invoice, and request payment of all overdue late payment

interest penalty and such additional penalty as may be required;

(B) Attach a copy of the invoice on which the unpaid late payment

interest was due; and

including the date of receipt.

(ii) Demands must be postmarked on or before the 40th day

after payment was made, except that--

(A) If the postmark is illegible or nonexistent, the demand must

have been received and annotated with the date of receipt by the

designated payment office on or before the 40th day after payment

was made; or

(B) If the postmark is illegible or nonexistent and the designated

payment office fails to make the required annotation, the demand's

validity will be determined by the date the contractor has placed on

the demand; provided such date is no later than the 40th day after

payment was made.

(3)(i) The additional penalty shall be equal to 100 percent of any

original late payment interest penalty that is due on or after January

22, 1990, except--

(A) For additional penalties due on or before January 22, 1992,

such penalties shall not exceed $2,500;

(B) After January 22, 1992, the additional penalty shall not exceed

$5,000;

(D) No additional penalty is owed if the amount of the underlying

interest penalty is less than $1.

(ii) If the interest penalty ceases to accrue in accordance with

the limits stated in paragraphs (e)(1) and (e)(2) of this section, the

amount of the additional penalty shall be calculated on the amount of

interest penalty that would have accrued in the absence of these

limits, but shall not exceed the limits specified in paragraph

(g)(3)(i) of this subsection.

(iii) For determining the maximum and minimum additional penalties,

the test shall be the interest penalty due on each separate payment

made for each separate contract. The maximum and minimum additional

penalty shall not be based upon individual invoices unless the invoices

are paid separately. Where payments are consolidated for disbursing

purposes, the maximum and minimum additional penalty determination

shall be made separately for each contract therein.

(iv) The additional penalty does not apply to payments regulated by

other Government regulations (e.g., payments under utility contracts

subject to tariffs and regulation).

7. Section 32.908 is revised to read as follows:

Sec. 32.908 Contract clauses.

(a) The contracting officer shall insert the clause at 52.232-26,

Prompt Payment for Fixed-Price Architect-Engineer Contracts, in

solicitations and contracts that contain the clause at 52.232-10,

Payments Under Fixed-Price Architect-Engineer Contracts.

(1) As authorized in 32.905(b)(4), the contracting officer may

modify the date in paragraph (a)(4)(i) of the clause to specify a

period longer than 7 days for constructive acceptance or constructive

approval, if required to afford the Government a practicable

opportunity to inspect and test the supplies furnished or evaluate the

services performed.

(2) If applicable, as authorized in 32.906(a) and only as permitted

by agency policies and procedures, the contracting officer may insert

in paragraph (b) of the clause a period shorter than 30 days (but not

less than 7 days) for making contract financing payments.

(b) The contracting officer shall insert the clause at 52.232-27,

Prompt Payment for Construction Contracts, in all solicitations and

contracts for construction (see part 36).

(1) As authorized in 32.905(c)(1)(i), the contracting officer may

modify the date in paragraph (a)(1)(i)(A) of the clause to specify a

period longer than 14

[[Page 12711]]

days if required to afford the Government a reasonable opportunity to

adequately inspect the work and to determine the adequacy of the

Contractor's performance under the contract.

(2) As authorized in 32.905(c)(1)(v), the contracting officer may

modify the date in paragraph (a)(4)(i) of the clause to specify a

period longer than 7 days for constructive acceptance or constructive

approval if required to afford the Government a reasonable opportunity

to inspect and test the supplies furnished or evaluate the services

performed.

(3) If applicable, as authorized in 32.906(a) and only as permitted

by agency policies and procedures, the contracting officer may insert

in paragraph (b) of the clause a period shorter than 30 days (but not

less than 7 days) for making contract financing payments.

Prompt Payment, in all other solicitations and contracts (including

contracts at or below the simplified acquisition threshold), except

where the clause at 52.212-4, Contract Terms and Conditions--Commercial

Items, applies, and except as indicated in 32.901.

(1) As authorized in 32.905(a)(1)(ii), the contracting officer may

modify the date in paragraph (a)(5)(i) of the clause to specify a

period longer than 7 days for constructive acceptance, if required to

afford the Government a reasonable opportunity to inspect and test the

supplies furnished or to evaluate the services performed, except in the

case of a contract for the purchase of a commercial item as defined in

2.101, including a brand-name commercial item for authorized resale

(e.g., commissary items).

(2) As authorized in 32.906(a) and only as permitted by agency

policies and procedures, the contracting officer may insert in

paragraph (b) of the clause a period shorter than 30 days (but not less

than 7 days) for making contract financing payments.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

8. Section 52.212-4 is amended by revising the clause date and the

undesignated paragraph following paragraph (g)(8) to read as follows:

52.212-4 Contract Terms and Conditions--Commercial Items.

* * * * *

CONTRACT TERMS AND CONDITIONS--COMMERCIAL ITEMS (MAY 1997)

* * * * *

(g) * * *

Invoices will be handled in accordance with the Prompt Payment

Act (31 U.S.C. 3903) and Office of Management and Budget (OMB)

Circular A-125, Prompt Payment. Contractors are encouraged to assign

an identification number to each invoice.

* * * * *

9. Section 52.232-5 is amended by-- (a) Revising the clause date,

and paragraphs (a), (b), and (c);

(b) By adding a paragraph heading at the beginning of the

introductory text of paragraph (d) and revising paragraph (d)(2);

text of paragraph (f), paragraph (g), and the introductory text of

paragraph (h) and paragraph (i); and

(d) Adding paragraph (j).

The revised and added text reads as follows:

52.232-5 Payments under Fixed-Price Construction Contracts.

* * * * *

PAYMENTS UNDER FIXED-PRICE CONSTRUCTION CONTRACTS (MAY 1997)

(a) Payment of price. The Government shall pay the Contractor

the contract price as provided in this contract.

(b) Progress payments. The Government shall make progress

payments monthly as the work proceeds, or at more frequent intervals

as determined by the Contracting Officer, on estimates of work

accomplished which meets the standards of quality established under

the contract, as approved by the Contracting Officer.

(1) The Contractor's request for progress payments shall include

the following substantiation:

(i) An itemization of the amounts requested, related to the

various elements of work required by the contract covered by the

payment requested.

(ii) A listing of the amount included for work performed by each

subcontractor under the contract.

(iii) A listing of the total amount of each subcontract under

the contract.

(iv) A listing of the amounts previously paid to each such

subcontractor under the contract.

(v) Additional supporting data in a form and detail required by

the Contracting Officer.

(2) In the preparation of estimates, the Contracting Officer may

authorize material delivered on the site and preparatory work done

to be taken into consideration. Material delivered to the Contractor

at locations other than the site also may be taken into

consideration if--

(i) Consideration is specifically authorized by this contract;

and

(ii) The Contractor furnishes satisfactory evidence that it has

acquired title to such material and that the material will be used

to perform this contract.

progress payments, the Contractor shall furnish the following

certification, or payment shall not be made: (However, if the

Contractor elects to delete paragraph (c)(4) from the certification,

the certification is still acceptable.)

I hereby certify, to the best of my knowledge and belief, that--

(1) The amounts requested are only for performance in accordance

with the specifications, terms, and conditions of the contract;

(2) Payments to subcontractors and suppliers have been made from

previous payments received under the contract, and timely payments

will be made from the proceeds of the payment covered by this

certification, in accordance with subcontract agreements and the

requirements of chapter 39 of Title 31, United States Code;

(3) This request for progress payments does not include any

amounts which the prime contractor intends to withhold or retain

from a subcontractor or supplier in accordance with the terms and

conditions of the subcontract; and

(4) This certification is not to be construed as final

acceptance of a subcontractor's performance.

----------------------------------------------------------------------

(Name)

----------------------------------------------------------------------

(Title)

----------------------------------------------------------------------

(Date)

(d) Refund of unearned amounts. * * *

* * * * *

(2) Be obligated to pay the Government an amount (computed by

the Contracting Officer in the manner provided in paragraph (j) of

this clause) equal to interest on the unearned amount from the 8th

day after the date of receipt of the unearned amount until--

* * * * *

(e) Retainage. * * *

* * * * *

(f) Title, liability, and reservation of rights. * * *

* * * * *

(g) Reimbursement for bond premiums. * * *

* * * * *

(h) Final payment. * * *

* * * * *

(i) Limitation because of undefinitized work. * * *

* * * * *

(j) Interest computation on unearned amounts. In accordance with

31 U.S.C. 3903(c)(1), the amount payable under subparagraph (d)(2)

of this clause shall be--

(1) Computed at the rate of average bond equivalent rates of 91-

day Treasury bills auctioned at the most recent auction of such

bills prior to the date the Contractor receives the unearned amount;

and

(2) Deducted from the next available payment to the Contractor.

(End of clause)

11. Section 52.232-8 is amended by revising the clause date and

paragraph (b) to read as follows:

[[Page 12712]]

52.232-8 Discounts for Prompt Payment.

* * * * *

DISCOUNTS FOR PROMPT PAYMENT (MAY 1997)

* * * * *

(b) In connection with any discount offered for prompt payment,

time shall be computed from the date of the invoice. If the

Contractor has not placed a date on the invoice, the due date shall

be calculated from the date the designated billing office receives a

proper invoice, provided the agency annotates such invoice with the

date of receipt at the time of receipt. For the purpose of computing

the discount earned, payment shall be considered to have been made

on the date that appears on the payment check or, for an electronic

funds transfer, the specified payment date. When the discount date

falls on a Saturday, Sunday, or legal holiday when Federal

Government offices are closed and Government business is not

expected to be conducted, payment may be made on the following

business day.

(End of clause)

12. Sections 52.232-25, 52.232-26, and 52.232-27 are revised to

read as follows:

52.232-25 Prompt Payment.

As prescribed in 32.908(c), insert the following clause:

PROMPT PAYMENT (MAY 1997)

Notwithstanding any other payment clause in this contract, the

Government will make invoice payments and contract financing

payments under the terms and conditions specified in this clause.

Payment shall be considered as being made on the day a check is

dated or the date of an electronic funds transfer. Definitions of

pertinent terms are set forth in section 32.902 of the Federal

Acquisition Regulation. All days referred to in this clause are

calendar days, unless otherwise specified. (However, see

subparagraph (a)(4) of this clause concerning payments due on

Saturdays, Sundays, and legal holidays.)

(a) Invoice payments (1) Due Date. (i) Except as indicated in

subparagraph (a)(2) and paragraph (c) of this clause, the due date

for making invoice payments by the designated payment office shall

be the later of the following two events:

(A) The 30th day after the designated billing office has

received a proper invoice from the Contractor (except as provided in

subdivision (a)(1)(ii) of this clause).

(B) The 30th day after Government acceptance of supplies

delivered or services performed by the Contractor. On a final

invoice where the payment amount is subject to contract settlement

actions, acceptance shall be deemed to have occurred on the

effective date of the contract settlement.

(ii) If the designated billing office fails to annotate the

invoice with the actual date of receipt at the time of receipt, the

invoice payment due date shall be the 30th day after the date of the

Contractor's invoice; provided a proper invoice is received and

there is no disagreement over quantity, quality, or Contractor

compliance with contract requirements.

(2) Certain food products and other payments. (i) Due dates on

Contractor invoices for meat, meat food products, or fish;

perishable agricultural commodities; and dairy products, edible fats

or oils, and food products prepared from edible fats or oils are--

(A) For meat or meat food products, as defined in section

2(a)(3) of the Packers and Stockyard Act of 1921 (7 U.S.C. 182(3)),

and as further defined in Pub. L. 98-181, including any edible fresh

or frozen poultry meat, any perishable poultry meat food product,

fresh eggs, and any perishable egg product, as close as possible to,

but not later than, the 7th day after product delivery.

(B) For fresh or frozen fish, as defined in section 204(3) of

the Fish and Seafood Promotion Act of 1986 (16 U.S.C. 4003(3)), as

close as possible to, but not later than, the 7th day after product

delivery.

section 1(4) of the Perishable Agricultural Commodities Act of 1930

(7 U.S.C. 499a(4)), as close as possible to, but not later than, the

10th day after product delivery, unless another date is specified in

the contract.

(D) For dairy products, as defined in section 111(e) of the

Dairy Production Stabilization Act of 1983 (7 U.S.C. 4502(e)),

edible fats or oils, and food products prepared from edible fats or

oils, as close as possible to, but not later than, the 10th day

after the date on which a proper invoice has been received. Liquid

milk, cheese, certain processed cheese products, butter, yogurt, ice

cream, mayonnaise, salad dressings, and other similar products, fall

within this classification. Nothing in the Act limits this

classification to refrigerated products. When questions arise

regarding the proper classification of a specific product,

prevailing industry practices will be followed in specifying a

contract payment due date. The burden of proof that a classification

of a specific product is, in fact, prevailing industry practice is

upon the Contractor making the representation.

(ii) If the contract does not require submission of an invoice

for payment (e.g., periodic lease payments), the due date will be as

specified in the contract.

(3) Contractor's invoice. The Contractor shall prepare and

submit invoices to the designated billing office specified in the

contract. A proper invoice must include the items listed in

paragraph (a)(3)(i) through (a)(3)(viii) of this clause. If the

invoice does not comply with these requirements, it shall be

returned within 7 days after the date the designated billing office

received the invoice (3 days for meat, meat food products, or fish;

5 days for perishable agricultural commodities, edible fats or oils,

and food products prepared from edible fats or oils), with a

statement of the reasons why it is not a proper invoice. Untimely

notification will be taken into account in computing any interest

penalty owed the Contractor in the manner described in subparagraph

(a)(5) of this clause.

(i) Name and address of the Contractor.

(ii) Invoice date. (The Contractor is encouraged to date

invoices as close as possible to the date of the mailing or

transmission.)

(iii) Contract number or other authorization for supplies

delivered or services performed (including order number and contract

line item number).

(iv) Description, quantity, unit of measure, unit price, and

extended price of supplies delivered or services performed.

(v) Shipping and payment terms (e.g., shipment number and date

of shipment, prompt payment discount terms). Bill of lading number

and weight of shipment will be shown for shipments on Government

bills of lading.

(vi) Name and address of Contractor official to whom payment is

to be sent (must be the same as that in the contract or in a proper

notice of assignment).

(vii) Name (where practicable), title, phone number, and mailing

address of person to be notified in the event of a defective

invoice.

(viii) Any other information or documentation required by the

contract (such as evidence of shipment).

(ix) While not required, the Contractor is strongly encouraged

to assign an identification number to each invoice.

(4) Interest penalty. An interest penalty shall be paid

automatically by the designated payment office, without request from

the Contractor, if payment is not made by the due date and the

conditions listed in paragraphs (a)(4)(i) through (a)(4)(iii) of

this clause are met, if applicable. However, when the due date falls

on a Saturday, Sunday, or legal holiday when Federal Government

offices are closed and Government business is not expected to be

conducted, payment may be made on the following business day without

incurring a late payment interest penalty.

(i) A proper invoice was received by the designated billing

office.

(ii) A receiving report or other Government documentation

authorizing payment was processed, and there was no disagreement

over quantity, quality, or Contractor compliance with any contract

term or condition.

(iii) In the case of a final invoice for any balance of funds

due the Contractor for supplies delivered or services performed, the

amount was not subject to further contract settlement actions

between the Government and the Contractor.

(5) Computing penalty amount. The interest penalty shall be at

the rate established by the Secretary of the Treasury under section

12 of the Contract Disputes Act of 1978 (41 U.S.C. 611) that is in

effect on the day after the due date, except where the interest

penalty is prescribed by other governmental authority (e.g.,

tariffs). This rate is referred to as the ``Renegotiation Board

Interest Rate,'' and it is published in the Federal Register

semiannually on or about January 1 and July 1. The interest penalty

shall accrue daily on the invoice principal payment amount approved

by the Government until the payment date of such approved principal

amount; and will be compounded in 30-day increments inclusive from

the first day after the due date through the payment date. That is,

interest accrued at the end of any 30-day period will be added to

the approved invoice principal payment amount and will be subject to

interest

[[Page 12713]]

penalties if not paid in the succeeding 30-day period. If the

designated billing office failed to notify the Contractor of a

defective invoice within the periods prescribed in subparagraph

(a)(3) of this clause, the due date on the corrected invoice will be

adjusted by subtracting from such date the number of days taken

beyond the prescribed notification of defects period. Any interest

penalty owed the Contractor will be based on this adjusted due date.

Adjustments will be made by the designated payment office for errors

in calculating interest penalties.

(i) For the sole purpose of computing an interest penalty that

might be due the Contractor, Government acceptance shall be deemed

to have occurred constructively on the 7th day (unless otherwise

specified in this contract) after the Contractor delivered the

supplies or performed the services in accordance with the terms and

conditions of the contract, unless there is a disagreement over

quantity, quality, or Contractor compliance with a contract

provision. In the event that actual acceptance occurs within the

constructive acceptance period, the determination of an interest

penalty shall be based on the actual date of acceptance. The

constructive acceptance requirement does not, however, compel

Government officials to accept supplies or services, perform

contract administration functions, or make payment prior to

fulfilling their responsibilities.

(ii) The following periods of time will not be included in the

determination of an interest penalty:

(A) The period taken to notify the Contractor of defects in

invoices submitted to the Government, but this may not exceed 7 days

(3 days for meat, meat food products, or fish; 5 days for perishable

agricultural commodities, dairy products, edible fats or oils, and

food products prepared from edible fats or oils).

(B) The period between the defects notice and resubmission of

the corrected invoice by the Contractor.

in accordance with the EFT clause of this contract.

(iii) Interest penalties will not continue to accrue after the

filing of a claim for such penalties under the clause at 52.233-1,

Disputes, or for more than 1 year. Interest penalties of less than

$1 need not be paid.

(iv) Interest penalties are not required on payment delays due

to disagreement between the Government and the Contractor over the

payment amount or other issues involving contract compliance or on

amounts temporarily withheld or retained in accordance with the

terms of the contract. Claims involving disputes, and any interest

that may be payable, will be resolved in accordance with the clause

at 52.233-1, Disputes.

(6) Prompt payment discounts. An interest penalty also shall be

paid automatically by the designated payment office, without request

from the Contractor, if a discount for prompt payment is taken

improperly. The interest penalty will be calculated as described in

subparagraph (a)(5) of this clause on the amount of discount taken

for the period beginning with the first day after the end of the

discount period through the date when the Contractor is paid.

(7) Additional interest penalty. (i) If this contract was

awarded on or after October 1, 1989, a penalty amount, calculated in

accordance with paragraph (a)(7)(iii) of this clause, shall be paid

in addition to the interest penalty amount if the Contractor--

(A) Is owed an interest penalty of $1 or more;

(B) Is not paid the interest penalty within 10 days after the

date the invoice amount is paid; and

additional penalty payment, in accordance with paragraph (a)(7)(ii)

of this clause, postmarked not later than 40 days after the invoice

amount is paid.

(ii)(A) Contractors shall support written demands for additional

penalty payments with the following data. No additional data shall

be required. Contractors shall--

(1) Specifically assert that late payment interest is due under

a specific invoice, and request payment of all overdue late payment

interest penalty and such additional penalty as may be required;

(2) Attach a copy of the invoice on which the unpaid late

payment interest was due; and

(3) State that payment of the principal has been received,

including the date of receipt.

(B) Demands must be postmarked on or before the 40th day after

payment was made, except that--

(1) If the postmark is illegible or nonexistent, the demand must

have been received and annotated with the date of receipt by the

designated payment office on or before the 40th day after payment

was made; or

(2) If the postmark is illegible or nonexistent and the

designated payment office fails to make the required annotation, the

demand's validity will be determined by the date the Contractor has

placed on the demand; provided such date is no later than the 40th

day after payment was made.

(iii)(A) The additional penalty shall be equal to 100 percent of

any original late payment interest penalty that is due on or after

January 22, 1990, except--

(1) For additional penalties due on or before January 22, 1992,

such penalties shall not exceed $2,500;

(2) After January 22, 1992, the additional penalty shall not

exceed $5,000;

(3) The additional penalty shall never be less than $25; and

(4) No additional penalty is owed if the amount of the

underlying interest penalty is less than $1.

(B) If the interest penalty ceases to accrue in accordance with

the limits stated in paragraph (a)(5)(iii) of this clause, the

amount of the additional penalty shall be calculated on the amount

of interest penalty that would have accrued in the absence of these

limits, subject to the overall limits on the additional penalty

specified in paragraph (a)(7)(iii)(A) of this clause.

penalties, the test shall be the interest penalty due on each

separate payment made for each separate contract. The maximum and

minimum additional penalty shall not be based upon individual

invoices unless the invoices are paid separately. Where payments are

consolidated for disbursing purposes, the maximum and minimum

additional penalty determination shall be made separately for each

contract therein.

(D) The additional penalty does not apply to payments regulated

by other Government regulations (e.g., payments under utility

contracts subject to tariffs and regulation).

(b) Contract financing payments--(1) Due dates for recurring

financing payments. If this contract provides for contract

financing, requests for payment shall be submitted to the designated

billing office as specified in this contract or as directed by the

Contracting Officer. Contract financing payments shall be made on

the (insert day as prescribed by Agency head; if not prescribed,

insert 30th day) day after receipt of a proper contract financing

request by the designated billing office. In the event that an audit

or other review of a specific financing request is required to

ensure compliance with the terms and conditions of the contract, the

designated payment office is not compelled to make payment by the

due date specified.

(2) Due dates for other contract financing. For advance

payments, loans, or other arrangements that do not involve recurring

submissions of contract financing requests, payment shall be made in

accordance with the corresponding contract terms or as directed by

the Contracting Officer.

(3) Interest penalty not applicable. Contract financing payments

shall not be assessed an interest penalty for payment delays.

the clause at 52.213-1, Fast Payment Procedure, payments will be

made within 15 days after the date of receipt of the invoice.

(End of clause)

52.232-26 Prompt Payment for Fixed-Price Architect-Engineer Contracts.

As prescribed in 32.908(a), insert the following clause:

PROMPT PAYMENT FOR FIXED-PRICE ARCHITECT-ENGINEER CONTRACTS (MAY 1997)

Notwithstanding any other payment terms in this contract, the

Government will make invoice payments and contract financing

payments under the terms and conditions specified in this clause.

Payment shall be considered as being made on the day a check is

dated or the date of an electronic funds transfer. Definitions of

pertinent terms are set forth in section 32.902 of the Federal

Acquisition Regulation. All days referred to in this clause are

calendar days, unless otherwise specified. (However, see

subparagraph (a)(3) of this clause concerning payments due on

Saturdays, Sundays, and legal holidays.)

(a) Invoice payments.--(1) Due date. The due date for making

invoice payments shall be--

(i) For work or services completed by the Contractor, the later

of the following two events:

(A) The 30th day after the designated billing office has

received a proper invoice from the Contractor (except as provided in

paragraph (a)(1)(iii) of this clause).

[[Page 12714]]

(B) The 30th day after Government acceptance of the work or

services completed by the Contractor. On a final invoice where the

payment amount is subject to contract settlement actions (e.g.,

release of claims), acceptance shall be deemed to have occurred on

the effective date of the contract settlement.

(ii) The due date for progress payments shall be the 30th day

after Government approval of Contractor estimates of work or

services accomplished.

(iii) If the designated billing office fails to annotate the

invoice or payment request with the actual date of receipt at the

time of receipt, the payment due date shall be the 30th day after

the date of the Contractor's invoice or payment request, provided a

proper invoice or payment request is received and there is no

disagreement over quantity, quality, or Contractor compliance with

contract requirements.

(2) Contractor's invoice. The Contractor shall prepare and

submit invoices to the designated billing office specified in the

contract. A proper invoice must include the items listed in

paragraphs (a)(2)(i) through (a)(2)(viii) of this clause. If the

invoice does not comply with these requirements, it shall be

returned within 7 days after the date the designated billing office

received the invoice, with a statement of the reasons why it is not

a proper invoice. Untimely notification will be taken into account

in computing any interest penalty owed the Contractor in the manner

described in subparagraph (a)(4) of this clause:

(i) Name and address of the Contractor.

(ii) Invoice date. (The Contractor is encouraged to date

invoices as close as possible to the date of mailing or

transmission.)

(iii) Contract number or other authorization for work or

services performed (including order number and contract line item

number).

(iv) Description of work or services performed.

(v) Delivery and payment terms (e.g., prompt payment discount

terms).

(vi) Name and address of Contractor official to whom payment is

to be sent (must be the same as that in the contract or in a proper

notice of assignment).

(vii) Name (where practicable), title, phone number, and mailing

address of person to be notified in the event of a defective

invoice.

(viii) Any other information or documentation required by the

contract.

(ix) While not required, the Contractor is strongly encouraged

to assign an identification number to each invoice.

(3) Interest penalty. An interest penalty shall be paid

automatically by the designated payment office, without request from

the Contractor, if payment is not made by the due date and the

conditions listed in paragraphs (a)(3)(i) through (a)(3)(iii) of

this clause are met, if applicable. However, when the due date falls

on a Saturday, Sunday, or legal holiday when Federal Government

offices are closed and Government business is not expected to be

conducted, payment may be made on the following business day without

incurring a late payment interest penalty.

(i) A proper invoice was received by the designated billing

office.

(ii) A receiving report or other Government documentation

authorizing payment was processed and there was no disagreement over

quantity, quality, Contractor compliance with any contract term or

condition, or requested progress payment amount.

(iii) In the case of a final invoice for any balance of funds

due the Contractor for work or services performed, the amount was

not subject to further contract settlement actions between the

Government and the Contractor.

(4) Computing penalty amount. The interest penalty shall be at