Federal Acquisition Regulation; Electronic Funds Transfer

Federal RegisterJul 6, 1998

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SUMMARY: The Civilian Agency Acquisition Council and the Defense

Acquisition Regulations Council are proposing 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. This is not a major rule under 5 U.S.C. 804.

DATES: Comments should be submitted on or before September 4, 1998 to

be considered in the formulation of a final rule.

ADDRESSES: Interested parties should submit written comments to:

General Services Administration, FAR Secretariat (MVRS), 1800 F Street,

NW, Room 4035, Washington, DC 20405.

E-mail comments submitted over the Internet should be addressed to:

[email protected].

Please cite FAR case 91-118 in all correspondence related to this

case.

FOR FURTHER INFORMATION CONTACT: The FAR Secretariat, 1800 F Street,

NW, Room 4035, Washington, DC 20405, (202) 501-4755 for information

pertaining to status or publication schedules. For clarification of

content, contact Mr. Jeremy Olson, Procurement Analyst, at (202) 501-

3221. Please cite FAR case 91-118.

SUPPLEMENTARY INFORMATION:

A. Background

An interim rule was published in the Federal Register on August 29,

1996 (61 FR 45770) to implement subsection (x)(1) of the Debt

Collection Improvement Act of 1996. The Debt Collection Improvement Act

is chapter 10 of the Omnibus Consolidated Rescissions and

Appropriations Act of 1996 (Public Law 104-134). Subsection (x)(1)

amends 31 U.S.C. 3332 to require, beginning July 26, 1996, that all

Federal payments to a recipient who becomes eligible for that type of

payment shall be made by electronic funds transfer. The statute

provides an exemption for payments to certain recipients, and

stipulates that the Department of the Treasury is responsible for

issuing regulations necessary for carrying out the statute. On July 26,

1996, the Department of the Treasury's Financial Management Service

issued an interim rule (61 FR 39254) which added Part 208 to Title 31,

Code of Federal Regulations, to provide regulations for payments

through EFT.

This proposed FAR rule differs significantly from the interim FAR

rule. One of the main differences is the location where the Government

will receive the contractor's EFT information. The interim rule clauses

at 52.232-33, Mandatory Information for Electronic Funds Transfer

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

Transfer Payment, require the contractor to submit that information

directly to the payment office. The proposed rule revises these two

contract clauses with new language at 52.232-33, Payment by Electronic

Funds Transfer (CCR), and 52.232-34, Payment by Electronic Funds

Transfer (Non-CCR). The new clause at 52.232-33 is prescribed when the

payment office uses the Central Contract Registration (CCR) database as

its source of EFT information. The new clause at 52.232-34 is used when

the contractor submits EFT information to a source other than the CCR

database.

The proposed rule also recognizes that agencies may use differing

administrative approaches in the collection, tracking, and maintenance

of contractor EFT banking information. The two most distinctly

different approaches are those that involve obtaining contractor

banking information prior to award (as a condition of award) as opposed

to obtaining that information after award (as a normal contract

performance duty).

The proposed rule also differs from the interim rule by more

rigidly requiring payment by EFT except for two categories of

exceptions described at FAR 32.1103-1: ``non-banked contractors'' and

``non-EFT system''. In contrast, the interim rule provides the clause

at 52.232-34 for optional submission of EFT information by the

contractor for payments occurring on or before January 1, 1999. The

determination whether a particular payment must be made by EFT is made

by the payment official. In addition, the proposed rule contains three

new clauses at 52.232-X1, Designation of Office for Government Receipt

of EFT Information, 52.232-X2, Payment by Third Party, and 52.232-X3,

Multiple Payment Arrangements. The clause at 52.232-X1 is prescribed

when the Government has designated an office other than the payment

office to receive the contractor's EFT information. The clause at

52.232-X2 is prescribed when payment on a written contract is made by a

third party on behalf of the Government (e.g., Governmentwide

commercial purchase card). The clause at 52.232-X3 is prescribed when

the contract or agreement provides for the use of delivery orders and

provides for multiple types of payment arrangements. The solicitation

provision at 52.232-X4, Submission of EFT Information with Offer, is

prescribed when the Government has determined that EFT banking

information is to be submitted prior to award, along with the offer.

Public comments were received from sixteen sources. All comments

were considered in the development of this proposed rule.

B. Regulatory Flexibility Act

The rule may have a significant economic impact on a substantial

number of small entities within the meaning of the Regulatory

Flexibility Act, 5 U.S.C. 601 et seq. because the majority of small

entities will have payment made by EFT under their contracts. An

Initial Regulatory Flexibility Analysis (IRFA) was performed in

conjunction with the interim rule published at 61 FR 45770, August 29,

1996, and a revised Initial Regulatory Flexibility Analysis has been

performed in conjunction with this proposed rule. The analysis is

summarized as follows:

The rule will apply, prior to January 2, 1999, to all small

businesses who enter into contracts with the Federal Government

except for two categories: ``Non-banked'' contractors'' and ``Non-

EFT system''. ``Non-banked contractors'' are those contractors who

do not have an account at a domestic United States financial

institution and do not have an authorized payment agent. These

contractors are waived from the requirement to be paid by EFT, upon

submission of a certificate. Contractors are also exempt from

receiving payment by EFT if agencies are unable to make payment

because of system limitations. This ``non-EFT system'' category

consists of contracts (1) in which the cognizant payment offices are

not capable of making payment through EFT; (2) that are paid in

other than U.S. dollars; (3) that are classified; (4) that are

awarded by a deployed

[[Page 36523]]

contracting officer in the course of military operations; and (5)

where payments are received by, or on behalf of, the contractor

outside the United States or Puerto Rico. On and after January 2,

1999, however, payments under all contracts, subject to implementing

regulations of the Secretary of the Treasury, are required to be

made by EFT. To date no supporting data has been collected,

therefore there is no estimate available of the number of small

businesses that will be subject to the rule.

A copy of the IRFA has been submitted to the Chief Counsel for

Advocacy of the Small Business Administration. A copy of the IRFA may

be obtained from the FAR Secretariat. Comments from small entities

concerning the affected FAR subparts shall also be considered in

accordance with Section 610 of the Act. Such comments must be submitted

separately and cite FAR case 91-118 in correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act (Public Law 96-511) applies because the

proposed rule contains information collection requirements. The Office

of Management and Budget has approved an information collection

concerning Electronic Funds Transfer (9000-0144) through August 31,

1999, based on the requirements in the interim rule for contractors to

provide EFT information for each contract award. The proposed rule

decreases the collection requirements since the rule permits

contractors to provide EFT information to the CCR database on an annual

basis, rather than per contract award.

Annual Reporting Burden: Public reporting burden for this

collection of information is estimated to average .5 hours per

response, including the time for reviewing instruction, searching

existing data sources, gathering and maintaining the data needed, and

completing and reviewing the collection of information.

The annual reporting burden is estimated as follows: Respondents:

14,000; Responses per respondent: 10; Total annual responses: 140,000;

Preparation hours per response: .5; and Total response burden hours:

70,000.

D. Request for Comments Regarding Paperwork Burden

Members of the public are invited to comment on the recordkeeping

and information collection requirements and estimates set forth above.

Please send comments to: Office of Information and Regulatory Affairs,

Office of Management and Budget, Attention: Mr. Peter N. Weiss, FAR

Desk Officer, New Executive Office Building, Room 10102, 725 17th

Street, NW, Washington, DC 20503.

Also send a copy of any comments to the FAR Secretariat at the

address shown under ADDRESSES. Please cite FAR case 91-118, Electronic

Funds Transfer, in all correspondence related to this estimate.

List of Subjects in 48 CFR Parts 13, 16, 32 and 52

Government procurement.

Dated: June 23, 1998.

Edward C. Loeb,

Director, Federal Acquisition Policy Division.

Therefore, it is proposed that 48 CFR Parts 13, 16, 32 and 52 be

amended as set forth below:

1. The authority citation for 48 CFR Parts 13, 16, 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 13--SIMPLIFIED ACQUISITION PROCEDURES

2. Section 13.301 is amended in paragraph (c)(3) by adding a

sentence at the end to read as follows:

13.301 Governmentwide commercial purchase card.

* * * * *

(3) * * * See 32.1105(d) for instructions for use of the

appropriate clause when payment under a written contract will be made

through use of the card.

3. Section 13.302-1 is amended by revising paragraph (e) to read as

follows:

13.302-1 General.

* * * * *

(e) In accordance with 31 U.S.C. 3332, electronic funds transfer

(EFT) is required for payments except as provided in 32.1103-1. See

Subpart 32.11 for instructions for use of the appropriate clause in

purchase orders. When obtaining verbal quotes, the contracting officer

shall inform the quoter of the EFT clause that will be in any resulting

purchase order.

PART 16--TYPES OF CONTRACTS

4. Section 16.505 is amended in paragraph (a) by redesignating

paragraph (a)(6)(viii) as (a)(6)(ix) and by adding a new (a)(6)(viii)

to read as follows:

16.505 Ordering.

(a) * * *

(6) * * *

(viii) Method of payment and payment office, if not specified in

the contract (see 32.1105(e)).

* * * * *

PART 32--CONTRACT FINANCING

5. Subpart 32.11 is revised to read as follows:

Subpart 32.11--Electronic Funds Transfer

Sec.

32.1100 Scope of subpart.

32.1101 Statutory requirements.

32.1102 Definitions.

32.1103 Policy.

32.1103-1 Applicability.

32.1103-2 Protection of EFT information.

32.1103-3 Assignment of claims.

32.1103-4 EFT mechanisms.

32.1103-5 Government inability to make EFT payment.

32.1103-6 Payment information.

32.1103-7 EFT for contracts awarded from solicitations issued prior

to July 26, 1996.

32.1104 Payment by Governmentwide commercial purchase card.

32.1105 Solicitation provision and contract clauses.

Subpart 32.11--Electronic Fund Transfer

32.1100 Scope of subpart.

This subpart provides policy and procedures for providing financing

and delivery payments to contractors by electronic funds transfer

(EFT).

32.1101 Statutory requirements.

For contracts resulting from solicitations issued on or after July

26, 1996, 31 U.S.C. 3332, as implemented by Department of the Treasury

regulations, requires payment be made by EFT in most situations (see

32.1103-1). For all contracts, regardless of solicitation date, 31

U.S.C. 3332 requires, subject to implementing regulations of the

Secretary of the Treasury, that all payments made after January 1,

1999, be made by EFT.

32.1102 Definitions.

EFT information means information necessary for making a payment by

electronic funds transfer through specified EFT mechanisms.

Electronic Funds Transfer (EFT) means any transfer of funds, other

than a transaction originated by cash, check, or similar paper

instrument, that is initiated through an electronic terminal,

telephone, computer, or magnetic tape, for the purpose of ordering,

instructing, or authorizing a financial institution to debit or credit

an account. The term includes Automated Clearing House transfers,

Federal Reserve Wire

[[Page 36524]]

transfers, transfers made at automatic teller machines, and point-of-

sale terminals (e.g., Governmentwide commercial purchase cards).

Governmentwide commercial purchase card, as used in this part,

means a card that is similar in nature to a commercial credit card that

is used to make financing and delivery payments for supplies and

services. The purchase card is an EFT method and it may be used as a

means to meet the requirement to pay by EFT, to the extent that

purchase card limits do not preclude such payments.

Payment information means the payment advice provided by the

Government to the contractor that identifies what the payment is for,

any computations or adjustments made by the Government, and any

information required by the Prompt Payment Act.

32.1103 Policy.

Except as authorized by this subpart or otherwise authorized in

accordance with Treasury regulations at 31 CFR 208, all types of

contract payments shall be made by an EFT method.

32.1103-1 Applicability.

Pursuant to 31 U.S.C. 3332, payment through EFT is the required

method of contract payment. However, certain classes of contracts have

been authorized limited exceptions from the requirement to pay by EFT.

(a) Non-Banked Contractors. Through January 1, 1999, contractors

that do not have an account at a domestic United States financial

institution and do not have an authorized payment agent are waived from

the requirement to be paid by EFT, upon submission of a certification

(see paragraph (b) of the EFT clauses at 52.232-33 and 52.232-34).

(b) Non-EFT System. (1) If the Government office making payment

under the contract is not capable of making payment through EFT,

payment by other than EFT is authorized, subject to the requirements of

31 CFR 208.3(c) (see 32.1103-5).

(2) Except as provided in 32.1103-4(b), if the payment is to be

received by or on behalf of the contractor, outside the United States

and Puerto Rico, payment shall be made by other than EFT.

(3) Except as provided in 32.1103-4(b), if a contract is paid in

other than United States currency, payment shall be made by other than

EFT.

(4) If a contract is a classified contract (see 4.401), the

contract 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.

(5) If a contract is awarded by a deployed contracting officer in

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

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

contract is awarded by any contracting officer in the conduct of

emergency operations, such as responses to natural disasters or

national or civil emergencies, the contract shall provide for payment

by other than EFT where--

(i) EFT is not known to be possible; or

(ii) EFT payment would not support the objectives of the operation.

32.1103-2 Protection of EFT information.

The Government shall protect against improper disclosure of

contractors' EFT information.

32.1103-3 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 that 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.

32.1103-4 EFT mechanisms.

(a) Domestic EFT. The EFT clauses at 52.232-33 and 52.232-34 are

designed for use with the domestic United States banking system, using

United States currency, and only the specified mechanisms of EFT (U.S.

Automated Clearing House, and Federal Reserve Wire Transfer System).

The head of the agency shall not authorize the use of any other EFT

mechanism for domestic EFT without the prior concurrence of the office

or agency responsible for making payments.

(b) Non-Domestic EFT Mechanisms and Non-United States Currency. For

payments received by or on behalf of the contractor outside the United

States and Puerto Rico or for contracts paid in non-United States

currency, payment shall be made by other than EFT. However, if the head

of an agency determines that a particular non-domestic EFT mechanism is

appropriate and safe for use outside the domestic United States, or for

payments of non-United States currency, the head of the agency may

authorize appropriate use of EFT. Any such determination shall not be

made effective without the prior concurrence of the office or agency

responsible for making payments.

32.1103-5 Government inability to make EFT payment.

(a) If the Government payment office is not capable of making

payment by EFT, the Government is relieved of the requirement to pay by

EFT if the agency complies with 31 CFR 208.3(c), which requires written

notice and submittal of an implementation plan to the Department of the

Treasury, Financial Management Service.

(b) If the payment office does not have or loses the ability to

release payment by EFT under a contract that requires payment by EFT,

to the extent authorized by 31 CFR 208, the payment office shall make

necessary payments pursuant to paragraph (a)(2) of the clause at either

52.232-33 or 52.232-34 until such time as it can make EFT payments.

32.1103-6 Payment information.

The payment or disbursing office shall forward to the contractor

available payment information that is suitable for transmission as of

the date of release of the electronic funds transfer instruction to the

Federal Reserve System.

32.1103-7 EFT for contracts awarded from solicitations issued prior to

July 26, 1996.

(a) Prior to January 2, 1999, payment by EFT is not required on

contracts resulting from solicitations issued prior to July 26, 1996.

However, while not statutorily required, it is nevertheless Federal

policy to maximize the use of EFT. For contracts to be paid by payment

offices capable of making EFT payments, the contracting officer is

encouraged to use EFT, whenever reasonable, in any contract resulting

from a pre-July 26, 1996, solicitation for which the contractor is

willing to accept payment by EFT. The contractor's willingness to

accept payment by EFT constitutes sufficient consideration for

modification of existing contracts to incorporate EFT.

(b) Regardless of the solicitation date of the contract, all

payments to be made after January 1, 1999, shall be made by EFT, to the

extent required by the implementing regulations of the Secretary of the

Treasury, whether or not an EFT clause is included in the contract.

32.1104 Payment by Governmentwide commercial purchase card.

A Governmentwide commercial purchase card charge authorizes the

Third Party (e.g., financial institution) that issued the purchase card

to make immediate payment to the contractor.

[[Page 36525]]

That payment is reimbursed at a later date by a subsequent payment by

the Government to the Third Party.

(a) The clause at 52.232-X2, Payment by Third Party, governs when a

contractor submits a charge against the purchase card for contract

payment. The clause provides that the contractor shall make such

payment requests by a charge to a Government account with the Third

Party at the time the payment clause(s) of the contract authorizes the

contractor to submit a request for payment and for the amount due in

accordance with the terms of the contract. To the extent that such a

payment would otherwise be approved, the charge against the purchase

card should not be disputed when the charge is reported to the

Government by the Third Party. To the extent that such payment would

otherwise not have been approved, an authorized individual (see 1.603-

3(b)) shall take action to remove the charge, such as by disputing the

charge with the Third Party or by requesting that the contractor credit

the charge back to the Government under the contract.

(b) Written contracts to be paid by purchase card should include

the clause 52.232-X2, Payment by Third Party, as prescribed by

32.1105(d). However, payment by a purchase card may also be made under

a contract that does not contain the clause to the extent the

contractor agrees to accept that method of payment.

the Third Party and the particular purchase card to be used be

identified elsewhere in the contract. The purchase card account number

should not be included in the contract, but should be separately

provided.

32.1105 Solicitation provision and contract clauses.

(a) Unless payment will be made exclusively through use of the

Governmentwide commercial purchase card or other third party payment

arrangement (see 13.301 and paragraph (d) of this section) or an

exception listed in 32.1103-1(b)(2) through (5) applies--

(1) The contracting officer shall insert the clause at 52.232-33,

Payment by Electronic Funds Transfer (CCR), in all solicitations and

contracts if the payment office uses the CCR database as its source of

EFT information. The contracting officer also shall insert this clause

if the payment office does not currently have the ability to make

payment by EFT, but will use the CCR database as its source of EFT

information when it begins making payments by EFT.

(2)(i) The contracting officer shall insert the clause at 52.232-

34, Payment by Electronic Funds Transfer (Non-CCR), in all other

solicitations and contracts. The contracting officer also shall insert

this clause if the payment office does not currently have the ability

to make payment by EFT, but will use a source other than the CCR

database for EFT information when it begins making payments by EFT.

(ii)(A) If permitted by agency procedures, the contracting officer

may insert in paragraph (c)(1) of the clause, a particular time after

award, such as a fixed number of days. However, in no event shall the

time period be later than 15 days prior to submission of the first

request for payment.

(B) If no agency procedures are prescribed, the time period

inserted in paragraph (c)(1) of the clause shall be ``no later than 15

days prior to submission of the first request for payment.''

(b) If the head of the agency has made a determination in

accordance with 32.1103-4(b) to use a nondomestic EFT mechanism, the

contracting officer shall insert in solicitations and contracts a

clause substantially the same as 52.232-33 or 52.232-34 that clearly

addresses the non-domestic EFT mechanism.

office in accordance with agency procedures, the contracting officer

shall insert in solicitations and contracts the clause at 52.232-X1,

Designation of Office for Government Receipt of EFT Information, or a

clause substantially the same as 52.232-X1 that clearly informs the

contractor of where to send the EFT information.

(d) If payment under a written contract will be made by a charge to

a Government account with a third party such as a Governmentwide

commercial purchase card, then the contracting officer shall insert the

clause at 52.232-X2, Payment by Third Party, in solicitations and

contracts. Payment by a purchase card may also be made under a contract

that does not contain the clause at 52.232-X2, to the extent the

contractor agrees to accept that method of payment.

(e) If the contract or agreement provides for the use of delivery

orders, and provides for a choice of payment methods for individual

orders, the contracting officer shall insert, in the solicitation and

contract or agreement, the clause at 52.232-X3, Multiple Payment

Arrangements, and, to the extent they are applicable, the clauses at--

(1) 52.232-33, Payment by Electronic Funds Transfer (CCR);

(2) 52.232-34, Payment by Electronic Funds Transfer (Non-CCR); and

(3) 52.232-X2, Payment by Third Party.

(f) 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.

(g) If the solicitation contains the clause at 52.232-34, Payment

by Electronic Funds Transfer (Non-CCR), and an offeror is required to

submit EFT information prior to award, the contracting officer shall

insert in the solicitation the provision at 52.232-X4, Submission of

Electronic Funds Transfer Information with Offer, or a provision

substantially the same.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

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

third sentence in paragraph (i) to read as follows:

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

* * * * *

Contract Terms and Conditions--Commercial Items (Date)

* * * * *

(i) Payment. * * * If the Government makes payment by Electronic

Funds Transfer (EFT), see 52.212-5 for the appropriate EFT clause. * *

* * * * *

7. Section 52.212-5 is amended by revising the clause date; and in

paragraph (b) by redesignating (b)(16) and (17) as (19) and (20),

respectively, and by adding new paragraphs (16), (17), and (18) to read

as follows:

52.212-5 Contract Terms and Conditions Required To Implement Statutes

or Executive Orders--Commercial Items.

* * * * *

Contract Terms and Conditions Required To Implement Statutes or

Executive Orders--Commercial Items (Date)

* * * * *

(b) * * *

______ (16) 52.232-33, Payment by Electronic Funds Transfer

(CCR) (31 U.S.C. 3332).

______ (17) 52.232-34, Payment by Electronic Funds Transfer

(Non-CCR) (31 U.S.C. 3332).

______ (18) 52.232-X2, Payment by Third Party (31 U.S.C. 3332).

* * * * *

8. Section 52.213-4 is amended by revising the clause date; by

removingparagraph (a)(2)(vi) and redesignating paragraphs (a)(2)(vii)

through (a)(2)(ix) as (a)(2)(vi) through

[[Page 36526]]

(a)(2)(viii); and by adding paragraphs (b)(1)(ix) and (b)(1)(x) to read

as follows:

52.213-4 Terms and Conditions--Simplified Acquisitions (Other Than

Commercial Items).

Terms and Conditions--Simplified Acquisition (Other Than Commercial

Items) (Date)

* * * * *

(b) * * *

(1) * * *

* * * * *

(ix) 52.232-33, Payment by Electronic Funds Transfer (CCR)

(Date). (Applies when payment will be made by EFT and the payment

office uses the Central Contractor Registration database as its

source of EFT information.)

(x) 52.232-34, Payment by Electronic Funds Transfer (Non-CCR)

(Date). (Applies when payment will be made by EFT and the payment

office does not use the Central Contractor Registration database as

its source of EFT information.)

* * * * *

9. Sections 52.232-33 and 52.232-34 are revised and new sections

52.232-X1 through 52.232-X4 are added to read as follows:

52.232-33 Payment by Electronic Funds Transfer (CCR).

As prescribed in 32.1105(a)(1), insert the following clause:

Payment by Electronic Funds Transfer (CCR) (Date)

(a) Method of payment. (1) All payments by the Government under

this contract shall be made by electronic funds transfer (EFT),

except as provided in paragraph (a)(2) or (b) of this clause. As

used in this clause, the term EFT refers to the funds transfer and

may also include the payment information transfer.

(2) In the event the Government is unable to release one or more

payments by EFT, the Contractor agrees to either--

(i) Accept payment by check or some other mutually agreeable

method of payment; or

(ii) Request the Government to extend the payment due date until

such time as the Government can make payment by EFT (but see

paragraph (e) of this clause).

(b) Alternative contractor certification. If the Contractor

certifies in writing, as part of its registration with the Central

Contractor Registration (CCR) database (FAR 4.503), that it does not

have an account with a financial institution and does not have an

authorized payment agent, payment shall be made by check to the

remittance address contained in the CCR database. All contractor

certifications will expire on January 1, 1999.

paragraph (b) of this clause, the Government shall make payment to

the Contractor using the EFT information contained in the CCR

database. In the event that the EFT information changes, the

Contractor shall be responsible for providing the updated

information to the CCR database.

(d) Mechanisms for EFT payment. 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.

(e) Suspension of Payment. If the Contractor's EFT information

in the CCR database is incorrect and the Contractor has not

certified under paragraph (b) of this clause, then the Government

need not make payment to the Contractor under this contract until

correct EFT information or certification is entered into the CCR

database; and any invoice or contract financing request shall be

deemed not to be a proper invoice for the purpose of prompt payment

under this contract. The prompt payment terms of the contract

regarding notice of an improper invoice and delays in accrual of

interest penalties apply.

(f) Contractor EFT arrangements. If the Contractor has

identified multiple payment receiving points (i.e., more than one

remittance address and/or EFT information set) in the CCR database,

and the Contractor has not notified the Government of the payment

receiving point applicable to this contract, the Government shall

make payment to the first payment receiving point (EFT information

set or remittance address as applicable) listed in the CCR database.

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

uncompleted or erroneous transfer occurs because the Government

failed to use the Contractor's 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 the

Contractor's EFT information was incorrect, or was revised within 30

days 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 shall not make payment, and the provisions of

paragraph (e) shall apply.

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

been made in a timely manner in accordance with the prompt payment

terms of this contract if, in the EFT payment transaction

instruction released 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.

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

proceeds of this contract as provided for in the assignment of

claims terms of this contract, the Contractor shall require as a

condition of any such assignment, that the assignee shall register

in the CCR database and shall be paid by EFT in accordance with the

terms of this clause. In all respects, the requirements of this

clause shall apply to the assignee as if it were the Contractor. EFT

information that 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) Liability for change of EFT information by financial agent.

The Government is not liable for errors resulting from changes to

EFT information made by the Contractor's financial agent.

(k) Payment information. The payment or disbursing office shall

forward to the Contractor available payment information that is

suitable for transmission as of the date of release of the

electronic funds transfer instruction to the Federal Reserve System.

The Government may request the Contractor to designate a desired

format and method(s) for delivery of payment information from a list

of formats and methods the payment office is capable of executing.

However, the Government does not guarantee that any particular

format or method of delivery is available at any particular payment

office and retains the latitude to use the format and delivery

method most convenient to the Government. If the Contractor has

certified in accordance with paragraph (b) of this clause or if the

Government otherwise makes payment by check in accordance with

paragraph (a) of this clause, the Government shall mail the payment

information to the remittance address contained in the CCR database.

(End of clause)

52.232-34 Payment by Electronic Funds Transfer (Non-CCR).

As prescribed in 32.1105(a)(2), insert the following clause:

Payment by Electronic Funds Transfer (Non-CCR) (Date)

(a) Method of Payment. (1) All payments by the Government under

this contract shall be made by electronic funds transfer (EFT),

except as provided in paragraph (a)(2) or (b) of this clause. As

used in this clause, the term EFT refers to the funds transfer and

may also include the payment information transfer.

(2) In the event the Government is unable to release one or more

payments by EFT, the Contractor agrees to either--

(i) Accept payment by check or some other mutually agreeable

method of payment; or

(ii) Request the Government to extend the payment due dates

until such time as the Government makes payment by EFT (but see

paragraph (e) of this clause).

(b) Alternative Contractor Certification. If the Contractor

certifies in writing to the designated office (see paragraph (c)(1)

of this clause) that is does not have an account with a financial

institution and does not have an authorized payment agent, payment

shall be made by check to the remittance address specified in this

contract and the Contractor need not provide EFT information. All

contractor certifications will expire on January 1, 1999. For any

payments to be made after January 1, 1999, the Contractor

[[Page 36527]]

shall provide EFT information as described in paragraph (k) of this

clause and payment shall be made by EFT.

Except as provided in paragraph (b) of this clause, the Contractor

is required, as a condition to any invoice or contract financing

payment under this contract, to provide the Government with the

information required to make payment by EFT (see paragraph (k) of

this clause). The Contractor shall provide this information directly

to the office designated in this contract to receive that

information (hereafter: ``designated office'') by [Insert date, days

after award, or days before first request as prescribed by Agency

head; if not prescribed, insert ``no later than 15 days prior to

submission of the first request for payment'']. If not otherwise

specified in this contract, the payment office is the designated

office for receipt of the Contractor's EFT information. If more than

one designated 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 updated information to the designated office(s).

(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

designated office. However, EFT information supplied to a designated

office shall be applicable only to contracts which identify that

designated office as the office to receive EFT information for that

contract.

(d) Mechanisms for EFT Payment. 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.

(e) Suspension of Payment. (1) The Government is not required to

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

designated 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 or

certificate, any invoice or contract financing request shall be

deemed not to be a proper invoice for the purpose of prompt payment

under this contract. The prompt payment terms of the contract

regarding notice of an improper invoice and delays in accrual of

interest penalties apply.

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

EFT information, the Government shall begin using the changed EFT

information no later than 30 days after its receipt to the extent

payment is made by EFT. However, the Contractor may request that no

further payments be made until the updated EFT information is

implemented by the payment office. If such suspension would result

in a late payment under the prompt payment terms 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) Liability for uncompleted or erroneous transfers. (1) If an

uncompleted or erroneous transfer occurs because the Government

failed to use the Contractor's 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 the

Contractor's EFT information was incorrect, or was revised within 30

days 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 shall not make payment and the provisions of

paragraph (e) shall apply.

(g) EFT and prompt payment. A payment shall be deemed to have

been made in a timely manner in accordance with the prompt payment

terms of this contract if, in the EFT payment transaction

instruction released 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.

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

proceeds of this contract as provided for in the assignment of

claims terms of this contract, the Contractor shall require as a

condition of any such assignment, that the assignee shall provide

the EFT information required by paragraph (k) of this clause to the

designated office, and shall be paid by EFT in accordance with the

terms of this clause. In all respects, the requirements of this

clause shall apply to the assignee as if it were the Contractor. EFT

information that 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.

(i) Liability for change of EFT information by financial agent.

The Government is not liable for errors resulting from changes to

EFT information provided by the Contractor's financial agent.

(j) Payment information. The payment or disbursing office shall