FAR sections 52.232-26 and 52.232-27

52.232-26

FEDERAL ACQUISITION REGULATION

30th day after the designated billing office receives a proper
invoice; and
(3) The contractor shall submit invoices for interim payments in accordance with paragraph (a) of FAR 52.216-7,
Allowable Cost and Payment. If the invoice does not comply
with contract requirements, it will be returned within 7 days
after the date the designated billing office received the invoice.

52.232-26 Prompt Payment for Fixed-Price ArchitectEngineer Contracts.
As prescribed in 32.908(a), insert the following clause:
PROMPT PAYMENT FOR FIXED-PRICE ARCHITECTENGINEER CONTRACTS (OCT 2008)
Notwithstanding any other payment terms in this contract,
the Government will make invoice payments under the terms
and conditions specified in this clause. The Government considers payment 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 sections 2.101, 32.001, and 32.902
of the Federal Acquisition Regulation. All days referred to in
this clause are calendar days, unless otherwise specified.
(However, see paragraph (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 is—
(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 receives a proper invoice from the Contractor (except
as provided in paragraph (a)(1)(iii) of this clause).
(B) The 30th day after Government acceptance of
the work or services completed by the Contractor. For a final
invoice, when the payment amount is subject to contract settlement actions (e.g., release of claims), acceptance is deemed
to occur on the effective date of the settlement.
(ii) The due date for progress payments is 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 is the 30th day
after the date of the Contractor’s invoice or payment request,
provided the designated billing office receives a proper
invoice or payment request 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)(x) of this clause. If the
invoice does not comply with these requirements, the designated billing office will return it within 7 days after receipt,
with the reasons why it is not a proper invoice. When comput52.2-220

(FAC 2005–27)

ing any interest penalty owed the Contractor, the Government
will take into account if the Government notifies the Contractor of an improper invoice in an untimely manner.
(i) Name and address of the Contractor.
(ii) Invoice date and invoice number. (The Contractor should 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., discount for
prompt payment 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 notify in the event of a defective invoice.
(viii) Taxpayer Identification Number (TIN). The
Contractor shall include its TIN on the invoice only if required
elsewhere in this contract.
(ix) Electronic funds transfer (EFT) banking
information.
(A) The Contractor shall include EFT banking
information on the invoice only if required elsewhere in this
contract.
(B) If EFT banking information is not required to
be on the invoice, in order for the invoice to be a proper
invoice, the Contractor shall have submitted correct EFT
banking information in accordance with the applicable solicitation provision (e.g., 52.232-38, Submission of Electronic
Funds Transfer Information with Offer), contract clause
(e.g., 52.232-33, Payment by Electronic Funds Transfer—
Central Contractor Registration, or 52.232-34, Payment by
Electronic Funds Transfer—Other Than Central Contractor
Registration), or applicable agency procedures.
(C) EFT banking information is not required if the
Government waived the requirement to pay by EFT.
(x) Any other information or documentation
required by the contract.
(3) Interest penalty. The designated payment office will
pay an interest penalty automatically, 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, the designated
payment office may make payment on the following working
day without incurring a late payment interest penalty.
(i) The designated billing office received a proper
invoice.
(ii) The Government processed a receiving report or
other Government documentation authorizing payment and

FAC 2005–27 OCTOBER 17, 2008
SUBPART 52.2—TEXT OF PROVISIONS AND CLAUSES
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 Government will
compute the interest penalty in accordance with the Office of
Management and Budget prompt payment regulations at
5 CFR Part 1315.
(i) For the sole purpose of computing an interest penalty that might be due the Contractor, Government acceptance
or approval is deemed to occur constructively as shown in
paragraphs (a)(4)(i)(A) and (B) of this clause. If actual acceptance or approval occurs within the constructive acceptance or
approval period, the Government will base the determination
of an interest penalty on the actual date of acceptance or
approval. Constructive acceptance or constructive approval
requirements do not apply if there is a disagreement over
quantity, quality, Contractor compliance with a contract provision, or requested progress payment amounts. These
requirements also 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.
(A) For work or services completed by the Contractor, Government acceptance is deemed to occur constructively on the 7th day after the Contractor completes the work
or services in accordance with the terms and conditions of the
contract.
(B) For progress payments, Government approval
is deemed to occur on the 7th day after the designated billing
office receives the Contractor estimates.
(ii) The prompt payment regulations at
5 CFR 1315.10(c) do not require the Government to pay interest penalties if payment delays are 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. The Government and the Contractor
shall resolve claims involving disputes, and any interest that
may be payable in accordance with the clause at
FAR 52.233-1, Disputes.
(5) Discounts for prompt payment. The designated payment office will pay an interest penalty automatically, without
request from the Contractor, if the Government takes a discount for prompt payment improperly. The Government will
calculate the interest penalty in accordance with 5 CFR
Part 1315.
(6) Additional interest penalty. (i) The designated payment office will pay a penalty amount, calculated in accor-

52.232-26
dance with the prompt payment regulations at 5 CFR
Part 1315, in addition to the interest penalty amount only if—
(A) The Government owes an interest penalty of
$1 or more;
(B) The designated payment office does not pay
the interest penalty within 10 days after the date the invoice
amount is paid; and
(C) The contractor makes a written demand to the
designated payment office for additional penalty payment, in
accordance with paragraph (a)(6)(ii) of this clause, postmarked not later than 40 days after the date the invoice
amount is paid.
(ii)(A) The Contractor shall support written demands
for additional penalty payments with the following data. The
Government will not request any additional data. The Contractor 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 is due; and
(3) State that payment of the principal has been
received, including the date of receipt.
(B) If there is no postmark or the postmark is
illegible—
(1) The designated payment office that
receives the demand will annotate it with the date of receipt,
provided the demand is received on or before the 40th day
after payment was made; or
(2) If the designated payment office fails to
make the required annotation, the Government will determine
the demand’s validity based on the date the Contractor has
placed on the demand, provided such date is no later than the
40th day after payment was made.
(iii) 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. If this contract provides
for contract financing, the Government will make contract
financing payments in accordance with the applicable contract financing clause.
(c) Overpayments. If the Contractor becomes aware of a
duplicate contract financing or invoice payment or that the
Government has otherwise overpaid on a contract financing or
invoice payment, the Contractor shall—
(1) Remit the overpayment amount to the payment
office cited in the contract along with a description of the
overpayment including the—
(i) Circumstances of the overpayment (e.g., duplicate payment, erroneous payment, liquidation errors, date(s)
of overpayment);
52.2-221

52.232-27

FEDERAL ACQUISITION REGULATION

(ii) Affected contract number and delivery order
number if applicable;
(iii) Affected contract line item or subline item, if
applicable; and
(iv) Contractor point of contact.
(2) Provide a copy of the remittance and supporting documentation to the Contracting Officer.
(End of clause)
52.232-27 Prompt Payment for Construction Contracts.
As prescribed in 32.908(b), insert the following clause:
PROMPT PAYMENT FOR CONSTRUCTION CONTRACTS
(OCT 2008)
Notwithstanding any other payment terms in this contract,
the Government will make invoice payments under the terms
and conditions specified in this clause. The Government considers payment 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 sections 2.101, 32.001, and 32.902
of the Federal Acquisition Regulation. All days referred to in
this clause are calendar days, unless otherwise specified.
(However, see paragraph (a)(3) concerning payments due on
Saturdays, Sundays, and legal holidays.)
(a) Invoice payments— (1) Types of invoice payments. For
purposes of this clause, there are several types of invoice payments that may occur under this contract, as follows:
(i) Progress payments, if provided for elsewhere in
this contract, based on Contracting Officer approval of the
estimated amount and value of work or services performed,
including payments for reaching milestones in any project.
(A) The due date for making such payments is
14 days after the designated billing office receives a proper
payment request. 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 is the 14th day after the
date of the Contractor’s payment request, provided the designated billing office receives a proper payment request and
there is no disagreement over quantity, quality, or Contractor
compliance with contract requirements.
(B) 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, is as specified in the contract or, if not specified,
30 days after approval by the Contracting Officer for release
to the Contractor.
(ii) Final payments based on completion and acceptance of all work and presentation of release of all claims
against the Government arising by virtue of the contract, 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).
52.2-222

(FAC 2005–27)

(A) The due date for making such payments is the
later of the following two events:
(1) The 30th day after the designated billing
office receives a proper invoice from the Contractor.
(2) The 30th day after Government acceptance
of the work or services completed by the Contractor. For a
final invoice when the payment amount is subject to contract
settlement actions (e.g., release of claims), acceptance is
deemed to occur on the effective date of the contract
settlement.
(B) If the designated billing office fails to annotate the invoice with the date of actual receipt at the time of
receipt, the invoice payment due date is the 30th day after the
date of the Contractor’s invoice, provided the designated billing office receives a proper invoice 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)(xi) of this clause. If the
invoice does not comply with these requirements, the designated billing office must return it within 7 days after receipt,
with the reasons why it is not a proper invoice. When computing any interest penalty owed the Contractor, the Government
will take into account if the Government notifies the Contractor of an improper invoice in an untimely manner.
(i) Name and address of the Contractor.
(ii) Invoice date and invoice number. (The Contractor should 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., discount for
prompt payment 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 notify in the event of a defective invoice.
(viii) For payments described in paragraph (a)(1)(i)
of this clause, substantiation of the amounts requested and
certification in accordance with the requirements of the clause
at 52.232-5, Payments Under Fixed-Price Construction
Contracts.
(ix) Taxpayer Identification Number (TIN). The
Contractor shall include its TIN on the invoice only if required
elsewhere in this contract.
(x) Electronic funds transfer (EFT) banking
information.

SUBPART 52.2—TEXT OF PROVISIONS AND CLAUSES
(A) The Contractor shall include EFT banking
information on the invoice only if required elsewhere in this
contract.
(B) If EFT banking information is not required to
be on the invoice, in order for the invoice to be a proper
invoice, the Contractor shall have submitted correct EFT
banking information in accordance with the applicable solicitation provision (e.g., 52.232-38, Submission of Electronic
Funds Transfer Information with Offer), contract clause
(e.g., 52.232-33, Payment by Electronic Funds Transfer—
Central Contractor Registration, or 52.232-34, Payment by
Electronic Funds Transfer—Other Than Central Contractor
Registration), or applicable agency procedures.
(C) EFT banking information is not required if the
Government waived the requirement to pay by EFT.
(xi) Any other information or documentation
required by the contract.
(3) Interest penalty. The designated payment office will
pay an interest penalty automatically, 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, the designated
payment office may make payment on the following working
day without incurring a late payment interest penalty.
(i) The designated billing office received a proper
invoice.
(ii) The Government processed a receiving report or
other Government documentation authorizing payment 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 Government will
compute the interest penalty in accordance with the Office of
Management and Budget prompt payment regulations at
5 CFR Part 1315.
(i) For the sole purpose of computing an interest penalty that might be due the Contractor for payments described
in paragraph (a)(1)(ii) of this clause, Government acceptance
or approval is deemed to occur constructively on the 7th day
after the Contractor has completed the work or services in
accordance with the terms and conditions of the contract. If
actual acceptance or approval occurs within the constructive
acceptance or approval period, the Government will base the
determination of an interest penalty on the actual date of
acceptance or approval. Constructive acceptance or constructive approval requirements do not apply if there is a disagreement over quantity, quality, or Contractor compliance with a
contract provision. These requirements also do not compel

52.232-27
Government officials to accept work or services, approve
Contractor estimates, perform contract administration functions, or make payment prior to fulfilling their
responsibilities.
(ii) The prompt payment regulations at
5 CFR 1315.10(c) do not require the Government to pay interest penalties if payment delays are 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. The Government and the Contractor
shall resolve claims involving disputes, and any interest that
may be payable in accordance with the clause at
FAR 52.233-1, Disputes.
(5) Discounts for prompt payment. The designated payment office will pay an interest penalty automatically, without
request from the Contractor, if the Government takes a discount for prompt payment improperly. The Government will
calculate the interest penalty in accordance with the prompt
payment regulations at 5 CFR Part 1315.
(6) Additional interest penalty. (i) The designated payment office will pay a penalty amount, calculated in accordance with the prompt payment regulations at 5 CFR
Part 1315 in addition to the interest penalty amount only if—
(A) The Government owes an interest penalty of
$1 or more;
(B) The designated payment office does not pay
the interest penalty within 10 days after the date the invoice
amount is paid; and
(C) The Contractor makes a written demand to the
designated payment office for additional penalty payment, in
accordance with paragraph (a)(6)(ii) of this clause, postmarked not later than 40 days after the date the invoice
amount is paid.
(ii)(A) The Contractor shall support written demands
for additional penalty payments with the following data. The
Government will not request any additional data. The Contractor 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) If there is no postmark or the postmark is
illegible—
(1) The designated payment office that
receives the demand will annotate it with the date of receipt
provided the demand is received on or before the 40th day
after payment was made; or
(FAC 2005–27)

52.2-223

52.232-27

FEDERAL ACQUISITION REGULATION

(2) If the designated payment office fails to
make the required annotation, the Government will determine
the demand’s validity based on the date the Contractor has
placed on the demand, provided such date is no later than the
40th day after payment was made.
(b) Contract financing payments. If this contract provides
for contract financing, the Government will make contract
financing payments in accordance with the applicable contract financing clause.
(c) Subcontract clause requirements. The Contractor shall
include in each subcontract for property or services (including
a material supplier) for the purpose of performing this contract
the following:
(1) Prompt payment for subcontractors. A payment
clause that obligates the Contractor to pay the subcontractor
for satisfactory performance under its subcontract not later
than 7 days from receipt of payment out of such amounts as
are paid to the Contractor under this contract.
(2) Interest for subcontractors. An interest penalty
clause that obligates the Contractor to pay to the subcontractor
an interest penalty for each payment not made in accordance
with the payment clause—
(i) For the period beginning on the day after the
required payment date and ending on the date on which payment of the amount due is made; and
(ii) Computed at the rate of interest established by
the Secretary of the Treasury, and published in the Federal
Register, for interest payments under section 12 of the Contract Disputes Act of 1978 (41 U.S.C. 611) in effect at the
time the Contractor accrues the obligation to pay an interest
penalty.
(3) Subcontractor clause flowdown. A clause requiring
each subcontractor to—
(i) Include a payment clause and an interest penalty
clause conforming to the standards set forth in
paragraphs (c)(1) and (c)(2) of this clause in each of its subcontracts; and
(ii) Require each of its subcontractors to include such
clauses in their subcontracts with each lower-tier subcontractor or supplier.
(d) Subcontract clause interpretation. The clauses required
by paragraph (c) of this clause shall not be construed to impair
the right of the Contractor or a subcontractor at any tier to
negotiate, and to include in their subcontract, provisions
that—
(1) Retainage permitted. Permit the Contractor or a subcontractor to retain (without cause) a specified percentage of
each progress payment otherwise due to a subcontractor for
satisfactory performance under the subcontract without incurring any obligation to pay a late payment interest penalty, in
accordance with terms and conditions agreed to by the parties
to the subcontract, giving such recognition as the parties deem
52.2-224

(FAC 2005–27)

appropriate to the ability of a subcontractor to furnish a performance bond and a payment bond;
(2) Withholding permitted. Permit the Contractor or
subcontractor to make a determination that part or all of the
subcontractor’s request for payment may be withheld in
accordance with the subcontract agreement; and
(3) Withholding requirements. Permit such withholding
without incurring any obligation to pay a late payment penalty
if—
(i) A notice conforming to the standards of
paragraph (g) of this clause previously has been furnished to
the subcontractor; and
(ii) The Contractor furnishes to the Contracting
Officer a copy of any notice issued by a Contractor pursuant
to paragraph (d)(3)(i) of this clause.
(e) Subcontractor withholding procedures. If a Contractor,
after making a request for payment to the Government but
before making a payment to a subcontractor for the subcontractor’s performance covered by the payment request, discovers that all or a portion of the payment otherwise due such
subcontractor is subject to withholding from the subcontractor
in accordance with the subcontract agreement, then the Contractor shall—
(1) Subcontractor notice. Furnish to the subcontractor a
notice conforming to the standards of paragraph (g) of this
clause as soon as practicable upon ascertaining the cause giving rise to a withholding, but prior to the due date for subcontractor payment;
(2) Contracting Officer notice. Furnish to the Contracting Officer, as soon as practicable, a copy of the notice furnished to the subcontractor pursuant to paragraph (e)(1) of
this clause;
(3) Subcontractor progress payment reduction. Reduce
the subcontractor’s progress payment by an amount not to
exceed the amount specified in the notice of withholding furnished under paragraph (e)(1) of this clause;
(4) Subsequent subcontractor payment. Pay the subcontractor as soon as practicable after the correction of the identified subcontract performance deficiency, and—
(i) Make such payment within—
(A) Seven days after correction of the identified
subcontract performance deficiency (unless the funds therefor
must be recovered from the Government because of a reduction under paragraph (e)(5)(i)) of this clause; or
(B) Seven days after the Contractor recovers such
funds from the Government; or
(ii) Incur an obligation to pay a late payment interest
penalty computed at the rate of interest established by the Secretary of the Treasury, and published in the Federal Register,
for interest payments under section 12 of the Contracts Disputes Act of 1978 (41 U.S.C. 611) in effect at the time the
Contractor accrues the obligation to pay an interest penalty;

FAC 2005–27 OCTOBER 17, 2008
SUBPART 52.2—TEXT OF PROVISIONS AND CLAUSES
(5) Notice to Contracting Officer. Notify the Contracting Officer upon—
(i) Reduction of the amount of any subsequent certified application for payment; or
(ii) Payment to the subcontractor of any withheld
amounts of a progress payment, specifying—
(A) The amounts withheld under paragraph (e)(1)
of this clause; and
(B) The dates that such withholding began and
ended; and
(6) Interest to Government. Be obligated to pay to the
Government an amount equal to interest on the withheld payments (computed in the manner provided in
31 U.S.C. 3903(c)(1)), from the 8th day after receipt of the
withheld amounts from the Government until—
(i) The day the identified subcontractor performance
deficiency is corrected; or
(ii) The date that any subsequent payment is reduced
under paragraph (e)(5)(i) of this clause.
(f) Third-party deficiency reports— (1) Withholding from
subcontractor. If a Contractor, after making payment to a firsttier subcontractor, receives from a supplier or subcontractor of
the first-tier subcontractor (hereafter referred to as a “secondtier subcontractor”) a written notice in accordance with the
Miller Act (40 U.S.C. 3133), asserting a deficiency in such
first-tier subcontractor’s performance under the contract for
which the Contractor may be ultimately liable, and the Contractor determines that all or a portion of future payments otherwise due such first-tier subcontractor is subject to
withholding in accordance with the subcontract agreement,
the Contractor may, without incurring an obligation to pay an
interest penalty under paragraph (e)(6) of this clause—
(i) Furnish to the first-tier subcontractor a notice conforming to the standards of paragraph (g) of this clause as
soon as practicable upon making such determination; and
(ii) Withhold from the first-tier subcontractor’s next
available progress payment or payments an amount not to
exceed the amount specified in the notice of withholding furnished under paragraph (f)(1)(i) of this clause.
(2) Subsequent payment or interest charge. As soon as
practicable, but not later than 7 days after receipt of satisfactory written notification that the identified subcontract performance deficiency has been corrected, the Contractor shall—
(i)
Pay
the
amount
withheld
under
paragraph (f)(1)(ii) of this clause to such first-tier subcontractor; or
(ii) Incur an obligation to pay a late payment interest
penalty to such first-tier subcontractor computed at the rate of
interest established by the Secretary of the Treasury, and published in the Federal Register, for interest payments under
section 12 of the Contracts Disputes Act of 1978
(41 U.S.C. 611) in effect at the time the Contractor accrues the
obligation to pay an interest penalty.

52.232-27
(g) Written notice of subcontractor withholding. The Contractor shall issue a written notice of any withholding to a subcontractor (with a copy furnished to the Contracting Officer),
specifying—
(1) The amount to be withheld;
(2) The specific causes for the withholding under the
terms of the subcontract; and
(3) The remedial actions to be taken by the subcontractor in order to receive payment of the amounts withheld.
(h) Subcontractor payment entitlement. The Contractor
may not request payment from the Government of any amount
withheld or retained in accordance with paragraph (d) of this
clause until such time as the Contractor has determined and
certified to the Contracting Officer that the subcontractor is
entitled to the payment of such amount.
(i) Prime-subcontractor disputes. A dispute between the
Contractor and subcontractor relating to the amount or entitlement of a subcontractor to a payment or a late payment
interest penalty under a clause included in the subcontract pursuant to paragraph (c) of this clause does not constitute a dispute to which the Government is a party. The Government
may not be interpleaded in any judicial or administrative proceeding involving such a dispute.
(j) Preservation of prime-subcontractor rights. Except as
provided in paragraph (i) of this clause, this clause shall not
limit or impair any contractual, administrative, or judicial
remedies otherwise available to the Contractor or a subcontractor in the event of a dispute involving late payment or nonpayment by the Contractor or deficient subcontract
performance or nonperformance by a subcontractor.
(k) Non-recourse for prime contractor interest penalty.
The Contractor’s obligation to pay an interest penalty to a subcontractor pursuant to the clauses included in a subcontract
under paragraph (c) of this clause shall not be construed to be
an obligation of the Government for such interest penalty. A
cost-reimbursement claim may not include any amount for
reimbursement of such interest penalty.
(l) Overpayments. If the Contractor becomes aware of a
duplicate contract financing or invoice payment or that the
Government has otherwise overpaid on a contract financing or
invoice payment, the Contractor shall—
(1) Remit the overpayment amount to the payment
office cited in the contract along with a description of the
overpayment including the—
(i) Circumstances of the overpayment (e.g., duplicate payment, erroneous payment, liquidation errors, date(s)
of overpayment);
(ii) Affected contract number and delivery order
number if applicable;
(iii) Affected contract line item or subline item, if
applicable; and
(iv) Contractor point of contact.
52.2-225

52.232-28

FEDERAL ACQUISITION REGULATION

(2) Provide a copy of the remittance and supporting documentation to the Contracting Officer.
(End of clause)
52.232-28 Invitation to Propose Performance-Based
Payments.
As prescribed in 32.1005(b)(1), insert the following
provision:
INVITATION TO PROPOSE PERFORMANCE-BASED
PAYMENTS (MAR 2000)
(a) The Government invites the offeror to propose terms
under which the Government will make performance-based
contract financing payments during contract performance.
The Government will consider performance-based payment
financing terms proposed by the offeror in the evaluation of
the offeror’s proposal. The Contracting Officer will incorporate the financing terms of the successful offeror and the
FAR clause, Performance-Based Payments, at FAR
52.232-32, in any resulting contract.
(b) In the event of any conflict between the terms proposed
by the offeror and the terms in the clause at FAR 52.232-32,
Performance-Based Payments, the terms of the clause at
FAR 52.232-32 shall govern.
(c) The Contracting Officer will not accept the offeror’s
proposed performance-based payment financing if the financing does not conform to the following limitations:
(1) The Government will make delivery payments only
for supplies delivered and accepted, or services rendered and
accepted in accordance with the payment terms of this
contract.
(2) The terms and conditions of the performance-based
payments must—
(i) Comply with FAR 32.1004;
(ii) Be reasonable and consistent with all other technical and cost information included in the offeror’s proposal;
and
(iii) Their total shall not exceed 90 percent of the
contract price if on a whole contract basis, or 90 percent of the
delivery item price if on a delivery item basis.
(3) The terms and conditions of the performance-based
financing must be in the best interests of the Government.
(d) The offeror’s proposal of performance-based payment
financing shall include the following:
(1) The proposed contractual language describing the
performance-based payments (see FAR 32.1004 for appropriate criteria for establishing performance bases and performance-based finance payment amounts).
(2) A listing of—
(i) The projected performance-based payment dates
and the projected payment amounts; and
(ii) The projected delivery date and the projected
payment amount.
52.2-226

(FAC 2005–27)

(3) Information addressing the Contractor’s investment
in the contract.
(e) Evaluation of the offeror’s proposed prices and financing terms will include whether the offeror’s proposed performance-based payment events and payment amounts are
reasonable and consistent with all other terms and conditions
of the offeror’s proposal.
(End of provision)
Alternate I
(Mar 2000).
As
prescribed
in
FAR 32.1005(b)(2), add the following paragraph (f) to the
basic provision:
(f) The Government will adjust each proposed price to
reflect the cost of providing the proposed performance-based
payments to determine the total cost to the Government of that
particular combination of price and performance-based financing. The Government will make the adjustment using the procedure described in FAR 32.205(c).

52.232-29 Terms for Financing of Purchases of
Commercial Items.
As prescribed in 32.206(b)(2), insert the following clause:
TERMS FOR FINANCING OF PURCHASES OF COMMERCIAL
ITEMS (FEB 2002)
(a) Contractor entitlement to financing payments. The
Contractor may request, and the Government shall pay, a contract financing payment as specified elsewhere in this contract
when: the payment requested is properly due in accordance
with this contract; the supplies deliverable or services due
under the contract will be delivered or performed in accordance with the contract; and there has been no impairment or
diminution of the Government’s security under this contract.
(b) Special terms regarding termination for cause. If this
contract is terminated for cause, the Contractor shall, on
demand, repay to the Government the amount of unliquidated
contract financing payments. The Government shall be liable
for no payment except as provided by the Termination for
Cause paragraph of the clause at 52.212-4, Contract Terms
and Conditions—Commercial Items.
(c) Security for Government financing. In the event the
Contractor fails to provide adequate security, as required in
this contract, no financing payment shall be made under this
contract. Upon receipt of adequate security, financing payments shall be made, including all previous payments to
which the Contractor is entitled, in accordance with the terms
of the provisions for contract financing. If at any time the Contracting Officer determines that the security provided by the
Contractor is insufficient, the Contractor shall promptly provide such additional security as the Contracting Officer determines necessary. In the event the Contractor fails to provide
such additional security, the Contracting Officer may collect