Subpart 32.11 - Electronic Funds Transfer

Parent topic: Part 32 - Contract Financing

32.1100 Scope of subpart.

This subpart provides policy and procedures for contract financing and delivery payments to

contractors by electronic funds transfer (EFT).

32.1101 Statutory requirements.

31 U.S.C.3332 requires, subject to implementing regulations of the Secretary of the Treasury at 31

CFR Part 208, that EFT be used to make all contract payments.

32.1102 Definitions.

As used in this subpartElectronic Funds Transfer information (EFT) means information necessary for making a payment by

EFT through specified EFT mechanisms.

Governmentwide commercial purchase card 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 Applicability.

The Government shall provide all contract payments through EFT except if-

(a) The office making payment under a contract that requires payment by EFT, loses the ability to

release payment by EFT. To the extent authorized by 31 CFR Part 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;

(b) The payment is to be received by or on behalf of the contractor outside the United States and

Puerto Rico (but see 32.1106(b));

(c) A contract is paid in other than United States currency (but see 32.1106(b));
(d) Payment by EFT under a classified contract could compromise the safeguarding of classified

information or national security, or arrangements for appropriate EFT payments would be

impractical due to security considerations;

(e) 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 2.101, or 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, if-

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

(2) EFT payment would not support the objectives of the operation;

(f) The agency does not expect to make more than one payment to the same recipient within a oneyear period;

(g) An agency’s need for supplies and services is of such unusual and compelling urgency that the

Government would be seriously injured unless payment is made by a method other than EFT;

(h) There is only one source for supplies and services and the Government would be seriously

injured unless payment is made by a method other than EFT; or

(i) Otherwise authorized by Department of the Treasury Regulations at 31 CFR Part 208.

32.1104 Protection of EFT information.

The Government shall protect against improper disclosure of contractors’ EFT information.

32.1105 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.

32.1106 EFT mechanisms.

(a) Domestic EFT mechanisms. 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 (U.S. Automated Clearing House, and Fedwire Transfer System) of EFT.

However, the head of an agency may authorize the use of any other EFT mechanism for domestic

EFT with the concurrence of the office or agency responsible for making payments.

(b) Nondomestic EFT mechanisms and other than United States currency. The Government shall

provide payment by other than EFT for payments received by or on behalf of the contractor outside

the United States and Puerto Rico or for contracts paid in other than United States currency.
However, the head of an agency may authorize appropriate use of EFT with the concurrence of the

office or agency responsible for making payments if-

(1) The political, financial, and communications infrastructure in a foreign country supports payment

by EFT; or

(2) Payments of other than United States currency may be made safely.

32.1107 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 EFT instruction to the Federal Reserve

System.

32.1108 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. The

Government reimburses the third party at a later date for the third party’s payment to the

contractor.

(a) The clause at 52.232-36, 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) 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)

(1) Written contracts to be paid by purchase card should include the clause at 52.232-36, Payment

by Third Party, as prescribed by 32.1110(d). However, payment by a purchase card also may be

made under a contract that does not contain the clause to the extent the contractor agrees to accept

that method of payment.

(2)

(i) When it is contemplated that the Governmentwide commercial purchase card will be used as the

method of payment, and the contract or order is above the micro-purchase threshold, contracting

officers are required to verify by looking in the System for Award Management (SAM) whether the

contractor has any delinquent debt subject to collection under the Treasury Offset Program (TOP) at
contract award and order placement. Information on TOP is available at

http://fms.treas.gov/debt/index.html.

(ii) The contracting officer shall not authorize the Governmentwide commercial purchase card as a

method of payment during any period the SAM indicates that the contractor has delinquent debt

subject to collection under the TOP. In such cases, payments under the contract shall be made in

accordance with the clause at 52.232-33, Payment by Electronic Funds Transfer-System for Award

Management, or 52.232-34, Payment by Electronic Funds Transfer-Other Than System for Award

Management, as appropriate (see FAR 32.1110(d)).

(iii) Contracting officers shall not use the presence of the SAM debt flag indicator to exclude a

contractor from receipt of the contract award or issuance or placement of an order.

(iv) The contracting officer may take steps to authorize payment by Governmentwide commercial

purchase card when a contractor alerts the contracting officer that the SAM debt flag indicator has

been changed to no longer show a delinquent debt.

(c) The clause at 52.232-36, Payment by Third Party, requires that the contract-

(1) Identify the third party and the particular purchase card to be used; and

(2) Not include the purchase card account number. The purchase card account number should be

provided separately to the contractor.

32.1109 EFT information submitted by offerors.

If offerors are required to submit EFT information prior to award, the successful offeror is not

responsible for resubmitting this information after award of the contract except to make changes, or

to place the information on invoices if required by agency procedures. Therefore, contracting

officers shall forward EFT information provided by the successful offeror to the appropriate office.

32.1110 Solicitation provision and contract clauses.

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

(1) 52.232-33, Payment by Electronic Funds Transfer-System for Award Management, in solicitations

and contracts that include the provision at 52.204-7 System for Award Management, or an agency

clause that requires a contractor to be registered in SAM and maintain registration until final

payment, unless–

(i) Payment will be made through a third party arrangement (see 13.301 and paragraph (d) of this

section); or

(ii) An exception listed in 32.1103(a) through (i) applies.

(2)

(i) 52.232-34, Payment by Electronic Funds Transfer-Other than System for Award Management, in
solicitations and contracts that require EFT as the method for payment but do not include the

provision at 52.204-7, System for Award Management, or a similar agency clause that requires the

contractor to be registered in the SAM.

(ii)

(A) If permitted by agency procedures, the contracting officer may insert in paragraph (b)(1) of the

clause, a particular time after award, such as a fixed number of days, or event such as the

submission of the first request for payment.

(B) If no agency procedures are prescribed, the time period inserted in paragraph (b)(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 authorized, in accordance with 32.1106, 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 nondomestic EFT mechanism.

(c) If EFT information is to be submitted to other than the payment office in accordance with agency

procedures, the contracting officer shall insert in solicitations and contracts the clause at 52.232-35,

Designation of Office for Government Receipt of Electronic Funds Transfer Information, or a clause

substantially the same as 52.232-35 that clearly informs the contractor 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 52.232-36, 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 52.232-36, to

the extent the contractor agrees to accept that method of payment. When the clause at 52.232-36 is

included in a solicitation or contract, the contracting officer shall also insert the clause at 52.232-33,

Payment by Electronic Funds Transfer-System for Award Management, or 52.232-34, Payment by

Electronic Funds Transfer-Other Than System for Award Management, as appropriate.

(e) If the contract or agreement provides for the use of delivery orders, and provides that the

ordering office designate the method of payment for individual orders, the contracting officer shall

insert, in the solicitation and contract or agreement, the clause at 52.232-37, Multiple Payment

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

(1) 52.232-33, Payment by Electronic Funds Transfer-System for Award Management;

(2) 52.232-34, Payment by Electronic Funds Transfer-Other than System for Award Management;

and

(3) 52.232-36, Payment by Third Party.

(f) If more than one disbursing office will make payment under a contract or agreement, the

contracting officer, or ordering office (if the contract provides for choices between EFT clauses on

individual orders or classes of orders), shall include or identify the EFT clause appropriate for each

office and shall identify the applicability by disbursing office and line item.

(g) If the solicitation contains the clause at 52.232-34, Payment by Electronic Funds Transfer-Other

than System for Award Management, and an offeror is required to submit EFT information prior to

award-
(1) The contracting officer shall insert in the solicitation the provision at 52.232-38, Submission of

Electronic Funds Transfer Information with Offer, or a provision substantially the same; and

(2) For sealed bid solicitations, the contracting officer shall amend 52.232-38 to ensure that a

bidder’s EFT information-

(i) Is not a part of the bid to be opened at the public opening; and

(ii) May not be released to members of the general public who request a copy of the bid.