[Federal Register Volume 60, Number 191 (Tuesday, October 3, 1995)]
[Proposed Rules]
[Pages 51766-51769]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-24579]
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DEPARTMENT OF DEFENSE
GENERAL SERVICES ADMINISTRATION
NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
48 CFR Parts 32 and 52
[FAR Case 91-118]
RIN 9000-AG49
Federal Acquisition Regulation; Payment by Electronic Fund
Transfer
AGENCIES: Department of Defense (DOD), General Services Administration
(GSA), and National Aeronautics and Space Administration (NASA).
ACTION: Proposed rule.
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SUMMARY: The Civilian Agency Acquisition Council and the Defense
Acquisition Regulations Council are considering changes to the Federal
Acquisition Regulation (FAR) to address the use of electronic fund
transfers for Federal contract payments. This regulatory action was
subject to Office of Management and Budget review under Executive Order
12866 dated September 30, 1993.
DATES: Comment Due Date: To be considered in the formulation of a final
rule, comments should be submitted to the address given below on or
before December 4, 1995.
ADDRESSES: Comments should be submitted to: General Services
Administration, FAR Secretariat (VRS), 18th & F Streets NW, Room 4037,
Washington, DC 20405.
FOR FURTHER INFORMATION CONTACT:
Mr. Jeremy F. Olson at (202) 501-3221 in reference to this FAR case.
For general information, contact the FAR Secretariat, Room 4037, GS
Building, Washington, DC 20405 (202) 501-4755. Please cite FAR case 91-
118.
SUPPLEMENTARY INFORMATION:
A. Background
The Councils are committed to advancing the use of electronic fund
transfers (EFT) as the standard method of payment under Federal
contracts and believe that the use of EFT will ultimately reduce the
administrative burden currently associated with contract invoice or
financing payments made by check. The Councils also believe that many
of the banks used by Federal contractors are not currently capable of
properly handling the complex data transmissions used for many
Government contract payments. Similarly, many Government offices
involved in certifying invoices and disbursing contract payments are
not currently capable of using EFT as the standard method of payment.
In drafting the proposed rule, the Councils tried to avoid committing
the Government to the routine use of EFT capabilities it does not yet
possess. This does not lessen the Councils' commitment to the use of
EFT as a contract payment method but recognizes that, as new computer
systems and attendant EFT procedures develop in both the public and
private sectors, the use of EFT as a normal payment practice will also
expand.
The proposed rule amends FAR Subpart 32.9 to provide guidance
concerning the use of electronic fund transfers (EFT) as a method of
contract payment. The rule also adds solicitation provisions and
contract clauses at FAR section 52.232 to implement the guidance. The
rule establishes a requirement for contractors to provide certain
information which would enable the Government to make payments under
the contract by electronic fund transfer rather than by check. The
information necessary to make the EFT transaction is specified in two
new clauses at section 52.232-00, Mandatory Information for Electronic
Fund Transfer Payment, and section 52.232-01, Optional Information for
Electronic Fund Transfer Payment. Under section 52.232-00, the
contractor is required to provide the information, prior to the
submission of the first request for payment, as a condition of payment
under the contract. The clause at section 52.232-01 is used if EFT may
become a viable method of payment during the period of contract
performance and if the contractor consents and provides the necessary
data to enable payment by EFT.
B. Regulatory Flexibility Act
The proposed FAR changes 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 changes
are intended to advance the use of EFT as a method of contract payment
and reduce the current administrative burden associated with payments
made by check. Under the proposed regulations, any business which
enters into a contract with the Government would be required to submit
certain information which would enable the Government to make contract
payments by EFT rather than by check. This requirement may have a
significant impact on a substantial number of small businesses because
it is expected that the majority of small businesses will receive
[[Page 51767]]
payments by EFT under their contracts when EFT becomes the standard
method of contract payment. Based on fiscal years 1991 and 1992 data
for contracts over $25,000, if fully implemented, EFT as a method of
payment would affect nearly 22,000 small businesses who received over
86,000 new contract awards. An Initial Regulatory Flexibility Analysis
(IRFA) has been performed. A copy of the IRFA has been submitted to the
Chief Counsel for Advocacy for the Small Business Administration. A
copy of the IRFA may be obtained from the FAR Secretariat. Comments are
invited. Comments from small entities concerning the affected FAR
subpart will be considered in accordance with 5 U.S.C. 610. Such
comments must be submitted separately and should cite 5 U.S.C. 601 et
seq. (FAR case 91-118), in all correspondence.
C. Paperwork Burden
Under the provisions of the Paperwork Reduction Act of 1995 (Pub.L.
104-13), the Federal Acquisition Regulation (FAR) Secretariat has
submitted to the Office of Management and Budget (OMB) a request to
review and approve a new information collection requirement under
Section 3507(d) of the Act concerning Payment by Electronic Fund
Transfer.
Dates: Comments may be submitted on or before December 4, 1995.
Addresses: Send comments to Mr. Peter Weiss, FAR Desk Officer, OMB,
Room 10102, NEOB, Washington, DC 20503 and a copy to the FAR
Secretariat at the address listed below for comments on the proposed
rule.
Annual Reporting Burden: Public reporting burden for this
collection of information is estimated to average .5 hours per
response, including the time for reviewing instructions, searching
existing data sources, gathering and maintaining the data needed, and
completing and reviewing the collection of information. Send comments
regarding this burden estimate or any other aspect of this collection
of information, including suggestions for reducing this burden, to
General Services Administration, FAR Secretariat, 18th & F Streets,
NW., Room 4037, Washington, DC 20405, and to the FAR Desk Officer,
Office of Information and Regulatory Affairs, Office of Management and
Budget, Washington, DC 20503.
The annual reporting burden is estimated to be $2,235,000 as a
result of the following estimated number of hours of labor for
compliance: Respondents, 31,000; responses per respondent, 10; total
annual responses, 310,000; preparation hours per response, .5; and
total response burden hours, 155,000.
List of Subjects in 48 CFR Parts 32 and 52
Government procurement.
Dated: September 27, 1995.
C. Allen Olson,
Director, Office of Federal Acquisition Policy.
Therefore, it is proposed that 48 CFR parts 32 and 52 be amended as
set forth below:
PART 32--CONTRACT FINANCING
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.
2. Section 32.902 is amended by adding the definition of
``Specified payment date'' in alphabetical order to read as follows:
32.902 Definitions.
* * * * *
Specified payment date means, for a payment by electronic fund
transfer (EFT), the date which the Government has placed in the EFT
payment transaction instruction given to the Federal Reserve System, as
the date on which the funds are to be transferred to the contractor's
financial agent (see 32.911-3). However, a specified payment date mut
be a valid date under the rules of the Federal Reserve System. For
example, if the Federal Reserve System requires two days' notice before
a specified payment date to process a transaction, release to the
Federal Reserve Bank of a payment transaction instruction one day
before the specified payment date could not constitute a valid date
under the rules of the Federal Reserve System.
3. Section 32.908 is amended by revising paragraph (d) and adding
paragraph (e) to read as follows:
32.908 Contract clauses.
* * * * *
(d) The contracting officer shall insert the clause at section
52.232-00, Mandatory Information for Electronic Fund Transfer Payment,
in all solicitations and contracts unless instructed not to by the
cognizant payment office.
(e) The contracting officer shall insert the clause at section
52.232-01, Optional Information for Electronic Fund Transfer Payment,
in all solicitations and contracts not containing the clause at section
52.232-00.
32.910 [Reserved]
4. Section 32.910 is reserved.
5. Sections 32.911 through 32.911-4 are added to read as follows:
32.911 Payment by electronic fund transfer (EFT).
32.911-1 Policy.
(a) The decision as to which clause is to be included in a contract
is that of the office responsible for making payment on the contract
per 31 CFR part 206. Normally, the payment office will notify the
contracting office of which clause to use. However, when in doubt, the
contracting officer shall consult with the payment office. (Note: If
the certifying and disbursing functions are separated, the decision as
to which clause to use shall be made by the office performing the
disbursing function.)
(b) Contracting officers shall not commit the Government to use or
not use EFT, but shall refer all contractor requests to the payment
office. When authorized by agency regulations, the payment office has
the authority not to exercise the Government's right to require
submission of EFT information.
(c) The clause at section 52.232-00 contains the terms and
conditions for payment by EFT and permits the Government to refuse to
make any payments until the contractor submits the information needed
to make payment by EFT.
(d) The clause at section 52.232-01 states the terms and conditions
for EFT payment if the contractor should request that the Governor use
EFT for payment.
(e) If more than one payment office will be making payments on a
contract, the contracting officer shall include the EFT clause
appropriate for each office and shall identify the applicability by
payment office and contract line item.
32.911-2 EFT information.
To protect against improper disclosure of a contractor's EFT
information, the clauses at section 52.232-00 and section 52.232-01
require the contractor to submit such information directly to the
payment office. However, if the information is inadvertently sent to
the contracting officer, the information shall be protected and
delivered immediately to the designated payment office.
32.911-3 Prompt payment.
The information provided to the Federal Reserve system that
constitutes the Government's order to pay the contractor includes a
specified payment date. The valid specified payment date is the date of
payment for prompt payment purposes, whether or not the Federal Reserve
system actually makes
[[Page 51768]]
the payment by that date, and whether or not the contractor's financial
agent credits the contractor's account on that date.
32.911-4 Assignment of claims.
The use of EFT payment methods is not a substitute for a properly
executed assignment of claims in accordance with Subpart 32.8. EFT
information which shows the ultimate recipient of the transfer to be
other than the contractor, in the absence of a proper assignment of
claims, is considered to be incorrect EFT information within the
meaning of the ``Suspension of Payment'' paragraphs of the EFT clauses
section 52.232-00, Mandatory Information for Electronic Fund Transfer,
and section 52.232-01, Optional Information for Electronic Fund
Transfer.
PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
542.232-28 [Reserved]
6. Section 52.232-28 is removed and reserved.
7. Sections 52.232-00 and 52.232-01 are added to read as follows:
52.232-00 Mandatory Information for Electronic Fund Transfer Payment.
As prescribed in 32.908(d), insert the following clause:
MANDATORY INFORMATION FOR ELECTRONIC FUND TRANSFER PAYMENT (DATE)
(a) Method of payment. Payments by the Government under this
contract, including invoice and contract financing payments, may be
made by check or electronic fund transfer (EFT) at the option of the
Government. If payment is made by EFT, the Government may at its
option, also forward the associated payment information by
electronic transfer. For this clause, the term EFT includes both the
fund transfer and the information transfer.
(b) Mandatory submission of contractor's EFT information. (1)
The Contractor is required, as a condition to any payment under this
contract, to provide the Government with the information required to
make payment by EFT as described in paragraph (d) of this clause.
(2) If the Contractor provides EFT information applicable to
multiple contracts, the Contractor shall specifically state the
applicability of this EFT information in terms acceptable to the
payment office.
(c) Contractor's EFT information. Prior to submission of the
first request for payment (whether for invoice or contract financing
payment) under this contract, the Contractor shall provide the
information required to make contract payment by EFT, as described
in paragraph (d) of this clause, directly to the Government payment
office named in this contract. If more than one payment office is
named for the contract, the Contractor shall provide a separate
notice to each office. In the event that the EFT information
changes, the Contractor shall be responsible for providing the
changed information to the designated payment office(s).
(d) Required EFT information. The Government may make payment by
EFT through either the Automated Clearing House (ACH) or Federal
Reserve System wire transfer at the Government's option. The
Contractor shall provide the following information for both methods
in a form acceptable to the designated payment office. The
Contractor may supply this data for this or multiple contracts (see
paragraph b of this clause).
(1) The contract number to which this notice applies.
(2) The Contractor's name and account number at the Contractor's
financial agent.
(3) The signature, title, and telephone number of the Contractor
Official authorized to provide this information.
(4) For ACH payments only:
(i) Name, address, and 9-digit Routing Transit Number of the
Contractor's financial agent.
(ii) Contractor's account number and the type of account
(checking, saving, or lockbox).
(5) For Federal Reserve System Wire Transfer payments only:
(i) Name, address, telegraphic abbreviation, and the 9-digit
Routing Transit Number for the Contractor's financial agent.
(ii) If the Contractor's financial agent is not directly on-line
to the Federal Reserve System's wire transfer network, and therefore
not the receiver of the wire transfer payment, the Contractor shall
also provide the name, address, and 9-digit Routing Transit Number
of the correspondent financial agent receiving the wire transfer
payment.
(e) Suspension of payment. (1) Notwithstanding the provisions of
any other clause, the Government is not required to make any payment
under this contract until after receipt from the Contractor of the
correct EFT payment information by the designated payment office.
Until receipt of the correct EFT information, any invoice or
contract financing request shall be deemed not to be a valid invoice
or contract financing request as defined in the Prompt Payment
clause of this contract.
(2) If the EFT information changes, after submission of correct
EFT information, the Government shall begin using the changed EFT
information no later than the 30th day after its receipt. However,
the Contractor may request that no further payments be made until
the changed EFT information is implemented by the payment office. If
such suspension would result in a late payment under the Prompt
Payment clause of this contract, the Contractor's request for
suspension shall extend the due date for payment by the number of
days of the suspension.
(f) Contractor EFT arrangements. The Contractor shall designate
a single financial agent capable of receiving and processing the
electronic fund transfer and associated electronic payment
information transfer, using the EFT methods described in paragraph
(d) of this clause. The Contractor shall pay all fees and charges
for receipt and processing of transfers.
(g) Liability for uncompleted or erroneous transfers. (1) If an
uncompleted or erroneous transfer occurs because the Government
failed to use the Contractor-provided EFT information in the correct
manner, the Government remains responsible for (i) making a correct
payment, (ii) paying any prompt payment penalty due, and (iii)
recovering any erroneously directed funds.
(2) If an uncompleted or erroneous transfer occurs because
Contractor-provided EFT information was incorrect at the time of
Government release of the EFT payment transaction instruction to the
Federal Reserve System, and:
(i) If the funds are no longer under the control of the payment
office, the Government is deemed to have made payment and the
Contractor is responsible for recovery of any erroneously directed
funds, or
(ii) If the funds remain under the control of the payment
office, the Government retains the rights to either make payment by
mail or suspend the payment in accordance with paragraph (e) of this
clause.
(h) EFT and prompt payment. (1) A payment shall be deemed to
have been made in a timely manner in accordance with the Prompt
Payment clause of this contract if, in the EFT payment transaction
instruction given to the Federal Reserve System, the date specified
for settlement of the payment is on or before the prompt payment due
date, provided the specified due date is a valid date under the
rules of the Federal Reserve System.
(2) When payment cannot be made by EFT because of incorrect EFT
information provided by the Contractor, no interest penalty is due
after the date of the uncompleted or erroneous payment transaction,
provided that notice of the defective EFT information is issued to
the Contractor within seven days after the Government is notified of
the defective EFT information.
(i) EFT and assignment of claims. If the Contractor assigns the
proceeds of this contract as provided for in the clause at section
52.232-23, Assignment of Claims, the assignee shall provide the EFT
information required by paragraph (d) of this clause for the
assignee. In all respects, the requirements of this clause shall
apply to the assignee as if it were the Contractor. EFT information
which shows the ultimate recipient of the transfer to be other than
the Contractor, in the absence of a proper assignment of claims
acceptable to the Government, is incorrect EFT information within
the meaning of paragraph (e) of this clause.
(j) Payment office discretion. If the Contractor does not wish
to receive payment by EFT methods for one or more payments, a
request may be submitted to the designated payment office to refrain
from requiring EFT information or using the EFT payment method. The
decision to grant the request is solely that of the Government.
(End of clause)
52.232-01 Optional information for electronic fund transfer payment.
As prescribed in 32.908(e), insert the following clause:
[[Page 51769]]
OPTIONAL INFORMATION FOR ELECTRONIC FUND TRANSFER PAYMENT (DATE)
(a) Method of payment. After the Contractor provides the
information described in paragraph (d) of this clause, in accordance
with paragraph (b), payments by the Government under this contract,
including invoice and contract financing payments, may by made by
check or electronic fund transfer (EFT) at the option of the
Government. If payment is made by EFT, the Government may, at its
option, also forward the associated payment information by
electronic transfer. For this clause, the term EFT includes both the
fund transfer and the information transfer.
(b) Contractor consent. (1) If the Contractor is willing to be
paid by EFT, the Contractor shall provide the EFT information
described in paragraph (d) of this clause. If the Contractor does
not provide the EFT information, this clause is inoperative. The
Contractor agrees that, after providing EFT information in
accordance with this clause, the Contractor cannot withdraw the
Government's right to make payment by EFT for this contract.
(2) If the Contractor provides EFT information applicable to
multiple contracts, the Contractor shall specifically state the
applicability of this EFT information in terms acceptable to the
payment office.
(c) Contractor's EFT information. Prior to submission of the
first request for payment (whether for invoice or contract financing
payment) under this contract, for which the Contractor desires EFT
payment, the Contractor shall provide the information required to
make contract payment by EFT, as described in paragraph (d) of this
clause, directly to the Government payment office named in this
contract. If more than one payment office is named for the contract,
the Contractor shall provide a separate notice to each office. In
the event that the EFT information changes, the Contractor shall be
responsible for providing the changed information to the designated
payment office(s).
(d) Required EFT information. The Government may make payment by
EFT through either the Automated Clearing House (ACH) or Federal
Reserve System wire transfer at the Government's option. The
Contractor shall provide the following information for both methods
in a form acceptable to the designated payment office. The
Contractor may supply this data for this or multiple contracts (see
paragraph (b) of this clause).
(1) The contract number to which this notice applies.
(2) The Contractor's name and account number at the Contractor's
financial agent.
(3) The signature, title, and telephone number of the Contractor
official authorized to provide this information.
(4) For ACH payment only:
(i) Name, address, and 9-digit Routing Transit Number of the
Contractor's financial agent.
(ii) Contractor's account number and the type of account
(checking, saving, or lockbox).
(5) For Federal Reserve System Wire Transfer payments only:
(i) Name, address, telegraphic abbreviation, and the 9-digit
Routing Transit Number for the Contractor's financial agent,
(ii) If the Contractor's financial agent is not directly on-line
to the Federal Reserve System's wire transfer network, and therefore
not the receiver of the wire transfer payment, the Contractor shall
also provide the name, address, and 9-digit Routing Transit Number
of the correspondent financial agent receiving the wire transfer
payment.
(e) Suspension of payment: (1) Notwithstanding the provisions of
any other clause, if after receipt of the Contractor's EFT
information in accordance with paragraph (b) of this clause, the EFT
information is found to be incorrect, and until after receipt from
the Contractor of the correct EFT information by the designated
payment office: (i) the Government is not required to make any
further payment under this contract; and (ii) any invoice or
contract financing request shall be deemed not to be a valid invoice
or contract financing request as defined in the Prompt Payment
clause of this contract.
(2) If the EFT information changes, after submission of correct
EFT information, the Government shall begin using the changed EFT
information no later than the 30th day after its receipt. However,
the Contractor may request that no further payments be made until
the changed EFT information is implemented by the payment office. If
such suspension would result in a late payment under the Prompt
Payment clause of this contract, the Contractor's request for
suspension shall extend the due date for payment by the number of
days of the suspension.
(f) Contractor EFT arrangements. The Contractor shall designate
a single financial agent capable of receiving and processing the
electronic fund transfer and associated electronic payment
information transfer, using the EFT methods described in paragraph
(d) of this clause. The Contractor shall pay all fees and charges
for receipt and processing of transfers.
(g) Liability for uncompleted or erroneous transfers. (1) If an
uncompleted or erroneous transfer occurs because the Government
failed to use the Contractor-provided EFT information in the correct
manner, the Government remains responsible for (i) making a correct
payment, (ii) paying any prompt payment penalty due, and (iii)
recovering any erroneously directed funds.
(2) If an uncompleted or erroneous transfer occurs because
Contractor-provided EFT information was incorrect at the time of
Government release of the EFT payment transaction instruction to the
Federal Reserve system, and:
(i) If the funds are no longer under the control of the payment
office, the Government is deemed to have made payment and the
Contractor is responsible for recovery of any erroneously directed
funds, or
(ii) If the funds remain under the control of the payment
office, the Government retains the right to either make payment by
mail or suspend the payment in accordance with paragraph (e) of this
clause.
(h) EFT and prompt payment. (1) A payment shall be deemed to
have been made in a timely manner in accordance with the Prompt
Payment clause of this contract if, in the EFT payment transaction
instruction given to the Federal Reserve System, the date specified
for settlement of the payment is on or before the prompt payment due
date, provided the specified due date is a valid date under the
rules of the Federal Reserve System.
(2) When payment cannot be made by EFT because of incorrect EFT
information provided by the Contractor, no interest penalty is due
after the date of the uncompleted or erroneous payment transaction,
provided that notice of the defective EFT information is issued to
the Contractor within seven days after the Government is notified of
the defective EFT information.
(i) EFT and assignment of claims. If the Contractor assigns the
proceeds of this contract as provided for in the clause at section
52.232-23, Assignment of Claims, the assignee shall provide the EFT
information required by paragraph (d) of this clause for the
assignee. In all respects, the requirements of this clause shall
apply to the assignee as if it were the Contractor. EFT information
which shows the ultimate recipient of the transfer to be other than
the Contractor, in the absence of a proper assignment of claims
acceptable to the Government, is incorrect EFT information within
the meaning of paragraph (e) of this clause.
(j) Payment office discretion. If the Contractor does not wish
to receive payment by EFT methods for one or more payments, a
request may be submitted to the designated payment office to refrain
from requiring EFT information or using the EFT payment method. The
decision to grant the request is solely that of the Government.
(End of clause)
[FR Doc. 95-24579 Filed 10-2-95; 8:45 am]
BILLING CODE 6820-EP-M