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I am trying to determine if there is anything in the FAR that would expressly prohibit an arrangement whereby if a company owes money to the Government on a contract that it is actively performing (credit not resulting from a noncompliance with TINA or Defective Pricing), it could offset the credit balance due to the Government against the next monthly invoice due to the contractor rather than return the money to the Government. I have looked at FAR 32.6 and the payment clauses at 52.232 and don't see any express prohibitions. Could such an arrangement be made with the Contracting Officer?

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It depends on the circumstances on how the contractor established the debt. There are situations where monies due go directly to the Treasury general fund. You shouldn't do an offsetting credit against an invoice for that kind of debt.

But using credits as offsets is common especially for commercial type buys. Equipment leases are a prime example where the contractor grants credits for downtime. The contractor usually submits a regular monthly invoice amount for the lease amount less credits for downtime and the government pays the net amount.

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