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Whynot

Interest on returning an Over Payment

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I agree with Navy with respect to the first sentence ("It may depend on the reason for the overpayment.") I disagree that FAR 32.6 is applicable to an overpayment unrelated to a CAS matter.

Generaly I would not expect a contractor to include interest on an overpayment received during the normal course of business.

Hope this helps.

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I agree with Navy with respect to the first sentence ("It may depend on the reason for the overpayment.") I disagree that FAR 32.6 is applicable to an overpayment unrelated to a CAS matter.

Generaly I would not expect a contractor to include interest on an overpayment received during the normal course of business.

Hope this helps.

H2H,

I don't see where the applicability of FAR 32.6, Contract Debts, is limited to debts related to CAS matters. Can you point me to that restriction?

Regarding your last point, I agree, (unless the repayment is not made before, or within 30 days after, issuance of a demand letter), and that is consistent with FAR 32.604(b )(4)(ii).

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Where do I find the interest to apply to returning an over payment that I received. Thanks.

Whynot, which Payment clause is in your contract and is this considered an unearned amount? I believe that your payment clause will tell you what the basis of the interest rate is. The government is supposed to calculate and deduct any interest due from the next payment (at least under construction contracts).

Example: Clause 52.232-5 -- Payments Under Fixed-Price Construction Contracts.

"(d) Refund of unearned amounts. If the Contractor, after making a certified request for progress payments, discovers that a portion or all of such request constitutes a payment for performance by the Contractor that fails to conform to the specifications, terms, and conditions of this contract (hereinafter referred to as the “unearned amount”), the Contractor shall --

(1) Notify the Contracting Officer of such performance deficiency; and

(2) Be obligated to pay the Government an amount (computed by the Contracting Officer in the manner provided in paragraph (j) of this clause) equal to interest on the unearned amount from the 8th day after the date of receipt of the unearned amount until --

  • (i) The date the Contractor notifies the Contracting Officer that the performance deficiency has been corrected; or

    (ii) The date the Contractor reduces the amount of any subsequent certified request for progress payments by an amount equal to the unearned amount."

"...(j) Interest computation on unearned amounts. In accordance with 31 U.S.C. 3903©(1), the amount payable under subparagraph (d)(2) of this clause shall be --

(1) Computed at the rate of average bond equivalent rates of 91-day Treasury bills auctioned at the most recent auction of such bills prior to the date the Contractor receives the unearned amount; and

(2) Deducted from the next available payment to the Contractor."

Being the dutiful stewards of the taxpayers money that they are, please let us know if the government actually does this.

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I take back part of what I said. Looks like only the fixed-price construction payments clause covers interest on overbillings.

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Navy my bad. I read 30.6 not 32.6. Sorry for the confusion. Nonetheless, I stand by my original post that (generally speaking) overpayments do not get repaid with interest.

H2H

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Navy my bad. I read 30.6 not 32.6. Sorry for the confusion. Nonetheless, I stand by my original post that (generally speaking) overpayments do not get repaid with interest.

H2H

with an exception of refunds of progress payment amounts that were not eanred (overbilled) on construction contracts...if the government follows through.

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Joel, and with a further exception of payments related to increased costs (in the aggregate)paid by USG in relation to a contractor's change in cost accounting practice, as Judge Delman just explained in a very recent ASBCA decision.

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