[Federal Register Volume 61, Number 169 (Thursday, August 29, 1996)]
[Rules and Regulations]
[Pages 45770-45775]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-22034]



[[Page 45769]]


_______________________________________________________________________

Part X

Department of Defense

General Services Administration

National Aeronautics and Space Administration
_______________________________________________________________________



48 CFR Ch. 1, et al.



Federal Acquisition Regulation; Payment by Electronic Funds Transfer 
and Small Entity Compliance Guide; Rules

  Federal Register / Vol. 61, No. 169 / Thursday, August 29, 1996 / 
Rules and Regulations  

[[Page 45770]]



DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Parts 12, 13, 32, and 52

[FAC 90-42, FAR Case 91-118]
RIN 9000-AG49


Federal Acquisition Regulation; Payment by Electronic Funds 
Transfer

AGENCIES: Department of Defense (DoD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Interim rule with request for comment.

-----------------------------------------------------------------------

SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council have agreed on an interim rule to amend 
the Federal Acquisition Regulation (FAR) to address the use of 
electronic funds transfers (EFT) for Federal contract payments, and to 
facilitate implementation of Public Law 104-134 which mandates payment 
by EFT in certain situations. This regulatory action was not subject to 
Office of Management and Budget review under Executive Order 12866, 
dated September 30, 1993, and is not a major rule under 5 U.S.C. 804. A 
companion document, the Small Entity Compliance Guide, follows this FAC 
and may be located on the Internet at http://www.gsa.gov/far.

DATES: Effective Date: August 29, 1996.
    Comment Date: Comments should be submitted to the FAR Secretariat 
at the address shown below on or before October 28, 1996 to be 
considered in the formulation of a final rule.

ADDRESSES: Interested parties should submit written comments to: 
General Services Administration, FAR Secretariat (MVR), 18th & F 
Streets, NW, Room 4035, Attn: Ms. Beverly Fayson, Washington, DC 20405.
    Please cite FAC 90-42, FAR case 91-118 in all correspondence 
related to this case.

FOR FURTHER INFORMATION CONTACT: Mr. Jeremy Olson at (202) 501-3221 in 
reference to this FAR case. For general information, contact the FAR 
Secretariat, Room 4035, GS Building, Washington, DC 20405 (202) 501-
4755. Please cite FAC 90-42, FAR case 91-118.

SUPPLEMENTARY INFORMATION:

A. Background

    Public Law 104-134, the Omnibus Consolidated Rescissions and 
Appropriations Act of 1996, contained a separate chapter 10 entitled 
Debt Collection Improvements. Subsection (x)(1) of Section 31001, the 
Debt Collection Improvement Act of 1996, amended Section 3332 of title 
31, United States Code, by adding the following new statutory 
requirement: ``(e)(1) Notwithstanding subsections (a) through (d) of 
this section, sections 5120(a) and (d) of title 38, and any other 
provision of law, all Federal payments to a recipient who becomes 
eligible for that type of payment after 90 days after the date of the 
enactment of the Debt Collection Improvement Act of 1996 shall be made 
by electronic funds transfer.''
    The statute further defines Federal payments to include vendor 
payments and expense reimbursements, as well as providing exemption for 
payments to certain recipients. The effective date of this provision is 
July 26, 1996.
    Public Law 104-134 also contained provisions for payments by EFT 
which become applicable after January 1, 1999.
    Under this statute, the Department of the Treasury is responsible 
for issuing regulations necessary for carrying out the statute. On July 
26, 1996, the Financial Management Service issued an interim rule (61 
FR 39254) which added Part 208 to Title 31, Code of Federal 
Regulations, to provide a regulation for payments through EFT. This 
interim rule reflects the provisions of the Treasury interim rule with 
respect to vendor payments.
    The Councils are committed to advancing the use of 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 for both the Government and contractors. The rule, therefore, 
provides a contract clause which requires contractor submission of the 
information needed for payment by EFT as a condition of payment. With 
certain limited exceptions, this is the clause that will normally be 
used. However, some Government offices involved in certifying invoices 
and disbursing contract payments are not currently capable of using EFT 
as the standard method of payment. The rule provides a contract clause 
for contractor optional submission of EFT information where that is 
appropriate and consistent with the statute. The determination whether 
a particular payment must be made by EFT is that of the payment 
official.
    The rule recognizes that contracts using non-United States currency 
and contracts issued outside the United States and Puerto Rico are 
currently not capable of being paid by EFT through the domestic banking 
system of the United States. In addition, certain classified contracts 
and certain contracts related to military operations and emergency 
situations will not be appropriate for payment by EFT. In accordance 
with the Treasury interim rule, these contracts have been excepted from 
the requirement for payment by EFT.
    The Treasury Department has stated that a credit card transaction 
is an electronic payment. The rule, therefore, directs that contracts 
to be paid through use of a Governmentwide commercial purchase card 
will not include either EFT clause.
    The statute provides that until January 1, 1999, recipients of 
payments who certify they do not have an account with a financial 
institution or an authorized payment agent shall be paid by other than 
EFT. To implement this statutory right, the clause at 52.232-33 (the 
mandatory EFT information clause) provides for non-EFT payment upon 
receipt of a contractor certification. Note that the certification is 
an explicit statutory requirement of 31 U.S.C. 3332(e)(2).
    In addition to the provisions taking effect on July 26, 1996 (31 
U.S.C. 3332(e)), Public Law 104-134 contained provisions which take 
effect after January 1, 1999 (31 U.S.C. 3332(f), et al.).
    The most significant is a requirement that all payments after that 
date be made by EFT. While the statute provides for waivers of the 
applicable subsection by the Secretary of the Treasury after January 1, 
1999, detailed regulations regarding these waivers have not been 
established. Therefore, both contract clauses provide that, after 
January 1, 1999, contractors shall provide EFT information for the 
contracts containing the clauses established in this rule.
    A significant difference between EFT contract payments and EFT 
beneficiary or payroll payments is the additional information which 
must be provided by the Government to contractor recipients for 
contract payments. In order for a business receiving a contract payment 
to maintain its accounting books and records, it must obtain 
information such as invoice numbers, discounts taken, interest paid, 
and other payment adjustments with the payment. With paper checks, this 
information has normally been provided as an ``advice of

[[Page 45771]]

payment'', or other paper notice forwarded with the check. However, if 
this information is provided electronically, using appropriate formats, 
contractors can use more advanced accounting systems which do not 
require manual entry and processing of payment information. The 
contract clauses in this interim rule authorize the Government, at its 
option, to forward this information electronically, with the EFT 
payment, as provided for in the domestic banking system. However, the 
Government is aware that many banks and financial institutions do not 
yet provide their customers with this information electronically. In 
response to the proposed rule published in the Federal Register on 
October 3, 1995 (60 FR 51766), a significant issue raised was the 
desire to receive this remittance information electronically. The 
particular methods used for forwarding this information are specific to 
individual agencies and payment offices. Companies desiring payment 
information in specific formats should express their preferences to the 
agencies concerned, and their banks or financial institutions.
    The rule adds a new FAR Subpart 32.11, Electronic Funds Transfer, 
which provides policy and procedures for Government payment by EFT. The 
rule replaces the contract clause at 52.232-28, Electronic Funds 
Transfer Payment Methods, with two new clauses at 52.232-33, Mandatory 
Information for Electronic Funds Transfer Payment, and 52.232-34, 
Optional Information for Electronic Funds Transfer Payment. Under the 
clause at 52.232-33, the contractor is required to provide the EFT 
information, prior to the submission of the first request for payment, 
as a condition of payment under the contract. The clause at 52.232-34 
is used if EFT may become a viable method of payment during the period 
of contract performance, and the clause becomes effective if the 
Government and contractor agree to commence EFT.
    Three sources submitted public comments in response to the proposed 
rule published on October 3, 1995. All comments were considered in 
developing this interim rule.

B. Regulatory Flexibility Act

    An Initial Regulatory Flexibility Analysis has been prepared and 
submitted to the Chief Counsel for Advocacy of the Small Business 
Administration. A copy of the Analysis may be obtained from the FAR 
Secretariat at the General Services Administration, 18th & F Streets, 
NW., Room 4035, Washington, DC 20405. The Analysis is summarized as 
follows:
    This interim rule amends the Federal Acquisition Regulation (FAR) 
to address the use of electronic funds transfer (EFT) for payments to 
contractors under Government contracts. When fully implemented, it is 
expected that the use of EFT for contract payments will reduce the 
administrative burden that is currently associated with contract 
invoice or financing payments made by check. The objective of the rule 
is to facilitate implementation of Section 31001(x)(1) of the Debt 
Collection Improvement Act of 1996 (Pub. L. 104-134). Section 
31001(x)(1) amends 31 U.S.C. 3332 to require that, effective July 26, 
1996, payment to newly eligible vendors must be made by EFT. The rule 
will apply to all small businesses who enter into Government contracts 
that (1) Will not be paid through use of the Governmentwide commercial 
purchase card; (2) are issued by a contracting officer within the 
United States or Puerto Rico; (3) are denominated and paid in U.S. 
dollars, and (4) do not involve certain classified information or 
military or emergency operations. To date, no supporting data has been 
collected; therefore, there is no available estimate of the number of 
small businesses that will be subject to the rule.
    The Councils considered several alternatives which include 
permitting a transition period before requiring contractors to receive 
payment by EFT, and excluding, or making voluntary, EFT payments for 
certain types of contracts. The Councils selected the alternative that, 
within the constraints and objectives of the Debt Collection 
Improvement Act and the Treasury regulations, allows small entities to 
take advantage of the benefits of the EFT method of payment but also 
provides flexibility with regard to the needs of small entities. In 
accordance with 31 U.S.C. 3332, the rule provides for exemption of EFT 
requirements until January 1, 1999, for contractors who certify that 
they do not have an account with a financial institution or an 
authorized payment agent. As indicated above, the rule also exempts 
certain classes of contracts. The mandatory information clause 
contained in the rule requires contractors to submit identification and 
account number information, prior to the submission of the first 
request for payment, as a condition of payment under the contract. This 
clause permits a Contractor who does not wish to receive payment by EFT 
methods to submit a request to the payment office. The decision to 
grant the request, however, is solely that of the Government. The rule 
also contains an optional information clause which, if included in a 
contract, would permit a contractor to request EFT payment after award 
of the contract. However, in accordance with the EFT statute, under the 
optional clause, the contractor is required to furnish EFT information 
for any payment to be made after January 1, 1999. The Federal Register 
notice containing the Treasury interim rule states that, after this 
date, the Secretary is authorized to waive the EFT requirement for 
individuals or classes of individuals for whom compliance imposes a 
hardship, for certain categories of checks, and in other circumstances 
deemed necessary.
    Comments are invited. Comments from small entities concerning the 
affected FAR subparts will also be considered in accordance with 5 
U.S.C. 610. Such comments should be submitted separately and should 
cite FAR Case 91-118 in correspondence.

C. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (Pub. L. 104-13) applies 
because the interim rule contains information collection requirements. 
Accordingly, a request for approval of an information collection 
concerning Electronic Funds Transfer (9000-0144) has been submitted to 
the Office of Management and Budget (OMB) and approved through August 
31, 1999.

D. Determination To Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense (DoD), the Administrator of General Services (GSA), and the 
Administrator of the National Aeronautics and Space Administration 
(NASA) that compelling reasons exist to promulgate this interim rule 
without prior opportunity for public comment. This rule is necessary 
for effective implementation of Section 31001(x)(1) of the Debt 
Collection Improvement Act of 1996 (Pub. L. 104-134), which requires 
that beginning 90 days (July 26, 1996) after enactment of the Act 
(April 26, 1996), payments to newly eligible vendors must be made by 
electronic funds transfer. Comments received in response to the 
publication of this interim rule will be considered in formulating the 
final rule.

E. Determination of Applicability of Section 31001(x)(1) of Public Law 
104-134 to Contracts Not Greater Than the Simplified Acquisition 
Threshold and Procurements of Commercial Items

    In accordance with 41 U.S.C. 429 and 41 U.S.C. 430, the Federal 
Acquisition

[[Page 45772]]

Regulatory Council has determined that it would not be in the best 
interest of the Federal Government to exempt contracts in amounts not 
greater than the simplified acquisition threshold, or contracts for the 
procurement of commercial items, from the applicability of Section 
31001(x)(1) of the Debt Collection Improvement Act of 1996 (Pub. L. 
104-134). Section 31001(x)(1) amends 31 U.S.C. 3332 to require that, 
beginning July 26, 1996, payments to newly eligible vendors must be 
made by electronic funds transfer. Electronic funds transfer payment 
methods, when fully implemented, are expected to significantly reduce 
the administrative burden that is currently associated with contract 
payments made by check and, therefore, should apply to all Federal 
contracts.

List of Subjects in 48 CFR Parts 12, 13, 32, and 52

    Government procurement.

    Dated: August 23, 1996.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.

    Therefore, 48 CFR parts 12, 13, 32, and 52 are amended as set forth 
below:
    1. The authority citation for 48 CFR parts 12, 13, 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(c).

PART 12--ACQUISITION OF COMMERCIAL ITEMS


12.302  [Amended]

    2. Section 12.302 is amended in paragraph (b)(3) by adding 
``(except as provided in subpart 32.11)'' after ``Payment''.

PART 13--SIMPLIFIED ACQUISITION PROCEDURES

    3. Section 13.501 is amended by adding paragraph (i) to read as 
follows:


13.501  General.

* * * * *
    (i) In accordance with 31 U.S.C. 3332, payment under contracts may 
be required to be made by electronic funds transfer (EFT). See 32.1103 
for instructions for use of the appropriate clause in purchase orders. 
When obtaining verbal quotes, the contracting officer shall inform the 
offeror of the EFT clause that will be in any resulting purchase order. 
Contracting officers shall not accept EFT payment data. All such data 
shall be provided by the contractor directly to the payment office.

PART 32--CONTRACT FINANCING

    4. Section 32.000 is amended in paragraph (g) by removing the word 
``and''; in paragraph (h) by removing the period and inserting ``; 
and'' in its place; and adding paragraph (i) to read as follows:


32.000  Scope of part.

* * * * *
    (i) Electronic funds transfer payments.
    5. Section 32.002 is amended by adding paragraph (a)(7) to read as 
follows:


32.002  Applicability of subparts.

    (a) * * *
    (7) Subpart 32.11, Electronic Funds Transfer.
* * * * *
    6. Section 32.902 is amended by revising the definition ``Payment 
date'' and adding, in alphabetical order, the definition ``Specified 
payment date'' to read as follows:


32.902  Definitions.

* * * * *
    Payment date means the date on which a check for payment is dated 
or, for an electronic funds transfer, the specified payment date.

* * * * *
    Specified payment date, as it applies to electronic funds transfer 
(EFT), means 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 
account by the financial agent. If no date has been specified in the 
instruction, the specified payment date is 3 business days after the 
payment office releases the EFT payment transaction instruction.

    7. Section 32.903 is amended by adding the following three 
sentences at the end of the section:


32.903  Policy.

    * * * For payments made by electronic funds transfer, the specified 
payment date, included in the Government's order to pay the contractor, 
is the date of payment for prompt payment purposes, whether or not the 
Federal Reserve System actually makes the payment by that date, and 
whether or not the contractor's financial agent credits the 
contractor's account on that date. However, a specified payment date 
must be a valid date under the rules of the Federal Reserve System. For 
example, if the Federal Reserve System requires 2 days' notice before a 
specified payment date to process a transaction, release of a payment 
transaction instruction to the Federal Reserve Bank 1 day before the 
specified payment date could not constitute a valid date under the 
rules of the Federal Reserve System.


32.908  [Amended]

    8. Section 32.908 is amended by removing paragraph (d).
    9. Subpart 32.11, consisting of sections 32.1100 through 32.1103, 
is added to read as follows:
SUBPART 32.11--ELECTRONIC FUNDS TRANSFER
Sec.
32.1100  Scope of subpart.
32.1101  Policy.
32.1102  Assignment of claims.
32.1103  Contract clauses.


32.1100  Scope of subpart.

    This subpart provides policy and procedures for Government payment 
by electronic funds transfer (EFT).


32.1101  Policy.

    (a) 31 U.S.C. 3332(e) requires payment by EFT in certain 
situations. The payment office, not the contracting officer, determines 
if payment is to be made by EFT. The payment office may determine not 
to require submission of EFT information in accordance with paragraph 
(j) of the contract clauses at 52.232-33 and 52.232-34.
    (b) The Government will protect against improper disclosure of a 
contractor's EFT information. The clauses at 52.232-33 and 52.232-34 
require the contractor to submit such information directly to the 
payment office.
    (c) Contractors that do not have an account at a domestic United 
States financial institution or an authorized payment agent are 
exempted by 31 U.S.C. 3332 until January 1, 1999, from the requirement 
to be paid by EFT. The clause at 52.232-33 provides for the contractor 
to submit a certification to that effect directly to the payment office 
in lieu of the EFT information otherwise required by the clause.
    (d) Payment by EFT is the preferred method of contract payment in 
normal contracting situations. However, in accordance with 31 CFR 
208.3(c), certain classes of contracts have been authorized specific 
limited exceptions as listed in paragraphs (d) (1) through (4) of this 
section. In these situations, the method of payment shall be specified 
by the payment office, either through agency regulations or by specific 
agreement.
    (1) Contracts awarded by contracting officers outside the United 
States and Puerto Rico shall provide for payment by other than EFT. 
However, payment

[[Page 45773]]

by EFT is acceptable for this type of contract if the contractor agrees 
and the payment office concurs.
    (2) Contracts denominated or paid in other than United States 
dollars shall provide for payment by other than EFT.
    (3) Classified contracts (see 4.401) shall provide for payment by 
other than EFT where payment by EFT could compromise the safeguarding 
of classified information or national security, or where arrangements 
for appropriate EFT payments would be impractical due to security 
considerations.
    (4) Contracts executed by deployed contracting officers in the 
course of military operations, including, but not limited to, 
contingency operations as defined in 10 U.S.C. 101(a)(13), or contracts 
executed by any contracting officer in the conduct of emergency 
operations, such as responses to natural disasters or national or civil 
emergencies, shall provide for payment by other than EFT where (i) EFT 
payment is not known to be possible, or (ii) EFT payment would not 
support the objectives of the operation. Contracting officers 
predesignated to perform contracting duties in the event of these 
operations shall include coordinated plans for payment arrangements as 
part of the pre-contingency contract operations planning.


32.1102  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 
at 52.232-33 and 52.232-34.


32.1103  Contract clauses.

    (a) Unless instructed otherwise by the cognizant payment office or 
agency guidance, the contracting officer shall insert the clause at 
52.232-33, Mandatory Information for Electronic Funds Transfer Payment, 
in all solicitations and resulting contracts which (1) will not be paid 
through use of the Governmentwide commercial purchase card (see 
13.103(e)); and (2) are not otherwise excepted in accordance with 
32.1101(d). The clause may be inserted in other contracts if the 
contractor requests payment by EFT and the payment office concurs.
    (b) Unless instructed otherwise by agency guidance, the contracting 
officer shall insert the clause at 52.232-34, Optional Information for 
Electronic Funds Transfer Payment, in all solicitations and resulting 
contracts which (1) Do not contain the clause at 52.232-33; (2) Will 
not be paid through use of the Governmentwide commercial purchase card 
(see 13.103(e)); and (3) Are not otherwise excepted in accordance with 
32.1101(d).

    (c) For contracts containing the clause at 52.212-4, Contract Terms 
and Conditions--Commercial Items, if the clause at 52.232-33, Mandatory 
Information for Electronic Funds Transfer Payment, will not be included 
in the contract in accordance with paragraph (a) of this section, the 
contracting officer shall attach an addendum to the contract that 
deletes the clause at 52.232-33 and--

    (1) If required by paragraph (b) of this section, incorporates the 
clause at 52.232-34, Optional Information for Electronic Funds Transfer 
Payment, in the contract; or

    (2) If the clause at 52.232-34 is not required, specifies that the 
Government will make payment under the contract by check.

    (d) If more than one disbursing office will make payment under a 
contract, the contracting officer shall include the EFT clause 
appropriate for each office and shall identify the applicability by 
disbursing office and contract line item.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    10. Section 52.212-4 is amended by revising the date of the clause; 
and in paragraph (i) by revising the third and fifth sentences to read 
as follows:


52.212-4  Contract Terms and Conditions-Commercial Items.

* * * * *

CONTRACT TERMS AND CONDITIONS--COMMERCIAL ITEMS (AUG 1996)

* * * * *
    (i) * * * Unless otherwise provided by an addendum to this 
contract, the Government shall make payment in accordance with the 
clause at FAR 52.232-33, Mandatory Information for Electronic Funds 
Transfer Payment, which is incorporated herein by reference. * * * 
For the purpose of computing the discount earned, payment shall be 
considered to have been made on the date which appears on the 
payment check or the specified payment date if an electronic funds 
transfer payment is made.

* * * * *


52.232-28  [Reserved]

    11. Section 52.232-28 is removed and reserved.
    12. Section 52.232-33 and 52.232-34 are added to read as follows:


52.232-33  Mandatory Information for Electronic Funds Transfer Payment.

    As prescribed in 32.1103(a) and (c), insert the following clause:

MANDATORY INFORMATION FOR ELECTRONIC FUNDS TRANSFER PAYMENT (AUG 1996)

    (a) Method of payment. Payments by the Government under this 
contract, including invoice and contract financing payments, may be 
made by check or electronic funds 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. As used in this clause, the term ``EFT'' refers 
to the funds transfer and may also include 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, 
unless the payment office determines that submission of the 
information is not required. However, until January 1, 1999, in the 
event the Contractor certifies in writing to the payment office that 
the Contractor does not have an account with a financial institution 
or an authorized payment agent, payment shall be made by other than 
EFT. For any payments to be made after January 1, 1999, the 
Contractor shall provide EFT information 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 an Automated Clearing House (ACH) subject to the 
banking laws of the United States or the Federal Reserve Wire 
Transfer System 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 remittance address, as stated in 
the contract, and account number at the Contractor's financial 
agent.
    (3) The signature (manual or electronic, as appropriate), title, 
and telephone number of

[[Page 45774]]

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 Wire Transfer System 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 Wire Transfer System 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 institution receiving the wire transfer 
payment.
    (e) Suspension of payment. (1) Notwithstanding the provisions of 
any other clause of this contract, the Government is not required to 
make any payment under this contract until after receipt, by the 
designated payment office, of the correct EFT payment information 
from the Contractor or a certificate submitted in accordance with 
paragraph (b) of this clause. 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 to the 
extent payment is made by EFT. 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 funds 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 payment 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 7 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 Assignment of 
Claims clause of this contract, the assignee shall provide the 
assignee EFT information required by paragraph (d) of this clause. 
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, the 
Contractor may submit a request 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.
    (k) Change of EFT information by financial agent. The Contractor 
agrees that the Contractor's financial agent may notify the 
Government of a change to the routing transit number, Contractor 
account number, or account type. The Government shall use the 
changed data in accordance with paragraph (e)(2) of this clause. The 
Contractor agrees that the information provided by the agent is 
deemed to be correct information as if it were provided by the 
Contractor. The Contractor agrees that the agent's notice of changed 
EFT data is deemed to be a request by the Contractor in accordance 
with paragraph (e)(2) that no further payments be made until the 
changed EFT information is implemented by the payment office.

(End of clause)


52.232-34  Optional Information for Electronic Funds Transfer Payment.

    As prescribed in 32.1103 (b) and (c), insert the following clause:

OPTIONAL INFORMATION FOR ELECTRONIC FUNDS TRANSFER PAYMENT (AUG 1996)

    (a) Method of payment. (1) Except as provided in paragraph 
(a)(2) of this clause, after the Contractor provides the information 
described in paragraph (d) of this clause, in accordance with 
paragraph (b) of this clause, payments by the Government under this 
contract, including invoice and contract financing payments, may be 
made by check or electronic funds 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. As used in this clause, the term ``EFT'' refers 
to the funds transfer and may also include the information transfer.
    (2) Notwithstanding the provision of this clause making the 
furnishing of EFT information optional, the Contractor shall furnish 
the EFT information described in paragraph (d) for any payment to be 
made after January 1, 1999.
    (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. 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 an Automated Clearing House (ACH) subject to the 
domestic banking laws of the United States or the Federal Reserve 
Wire Transfer System 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 remittance address, as stated in 
the contract, and account number at the Contractor's financial 
agent.
    (3) The signature (manual or electronic, as appropriate), title, 
and telephone number of

[[Page 45775]]

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 Wire Transfer System 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 Wire Transfer System 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 institution receiving the wire transfer 
payment.
    (e) Suspension of payment. (1) Notwithstanding the provisions of 
any other clause of this contract, 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, or, for 
payment after January 1, 1999, if EFT information has not been 
furnished, then until receipt by the designated payment office of 
the correct EFT information from the Contractor, (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 to the 
extent payment is made by EFT. 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 funds 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 payment 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 7 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 Assignment of 
Claims clause of this contract, the assignee shall provide the 
assignee EFT information required by paragraph (d) of this clause. 
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, after submitting the EFT 
information, the Contractor does not wish to receive payment by EFT 
methods for one or more payments, the Contractor may submit a 
request to the designated payment office to refrain from using the 
EFT payment method. The decision to grant the request is solely that 
of the Government.
    (k) Change of EFT information by financial agent. The Contractor 
agrees that the Contractor's financial agent may notify the 
Government of a change to the routing transit number, Contractor 
account number, or account type. The Government shall use the 
changed data in accordance with paragraph (e)(2) of this clause. The 
Contractor agrees that the information provided by the agent is 
deemed to be correct information as if it were provided by the 
Contractor. The Contractor agrees that the agent's notice of changed 
EFT data is deemed to be a request by the Contractor in accordance 
with paragraph (e)(2) that no further payments be made until the 
changed EFT information is implemented by the payment office.

(End of clause)

    Federal Acquisition Circular (FAC) 90-42 is issued under the 
authority of the Secretary of Defense, the Administrator of General 
Services, and the Administrator for the National Aeronautics and Space 
Administration.
    Unless otherwise specified, all Federal Acquisition Regulation 
(FAR) and other directive material contained in FAC 90-42 is effective 
August 29, 1996.

    Dated: August 21, 1996.
Eleanor R. Spector,
Director, Defense Procurement.

    Dated: August 22, 1996.
Ida M. Ustad,
Deputy Associate Administrator, Office of Acquisition Policy.

    Dated: August 21, 1996.
Tom Luedtke,
Deputy Associate Administrator for Procurement, NASA.
[FR Doc. 96-22034 Filed 8-28-96; 8:45 am]
BILLING CODE 6820-EP-P