[Federal Register Volume 63, Number 50 (Monday, March 16, 1998)]
[Rules and Regulations]
[Pages 12966-12969]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-6664]
[[Page 12965]]
_______________________________________________________________________
Part V
General Services Administration
_______________________________________________________________________
48 CFR Parts 532 and 552 and Chapter V
General Services Administration Acquisition Regulation; 10 Day Payment
Clause for Certain Federal Supply Service Contracts and Small Entity
Compliance Guide; Final Rules
Federal Register / Vol. 63, No. 50 / Monday, March 16, 1998 / Rules
and Regulations
[[Page 12966]]
GENERAL SERVICES ADMINISTRATION
48 CFR Parts 532 and 552
[APD 2800.12A, CHGE 77]
RIN 3090-AG30
General Services Administration Acquisition Regulation; 10 Day
Payment Clause for Certain Federal Supply Service Contracts
AGENCY: Office of Acquisition Policy, GSA.
ACTION: Interim rule with request for comments.
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SUMMARY: The General Services Administration Acquisition Regulation
(GSAR) is amended to authorize payment of invoices in 10 days after
receipt for Federal Supply Service (FSS) Stock, Special Order, and
Schedules contracts when the contractor agrees to full cycle electronic
commerce.
DATES: Effective Date March 16, 1998. Comments should be submitted in
writing to the address shown below on or before May 15, 1998.
ADDRESSES: Mail comments to General Services Administration, Office of
Acquisition Policy, GSA Acquisition Policy Division (MVP), 1800 F
Street, NW, Room 4012, Washington, DC 20405.
FOR FURTHER INFORMATION CONTACT: Gloria Sochon, GSA Acquisition Policy
Division, (202) 208-6726.
SUPPLEMENTARY INFORMATION:
A. Background
Electronic commerce (EC) helps to reduce the cost and improve the
efficiency of administrative processes by using electronic data
interchange (EDI) and electronic funds transfer (EFT) to conduct
business transactions. GSA FSS seeks to encourage contractors to
implement full cycle EC so that both parties realize these benefits.
Full cycle EC includes placing orders, receiving orders, issuing
invoices, and paying invoices electronically. Payment by electronic
funds transfer is already mandatory for most Federal contracts under
the Debt Collection Improvement Act of 1996 (31 U.S.C. 3332). GSA FSS
has the capability to issue orders and receive invoices electronically.
To encourage contractor participation, GSA will pay invoices in 10 days
for contractors who agree to process orders and invoices electronically
using implementation conventions provided by GSA.
B. Executive Order 12866
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.
C. Regulatory Flexibility Act
This interim rule will not 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. The rule provides
that the Government will make payment in 10 days from receipt of a
proper invoice when the contractor agrees to full cycle EC. Because not
all contractors are EDI capable, full cycle EC is not mandatory.
Contractors who do not agree to the terms will be paid under standard
Prompt Payment Act (31 U.S.C. 3903) procedures and suffer no adverse
consequences. Contractors who agree to full cycle EC will benefit from
receiving payment more quickly and being able to streamline
administrative procedures and costs associated with processing contract
orders.
D. Paperwork Reduction Act
The Paperwork Reduction Act does not apply because the changes to
the GSAR do not impose recordkeeping or information collection
requirements, or otherwise collect information from offerors,
contractors, or members of the public that require approval of the
Office of Management and Budget under 44 U.S.C. 3501 et seq.
E. Determination to Issue an Interim Rule
Urgent and compelling reasons exist to promulgate this interim rule
without prior opportunity for public comment. GSA believes this rule
will provide significant benefits to both the Federal government and
GSA contractors. Contractors who participate in full cycle EC will
receive payment more quickly than the standard 30 days under the Prompt
Payment Act. Electronic processing will reduce costs and improve
efficiency for both contractors and the government. However, pursuant
to Pub. L. 98-577 and FAR 1.501, GSA will consider public comments
received in response to this interim rule in the formation of the final
rule.
List of Subjects in 48 CFR Parts 532 and 552
Government procurement.
Accordingly, 48 CFR 532 and 552 are amended as follows:
1. The authority citation for 48 CFR Parts 532 and 552 continues to
read as follows:
Authority: 40 U.S.C. 486(c)
PART 532--CONTRACT FINANCING
Section 532.902 is added to read as follows:
532.902 Definitions.
Full cycle electronic commerce means the use of electronic data
interchange (EDI) and electronic funds transfer (EFT):
(a) By the Government, to place purchase or delivery orders,
receive invoices, and pay invoices.
(b) By the Contractor, to accept and fill orders, submit invoices,
and receive payment.
3. Section 532.905 is amended by adding a new paragraph (c) as
follows:
532.905 Invoice payments.
* * * * *
(c)(1) To increase efficiency and reduce costs to the Government,
Federal Supply Service contracts under the Stock, Special Order, and
Schedules Programs may authorize payment within 10 days of receipt of a
proper invoice. The contract must meet the following conditions:
(i) The contractor agrees to full cycle electronic commerce.
(ii) The contract includes FAR 52.232-33, Mandatory Information for
Electronic Funds Transfer Payment.
(2) The 10 day payment terms apply to each order that meet all the
following conditions:
(i) FSS places the order using EDI and the contractor submits EDI
invoices in accordance with the Trading Partner Agreement.
(ii) A GSA Finance Center pays the invoices using EFT.
(3) The 10 day payment terms do not apply to any order:
(i) Placed by a GSA contracting activity other than FSS.
(ii) Placed by or paid by another agency.
4. Section 532.908 is amended by revising paragraph (a) to read as
follows:
532.908 Contract clause.
(a) For FSS Stock, Special Order, and Schedules solicitations and
contracts that provide payment in 10 days under 532.905(c), the
contracting officer must:
(1) If the contract will include FAR 52.212-4, insert the clause at
552.232-70. GSA received a class deviation to allow use of 552.232-70
for commercial items.
(2) If the contract will not include FAR 52.212-4, insert 552.232-
25, Prompt Payment, instead of FAR 52.232-25.
* * * * *
[[Page 12967]]
PART 552--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
5. Section 552.212-71 is revised by changing the provision date and
revising the clause ``Invoice Payments'' in numerical order as follows:
552.212-71 Contract Terms and Conditions Applicable to GSA Acquisition
of Commercial Items
As prescribed in 512.301(a)(2), insert the following provision:
CONTRACT TERMS AND CONDITIONS APPLICABLE TO GSA ACQUISITION OF
COMMERCIAL ITEMS (MAR 1998)
* * * * *
______552.232-70 Invoice Payments
* * * * *
6. A new section 552.232-25 is added to read as follows:
552.232-25 Prompt payment.
As prescribed in 532.908(a)(2), insert the following clause:
PROMPT PAYMENT (MAY 1997) (DEVIATION MAR 1998)
Notwithstanding any other payment clause in this contract, the
Government will make invoice payments and contract financing
payments under the terms and conditions specified in this clause.
Payment shall be considered as being made on the day a check is
dated or the date of an electronic funds transfer. Definitions of
pertinent terms are set forth in section 32.902 of the Federal
Acquisition Regulation. All days referred to in this clause are
calendar days, unless otherwise specified. (However, see
subparagraph (a)(4) of this clause concerning payments due on
Saturdays, Sundays, and legal holidays.)
(a) Invoice payments.
(1) The due date for making invoice payments by the designated
payment office is:
(i) For orders placed electronically by the General Services
Administration (GSA) Federal Supply Service (FSS), and to be paid by
GSA through electronic funds transfer (EFT), the later of the
following two events:
(A) The 10th day after the designated billing office receives a
proper invoice from the Contractor. If the designated billing office
fails to annotate the invoice with the date of receipt at the time
of receipt, the invoice payment due date shall be the 10th day after
the date of the Contractor's invoice; provided the Contractor
submitted a proper invoice and no disagreement exists over quantity,
quality, or Contractor compliance with contract requirements.
(B) The 10th day after Government acceptance of supplies
delivered or services performed by the Contractor.
(ii) For all other orders, the later of the following two
events:
(A) The 30th day after the designated billing office receives a
proper invoice from the Contractor. If the designated billing office
fails to annotate the invoice with the date of receipt at the time
of receipt, the invoice payment due date shall be the 30th day after
the date of the Contractor's invoice; provided the Contractor
submitted a proper invoice and no disagreement exists over quantity,
quality, or Contractor compliance with contract requirements.
(B) The 30th day after Government acceptance of supplies
delivered or services performed by the Contractor.
(iii) On a final invoice, if the payment amount is subject to
contract settlement actions, acceptance occurs on the effective date
of the contract settlement.
(2) The General Services Administration will issue payment on
the due date in (a)(1)(i) above if the Contractor complies with full
cycle electronic commerce. Full cycle electronic commerce includes
all the following elements:
(i) The Contractor must receive and fulfill electronic data
interchange (EDI) purchase orders (transaction set 850).
(ii) The Contractor must generate and submit to the Government
valid EDI invoices (transaction set 810).
(iii) The Contractor's financial institution must receive and
process, on behalf of the Contractor, EFT payments through the
Automated Clearing House (ACH) system.
(iv) The EDI transaction sets in (i) through (iii) above must
adhere to implementation conventions provided by GSA.
(3) If any of the conditions in (a)(2) above do not occur, the
10 day payment due dates in (a)(1) become 30 day payment due dates.
(4) Certain food products and other payments.
(i) Due dates on Contractor invoices for meat, meat food
products, or fish; perishable agricultural commodities; and dairy
products, edible fats or oils, and food products prepared from
edible fats or oils are --
(A) For meat or meat food products, as defined in section
2(a)(3) of the Packers and Stockyard Act of 1921 (7 U.S.C. 182(3)),
and as further defined in Pub. L. 98-181, including any edible fresh
or frozen poultry meat, any perishable poultry meat food product,
fresh eggs, and any perishable egg product, as close as possible to,
but not later than, the 7th day after product delivery.
(B) For fresh or frozen fish, as defined in section 204(3) of
the Fish and Seafood Promotion Act of 1986 (16 U.S.C. 4003(3)), as
close as possible to, but not later than, the 7th day after product
delivery.
(C) For perishable agricultural commodities, as defined in
section 1(4) of the Perishable Agricultural Commodities Act of 1930
(7 U.S.C. 499a(4)), as close as possible to, but not later than, the
10th day after product delivery, unless another date is specified in
the contract.
(D) For dairy products, as defined in section 111(e) of the
Dairy Production Stabilization Act of 1983 (7 U.S.C. 4502(e)),
edible fats or oils, and food products prepared from edible fats or
oils, as close as possible to, but not later than, the 10th day
after the date on which a proper invoice has been received. Liquid
milk, cheese, certain processed cheese products, butter, yogurt, ice
cream, mayonnaise, salad dressings, and other similar products, fall
within this classification. Nothing in the Act limits this
classification to refrigerated products. When questions arise
regarding the proper classification of a specific product,
prevailing industry practices will be followed in specifying a
contract payment due date. The burden of proof that a classification
of a specific product is, in fact, prevailing industry practice is
upon the Contractor making the representation.
(ii) If the contract does not require submission of an invoice
for payment (e.g., periodic lease payments), the due date will be as
specified in the contract.
(5) Contractor's invoice. The Contractor shall prepare and
submit invoices to the designated billing office specified in the
contract. A proper invoice must include the items listed in
subdivisions (a)(5)(i) through (a)(5)(viii) of this clause. If the
invoice does not comply with these requirements, it shall be
returned within 7 days after the date the designated billing office
received the invoice (3 days for meat, meat food products, or fish;
5 days for perishable agricultural commodities, edible fats or oils,
and food products prepared from edible fats or oils), with a
statement of the reasons why it is not a proper invoice. Untimely
notification will be taken into account in computing any interest
penalty owed the Contractor in the manner described in subparagraph
(a)(5) of this clause.
(i) Name and address of the Contractor.
(ii) Invoice date. (The Contractor is encouraged to date
invoices as close as possible to the date of the mailing or
transmission.)
(iii) Contract number or other authorization for supplies
delivered or services performed (including order number and contract
line item number).
(iv) Description, quantity, unit of measure, unit price, and
extended price of supplies delivered or services performed.
(v) Shipping and payment terms (e.g., shipment number and date
of shipment, prompt payment discount terms). Bill of lading number
and weight of shipment will be shown for shipments on Government
bills of lading.
(vi) Name and address of Contractor official to whom payment is
to be sent (must be the same as that in the contract or in a proper
notice of assignment).
(vii) Name (where practicable), title, phone number, and mailing
address of person to be notified in the event of a defective
invoice.
(viii) Any other information or documentation required by the
contract (such as evidence of shipment).
(ix) While not required, the Contractor is strongly encouraged
to assign an identification number to each invoice.
(6) Interest penalty. An interest penalty shall be paid
automatically by the designated payment office, without request from
the Contractor, if payment is not made by the due date and the
conditions listed in subdivisions (a)(6)(i) through (a)(6)(iii) of
this clause are met, if applicable. However, when the due date falls
on a Saturday, Sunday, or legal holiday when Federal Government
offices are closed and Government business is not expected to be
conducted, payment may be made on the following business day without
incurring a late payment interest penalty.
[[Page 12968]]
(i) A proper invoice was received by the designated billing
office.
(ii) A receiving report or other Government documentation
authorizing payment was processed, and there was no disagreement
over quantity, quality, or Contractor compliance with any contract
term or condition.
(iii) In the case of a final invoice for any balance of funds
due the Contractor for supplies delivered or services performed, the
amount was not subject to further contract settlement actions
between the Government and the Contractor.
(7) Computing penalty amount. The interest penalty shall be at
the rate established by the Secretary of the Treasury under section
12 of the Contract Disputes Act of 1978 (41 U.S.C. 611) that is in
effect on the day after the due date, except where the interest
penalty is prescribed by other governmental authority (e.g.,
tariffs). This rate is referred to as the ``Renegotiation Board
Interest Rate,'' and it is published in the Federal Register
semiannually on or about January 1 and July 1. The interest penalty
shall accrue daily on the invoice principal payment amount approved
by the Government until the payment date of such approved principal
amount; and will be compounded in 30-day increments inclusive from
the first day after the due date through the payment date. That is,
interest accrued at the end of any 30-day period will be added to
the approved invoice principal payment amount and will be subject to
interest penalties if not paid in the succeeding 30-day period. If
the designated billing office failed to notify the Contractor of a
defective invoice within the periods prescribed in subparagraph
(a)(5) of this clause, the due date on the corrected invoice will be
adjusted by subtracting from such date the number of days taken
beyond the prescribed notification of defects period. Any interest
penalty owed the Contractor will be based on this adjusted due date.
Adjustments will be made by the designated payment office for errors
in calculating interest penalties.
(i) For the sole purpose of computing an interest penalty that
might be due the Contractor, Government acceptance shall be deemed
to have occurred constructively on the 7th day (unless otherwise
specified in this contract) after the Contractor delivered the
supplies or performed the services in accordance with the terms and
conditions of the contract, unless there is a disagreement over
quantity, quality, or Contractor compliance with a contract
provision. In the event that actual acceptance occurs within the
constructive acceptance period, the determination of an interest
penalty shall be based on the actual date of acceptance. The
constructive acceptance requirement does not, however, compel
Government officials to accept supplies or services, perform
contract administration functions, or make payment prior to
fulfilling their responsibilities.
(ii) The following periods of time will not be included in the
determination of an interest penalty:
(A) The period taken to notify the Contractor of defects in
invoices submitted to the Government, but this may not exceed 7 days
(3 days for meat, meat food products, or fish; 5 days for perishable
agricultural commodities, dairy products, edible fats or oils, and
food products prepared from edible fats or oils).
(B) The period between the defects notice and resubmission of
the corrected invoice by the Contractor.
(C) For incorrect electronic funds transfer (EFT) information,
in accordance with the EFT clause of this contract.
(iii) Interest penalties will not continue to accrue after the
filing of a claim for such penalties under the clause at 52.233-1,
Disputes, or for more than 1 year. Interest penalties of less than
$1 need not be paid.
(iv) Interest penalties are not required on payment delays due
to disagreement between the Government and the Contractor over the
payment amount or other issues involving contract compliance or on
amounts temporarily withheld or retained in accordance with the
terms of the contract. Claims involving disputes, and any interest
that may be payable, will be resolved in accordance with the clause
at 52.233-1, Disputes.
(8) Prompt payment discounts. An interest penalty also shall be
paid automatically by the designated payment office, without request
from the Contractor, if a discount for prompt payment is taken
improperly. The interest penalty will be calculated as described in
subparagraph (a)(7) of this clause on the amount of discount taken
for the period beginning with the first day after the end of the
discount period through the date when the Contractor is paid.
(9) Additional interest penalty.
(i) If this contract was awarded on or after October 1, 1989, a
penalty amount, calculated in accordance with subdivision
(a)(9)(iii) of this clause, shall be paid in addition to the
interest penalty amount if the Contractor--
(A) Is owed an interest penalty of $1 or more;
(B) Is not paid the interest penalty within 10 days after the
date the invoice amount is paid; and
(C) Makes a written demand to the designated payment office for
additional penalty payment, in accordance with subdivision
(a)(9)(ii) of this clause, postmarked not later than 40 days after
the invoice amount is paid.
(ii)(A) Contractors shall support written demands for additional
penalty payments with the following data. No additional data shall
be required. Contractors shall --
(1) Specifically assert that late payment interest is due under
a specific invoice, and request payment of all overdue late payment
interest penalty and such additional penalty as may be required;
(2) Attach a copy of the invoice on which the unpaid late
payment interest was due; and
(3) State that payment of the principal has been received,
including the date of receipt.
(B) Demands must be postmarked on or before the 40th day after
payment was made, except that--
(1) If the postmark is illegible or nonexistent, the demand must
have been received and annotated with the date of receipt by the
designated payment office on or before the 40th day after payment
was made; or
(2) If the postmark is illegible or nonexistent and the
designated payment office fails to make the required annotation, the
demand's validity will be determined by the date the Contractor has
placed on the demand; provided such date is no later than the 40th
day after payment was made.
(iii)(A) The additional penalty shall be equal to 100 percent of
any original late payment interest penalty, except--
(1) The additional penalty shall not exceed $5,000;
(2) The additional penalty shall never be less than $25; and
(3) No additional penalty is owed if the amount of the
underlying interest penalty is less than $1.
(B) If the interest penalty ceases to accrue in accordance with
the limits stated in subdivision (a)(5)(iii) of this clause, the
amount of the additional penalty shall be calculated on the amount
of interest penalty that would have accrued in the absence of these
limits, subject to the overall limits on the additional penalty
specified in subdivision (a)(7)(iii)(A) of this clause.
(C) For determining the maximum and minimum additional
penalties, the test shall be the interest penalty due on each
separate payment made for each separate contract. The maximum and
minimum additional penalty shall not be based upon individual
invoices unless the invoices are paid separately. Where payments are
consolidated for disbursing purposes, the maximum and minimum
additional penalty determination shall be made separately for each
contract therein.
(D) The additional penalty does not apply to payments regulated
by other Government regulations (e.g., payments under utility
contracts subject to tariffs and regulation).
(b) Contract financing payments.
(1) Due dates for recurring financing payments. If this contract
provides for contract financing, requests for payment shall be
submitted to the designated billing office as specified in this
contract or as directed by the Contracting Officer. Contract
financing payments shall be made on the [insert day as prescribed by
Agency head; if not prescribed, insert 30th day] day after receipt
of a proper contract financing request by the designated billing
office. In the event that an audit or other review of a specific
financing request is required to ensure compliance with the terms
and conditions of the contract, the designated payment office is not
compelled to make payment by the due date specified.
(2) Due dates for other contract financing. For advance
payments, loans, or other arrangements that do not involve recurring
submissions of contract financing requests, payment shall be made in
accordance with the corresponding contract terms or as directed by
the Contracting Officer.
(3) Interest penalty not applicable. Contract financing payments
shall not be assessed an interest penalty for payment delays.
(c) Fast payment procedure due dates. If this contract contains
the clause at 52.213-1, Fast Payment Procedure, payments will be
made within 15 days after the date of receipt of the invoice.
[[Page 12969]]
(End of clause)
7. Section 552.232-70 is revised as follows:
552.232-70 Invoice payments.
As prescribed in 532.908(a)(1), insert the following clause:
INVOICE PAYMENTS (MAR 1998)
(a) The due date for making invoice payments by the designated
payment office is:
(1) For orders placed electronically by the General Services
Administration (GSA) Federal Supply Service (FSS), and to be paid by
GSA through electronic funds transfer (EFT), the later of the
following two events:
(i) The 10th day after the designated billing office receives a
proper invoice from the Contractor. If the designated billing office
fails to annotate the invoice with the date of receipt at the time
of receipt, the invoice payment due date shall be the 10th day after
the date of the Contractor's invoice; provided the Contractor
submitted a proper invoice and no disagreement exists over quantity,
quality, or Contractor compliance with contract requirements.
(ii) The 10th day after Government acceptance of supplies
delivered or services performed by the Contractor.
(2) For all other orders, the later of the following two events:
(i) The 30th day after the designated billing office receives a
proper invoice from the Contractor. If the designated billing office
fails to annotate the invoice with the date of receipt at the time
of receipt, the invoice payment due date shall be the 30th day after
the date of the Contractor's invoice; provided the Contractor
submitted a proper invoice and no disagreement exists over quantity,
quality, or Contractor compliance with contract requirements.
(ii) The 30th day after Government acceptance of supplies
delivered or services performed by the Contractor.
(3) On a final invoice, if the payment amount is subject to
contract settlement actions, acceptance occurs on the effective date
of the contract settlement.
(b) The General Services Administration will issue payment on
the due date in (a)(1) above if the Contractor complies with full
cycle electronic commerce. Full cycle electronic commerce includes
all the following elements:
(1) The Contractor must receive and fulfill electronic data
interchange (EDI) purchase orders (transaction set 850).
(2) The Contractor must generate and submit to the Government
valid EDI invoices (transaction set 810).
(3) The Contractor's financial institution must receive and
process, on behalf of the Contractor, EFT payments through the
Automated Clearing House (ACH) system.
(4) The EDI transaction sets in (b)(1) through (b)(3) above must
adhere to implementation conventions provided by GSA.
(c) If any of the conditions in (b) above do not occur, the 10
day payment due dates in (a)(1) become 30 day payment due dates.
(d) All other provisions of the Prompt Payment Act (31 U.S.C.
3901 et seq.) and Office of Management and Budget (OMB) Circular A-
125, Prompt Payment, apply.
(End of clause)
Dated: February 27, 1998.
Ida M. Ustad,
Deputy Associate Administrator, Office of Acquisition Policy.
[FR Doc. 98-6664 Filed 3-13-98; 8:45 am]
BILLING CODE 6820-61-P