[Federal Register Volume 63, Number 97 (Wednesday, May 20, 1998)]
[Rules and Regulations]
[Pages 27682-27684]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-13387]


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DEPARTMENT OF DEFENSE

48 CFR Parts 232 and 252

[DFARS Case 98-D012]


Defense Federal Acquisition Regulation Supplement; Electronic 
Funds Transfer

AGENCY: Department of Defense (DoD).

ACTION: Interim rule with request for comments.

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SUMMARY: The Director of Defense Procurement has issued an interim rule 
amending the Defense Federal Acquisition Regulation Supplement (DFARS) 
to provide policy and procedures for the use of the electronic funds 
transfer (EFT) method of contract payment when the payment office uses 
the central contractor registration (CCR) database as its source of EFT 
information. This rule eliminates requirements for duplicate 
submissions of EFT information by DoD contractors.

DATES: Effective date: June 1, 1998.
    Comment date: Comments on the interim rule should be submitted in 
writing to the address shown below on or before July 20, 1998, to be 
considered in the formulation of the final rule.

ADDRESSES: Interested parties should submit written comments to: 
Defense Acquisition Regulations Council, Attn: Ms. Sandra G. Haberlin, 
PDUSD(A&T) DP (DAR), IMD 3D139, 3062 Defense Pentagon, Washington, DC 
20301-3062. Telefax number (703) 602-0350.
    E-mail comments submitted over the Internet should be addressed to: 
[email protected]
    Please cite DFARS Case 98-D012 in all correspondence related to 
this issue. E-mail comments should cite DFARS Case 98-D012 in the 
subject line.

FOR FURTHER INFORMATION CONTACT:
Ms. Sandra G. Haberline, (703) 602-0131.

SUPPLEMENTARY INFORMATION:

A. Background

    An interim rule amending the Federal Acquisition Regulation (FAR) 
was published in the Federal Register on August 29, 1996 (61 FR 45770). 
The rule added a new FAR Subpart 32.11, Electronic Funds Transfer, 
which provides policy and procedures for Government payment by EFT. The 
rule also added two contract clauses: FAR 52.232-33, Mandatory 
Information for Electronic Funds Transfer Payment, and FAR 52.232-34, 
Optional Information for Electronic Funds Transfer Payment. FAR 52.232-
33 requires the contractor to provide EFT information as a condition of 
payment under the contract. When FAR 52.232-33 will not be included in 
a contract, FAR 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 the contractor agree to 
commence EFT. Both clauses require the contractor to provide EFT 
information to the cognizant payment office for each contract awarded 
to the contractor.
    A final DFARS rule was published in the Federal Register on March 
31, 1998 (63 FR 15316). The rule added DFARS Subpart 204.73 and a 
contract clause at DFARS 252.204-7004, Required Central Contractor 
Registration, and requires contractor registration in a DoD CCR 
database prior to award of a contract, basic agreement, basic ordering 
agreement, or blanket purchase agreement, unless the award results from 
a solicitation issued on or before May 31, 1998. The rule requires that 
contractors register on a one-time basis, and confirm on an annual 
basis that their CCR registration is accurate and complete. As part of 
the registration process, contractors are required to furnish their EFT 
payment information into the CCR database.
    This interim DFARs rule eliminates conflicting and administratively 
burdensome requirements for contractors to provide EFT information to 
the payment office for each contract awarded (in accordance with FAR 
52.232-33 or FAR 52.232-34), and into the CCR database (in accordance 
with DFARS 252.204-7004). This rule prescribes the use of a new clause 
at DFARS 252.232-7009, Payment by Electronic Funds Transfer (CCR), 
instead of either EFT FAR clause, for contracts that include the clause 
at 252.204-7004 and that will be paid by EFT. DFARS 252.232-7009 is 
especially tailored for those DoD contractors that are required to 
register in the CCR database.

B. Regulatory Flexibility Act

    The interim rule may have a significant beneficial economic impact 
on a substantial number of small entities within the meaning of the 
Regulatory Flexibility Act, 5 U.S.C. 601, et seq. An Initial Regulatory 
Flexibility Analysis has been performed and is summarized as follows:
    The objective of the rule is to revise current procedures for the 
use of electronic funds transfer in order to accommodate the DoD 
requirement for contractors to register into a CCR database; thus, 
eliminating conflicting and administratively burdensome requirements 
for both large and small contractors.
    FAR 52.232-33 and FAR 52.232-34 require, for each contract awarded, 
the contractor to provide EFT information to the cognizant payment 
office. In addition, DFARS 204.7302 requires contractor registration in 
a DoD CCR database prior to award of a contract, basic agreement, basic 
ordering agreement, or blanket purchase agreement, unless the award 
results from a solicitation issued on or before May 31, 1998. As part 
of the registration process, contractors are required to furnish their 
EFT information. Therefore, Contractors are required to

[[Page 27683]]

furnish EFT information into the CCR database, and to the cognizant 
payment office for each contract awarded to them.
    This interim DFARS rule applies to small entities that are required 
to register in the DoD CCR database in accordance with DFARS 252.204-
7004, and that are required to be paid by EFT in accordance with FAR 
52.232-33 or FAR 52.232-34. The rule does not apply to small entities 
that are exempted from CCR or exempted from the EFT method of payment. 
This rule reduces the burden on small entities by eliminating the 
requirement for DoD contractors to furnish EFT information to the 
payment office for each contract. To date, no supporting data has been 
collected; therefore, there is no available estimate of the number of 
small entities that will be subject to the rule.
    The interim rule decreases information collection requirements by 
requiring the use of DFARS 252.232-7009 instead of the FAR clauses and 
their associated reporting requirements. The new DFARS clause only 
applies to contractors that are required to register in the CCR 
database. The requirement to register in the database already is 
prescribed at DFARS 204.7302.
    This rule has a beneficial economic impact on small entities by 
eliminating conflicting and administratively burdensome requirements 
for submission of EFT information. There are no significant 
alternatives that would have a more beneficial economic impact on small 
entities and at the same time comply with 31 U.S.C. 3332, as amended by 
Subsection 31001(x) of Public Law 104-134, that ``* * * all Federal 
payments to a recipient who becomes eligible for that type of payment * 
* * shall be made by electronic funds transfer.''
    A copy of the Initial Regulatory Flexibility Analysis may be 
obtained from the address specified herein. Comments are invited from 
small businesses and other interested parties. Comments from small 
entities concerning the affected DFARS subparts also will be considered 
in accordance with 5 U.S.C. 610. Such comments must be submitted 
separately and should cite DFARS Case 98-D012.

C. Paperwork Reduction Act

    The interim rule decreases the information collection requirement 
currently approved under Office of Management and Budget (OMB) Control 
Number 9000-0144. The decrease results from the rule removing the 
requirement to use the clause at FAR 52.232-33 or FAR 52.232-34, when a 
contract includes the clause at DFARS 252.204-7004, Required Central 
Contractor Registration, and will be paid by EFT. OMB approved the 
information collection requirement to submit EFT information in the CCR 
database on November 20, 1997, under OMB Control Number 0704-0400, 
which expires on November 30, 2000.

D. Determination To Issue an Interim Rule

    A determination has been made under the authority of the Secretary 
of Defense that urgent and compelling reasons exist to publish this 
interim rule prior to affording the public an opportunity to comment. 
This action is necessary to expeditiously eliminate conflicting and 
administratively burdensome requirements for DoD contractors. Effective 
June 1, 1998, DoD contractors are required to register in a CCR 
database. The contractor payment information required by the clauses at 
FAR 52.232-33 and 52.232-34 duplicates information required for 
registration in the CCR database. This interim rule prescribes a DFARS 
clause for use in place of the FAR clauses, to eliminate requirements 
for duplicate submissions of information by DoD contractors. However, 
comments received in response to the publication of this interim rule 
will be considered in formulating the final rule.

List of Subjects in 48 CFR Parts 232 and 252

    Government procurement.
Michele P. Peterson,
Executive Editor, Defense Acquisition Regulations Council.

    Therefore, 48 CFR Parts 232 and 252 are amended as follows:
    1. The authority citation for 48 CFR Parts 232 and 252 continues to 
read as follows:

    Authority: 41 U.S.C. 421 and 48 CFR Chapter 1.

PART 232--CONTRACT FINANCING

    2. Subpart 232.11 is added to read as follows:

Subpart 232.11--Electronic Funds Transfer

Sec.
232.1101  Policy.
232.1103  Contract clause.


232.1101  Policy.

    (a) If the payment office is not capable of making payment by 
electronic funds transfer (EFT), the payment office is relieved of the 
requirement to pay by EFT is DoD complies with 31 CFR 208.3, which 
requires written notice and submittal of an implication plan to the 
Department of the Treasury, Financial Management Service.


232.1103   Contract clause.

    If the solicitation or contract includes the clause at 252.204-
7004, Required Central Contractor Registration, and payment under the 
contract will be made by electronic funds transfer, use the clause at 
252.232-7009, Payment by Electronic Funds Transfer (CCR), instead of 
the clause at FAR 52.232-33, Mandatory Information for Electronic Funds 
Transfer Payment, or the clause at FAR 52.232-34, Optional Information 
for Electronic Funds Transfer Payment.

PART 252--SOLICITAITON PROVISIONS AND CONTRACT CLAUSES

    3. Section 252.232-7009 is added to read as follows:


252.232-7009  Payment by Electronic Funds Transfer (CCR).

    As prescribed in 232.1103, use the following clause:

Payment by Electronic Funds Transfer (CCR) (JUN 1998)

    (a) Method of payment. (1) All payments by the Government under 
this contract shall be made by electronic funds transfer (EFT), 
except as provided in paragraph (a)(2) of (b) of this clause. As 
used in this clause, the term ``EFT'' refers to the funds transfer 
and may also include the payment information transfer.
    (2) In the event the Government is unable to release one or more 
payments by EFT, the Contractor agrees to either (i) accept payment 
by check or some other mutually agreeable method of payment, or (ii) 
request the Government to extend the payment due date until such 
time as the Government can make payment by EFT (but see paragraph 
(e) of this clause).
    (b) Alternative contractor certification. If the Contractor 
certifies in writing, as part of its registration with the Central 
Contractor Registration (CCR) database that it does not have an 
account with a financial institution and does not have an authorized 
payment agent, payment shall be made by check to the remittance 
address contained in the CCR database. All contractor certifications 
will expire on January 1, 1999.
    (c) Contractor's EFT information. Except as provided in 
paragraph (b) of this clause, the Government shall make payment to 
the Contractor using the EFT information contained in the CCR 
database. In the event that the EFT information changes, the 
Contractor shall be responsible for providing the updated 
information to the CCR database.
    (d) Mechanisms for EFT payment. The Government may make payment 
by EFT through either an Automated Clearing House subject to the 
banking laws of the United States or the Federal Reserve Wire 
Transfer System.
    (e) Suspension of payment. If the Contractor's EFT information 
in the CCR

[[Page 27684]]

database is incorrect and the Contractor has not certified under 
paragraph (b) of this clause, the Government need not make payment 
to the Contractor under this contract until correct EFT information 
or certification is entered into the CCR database; and any invoice 
or contract financing request shall be deemed not to be a proper 
invoice for the purpose of prompt payment under this contract. The 
prompt payment terms of the contract regarding notice of an improper 
invoice and delays in accrual of interest penalties apply.
    (f) Contractor EFT arrangements. If the Contractor has 
identified multiple payment receiving points (i.e., more than one 
remittance address or EFT information set) in the CCR database, and 
the Contractor has not notified the Government of the payment 
receiving point applicable to this contract, the Government shall 
make payment to the first payment receiving point (EFT information 
set or remittance address as applicable) listed in the CCR database.
    (g) Liability for uncompleted or erroneous transfers. (1) If an 
uncompleted or erroneous transfer occurs because the Government 
failed to use the Contractor's 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 the 
Contractor's EFT information was incorrect, or was revised within 30 
days 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 shall not make payment, and the provisions of 
paragraph (e) of this clause shall apply.
    (h) EFT and prompt payment. A payment shall be deemed to have 
been made in a timely manner in accordance with the prompt payment 
terms of this contract if, in the EFT payment transaction 
instruction released 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.
    (i) EFT and assignment of claims. If the Contractor assigns the 
proceeds of this contract as provided for in the assignment of 
claims terms of this contract, the Contractor shall require as a 
condition of any such assignment, that the assignee register in the 
CCR database and be paid by EFT in accordance with the terms of this 
clause. In all respects, the requirements of this clause shall apply 
to the assignee as if it were the Contractor. EFT information that 
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) Liability for change of EFT information by financial agent. 
The Government is not liable for errors resulting from changes to 
EFT information made by the Contractor's financial agent.
    (k) Payment information. The payment or disbursing office shall 
forward to the Contractor available payment information that is 
suitable for transmission as of the date of release of the EFT 
instruction to the Federal Reserve System. The Government may 
request the Contractor to designate a desired format and method(s) 
for delivery of payment information from a list of formats and 
methods the payment office is capable of executing. However, the 
Government does not guarantee that any particular format or method 
of delivery is available at any particular payment office and 
retains the latitude to use the format and delivery method most 
convenient to the Government. If the Contractor has certified in 
accordance with paragraph (b) of this clause or if the Government 
otherwise makes payment by check in accordance with paragraph (a) of 
this clause, the Government shall mail the payment information to 
the remittance address contained in the CCR database.

(End of clause)

[FR Doc. 98-13387 Filed 5-19-98; 8:45 am]
BILLING CODE 5000-04-M