[Code of Federal Regulations]
[Title 48, Volume 1]
[Revised as of October 1, 2003]
From the U.S. Government Printing Office via GPO Access
[CITE: 48CFR49]

[Page 917-918]
 
            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM
 
                CHAPTER 1--FEDERAL ACQUISITION REGULATION
 
PART 49_TERMINATION OF CONTRACTS--Table of Contents
 
                     Subpart 49.1_General Principles
 
Sec.  49.112-1  Partial payments.

    (a) General. If the contract authorizes partial payments on 
settlement proposals before settlement, a prime contractor may request 
them on the form prescribed in 49.602-4 at any time after submission of 
interim or final settlement proposals. The Government will process 
applications for partial payments promptly. A subcontractor shall submit 
its application through the prime contractor which shall attach its own 
invoice and recommendations to the subcontractor's application. Partial 
payments to a subcontractor shall be made only through the prime 
contractor and only after the prime contractor has submitted its interim 
or final settlement proposal. Except for undelivered acceptable finished 
products, partial payments shall not be made for profit or fee claimed 
under the terminated portion of the contract. In exercising discretion 
on the extent of partial payments to be made, the TCO shall consider the 
diligence of the contractor in settling with subcontractors and in 
preparing its own settlement proposal.
    (b) Amount of partial payment. Before approving any partial payment, 
the TCO shall obtain any desired accounting, engineering, or other 
specialized reviews of the data submitted in support of the contractor's 
settlement proposal. If the reviews and the TCO's examination of the 
data indicate that the requested partial payment is proper, reasonable 
payments may be authorized in the discretion of the TCO up to--
    (1) 100 percent of the contract price, adjusted for undelivered 
acceptable items completed before the termination date, or later 
completed with the approval of the TCO (see 49.205);
    (2) 100 percent of the amount of any subcontract settlement paid by 
the prime contractor if the settlement was approved or ratified by the 
TCO under 49.108-3(c) or was authorized under 49.108-4;
    (3) 90 percent of the direct cost of termination inventory, 
including costs of raw materials, purchased parts, supplies, and direct 
labor;
    (4) 90 percent of other allowable costs (including settlement 
expense and manufacturing and administrative indirect costs) allocable 
to the terminated portion of the contract and not included in 
subparagraphs (1), (2), or (3) above; and
    (5) 100 percent of partial payments made to subcontractors under 
this section.
    (c) Recognition of assignments. When an assignment of claims has 
been made under the contract, the Government shall not make partial 
payments to other than the assignee unless the parties to the assignment 
consent in writing (see 32.805(e)).

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    (d) Security for partial payments. If any partial payment is made 
for completed end items or for costs of termination inventory, the TCO 
shall protect the Government's interest. This shall be done by obtaining 
title to the completed end items or termination inventory, or by the 
creation of a lien in favor of the Government, paramount to all other 
liens, on the completed end items or termination inventory, or by other 
appropriate means.
    (e) Deductions in computing amount of partial payments. The TCO 
shall deduct from the gross amount of any partial payment otherwise 
payable under 49.112-1(b)--
    (1) All unliquidated balances of progress and advance payments 
(including interest) made to the contractor, which are allocable to the 
terminated portion of the contract; and
    (2) The amounts of all credits arising from the purchase, retention, 
or sale of property, the costs of which are included in the application 
for payment.
    (f) Limitation on total amount. The total amount of all partial 
payments shall not exceed the amount that will, in the opinion of the 
TCO, become due to the contractor because of the termination.
    (g) Effect of overpayment. If the total of partial payments exceeds 
the amount finally determined due on the settlement proposal, the 
contractor shall repay the excess to the Government on demand, together 
with interest. The interest shall be computed at the rate established by 
the Secretary of the Treasury under 50 U.S.C. App. 1215(b)(2) from the 
date the excess payment was received by the contractor to the date of 
repayment. However, interest will not be charged for any (1) excess 
payment attributable to a reduction in the settlement proposal because 
of retention or other disposition of termination inventory, until 10 
days after the date of the retention or disposition, or a later date 
determined by the TCO, or (2) overpayment under cost-reimbursement 
research and development contracts without profit or fee if the 
overpayments are repaid to the Government within 30 days after demand.
    (h) Certification and approval of partial payments. (1) The 
contractor shall place the following certification on vouchers or 
invoices for partial payments:
    The payment covered by this voucher is a partial payment on the 
Contractor's settlement proposal under contract No. .......... made 
under part 49 of the Federal Acquisition Regulation.
    (2) The TCO shall approve the invoice or voucher by noting on it the 
following:
    Payment of $........ is approved.