[Code of Federal Regulations]

[Title 48, Volume 1]

[Revised as of October 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 48CFR49]



[Page 932-933]

 

            TITLE 48--FEDERAL ACQUISITION REGULATIONS SYSTEM

 

                CHAPTER 1--FEDERAL ACQUISITION REGULATION

 

PART 49_TERMINATION OF CONTRACTS--Table of Contents

 

                     Subpart 49.1_General Principles

 

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);



[[Page 933]]



    (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)).

    (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.