[Code of Federal Regulations]
[Title 5, Volume 3]
[Revised as of January 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 5CFR1315.14]

[Page 147-148]
 
                    TITLE 5--ADMINISTRATIVE PERSONNEL
 
              CHAPTER III--OFFICE OF MANAGEMENT AND BUDGET
 
PART 1315_PROMPT PAYMENT--Table of Contents
 
Sec.  1315.14  Payments under construction contracts.

    (a) Payment standards. Agencies shall follow these standards when 
making progress payments under construction contracts:
    (1) An agency may approve a request for progress payment if the 
application meets the requirements specified in paragraph (b) of this 
section;
    (2) The certification by the prime vendor as defined in paragraph 
(b)(2) of this section is not to be construed as final acceptance of the 
subcontractor's performance;
    (3) The agency shall return any such payment request which is 
defective to the vendor within seven days after receipt, with a 
statement identifying the defect(s);
    (4) A vendor is obligated to pay interest to the Government on 
unearned amounts in its possession from:
    (i) The eighth day after receipt of funds from the agency until the 
date the vendor notifies the agency that the performance deficiency has 
been corrected, or the date the vendor reduces the amount of any 
subsequent payment request by an amount equal to the unearned amount in 
its possession, when the vendor discovers that all or a portion of a 
payment received from the agency constitutes a payment for the vendor's 
performance that fails to conform to the specifications, terms, and 
conditions of its contract with the agency, under 31 U.S.C. 3905(a); or
    (ii) The eighth day after the receipt of funds from the agency until 
the date the performance deficiency of a subcontractor is corrected, or 
the date the vendor reduces the amount of any subsequent payment request 
by an amount equal to the unearned amount in its possession, when the 
vendor discovers that all or a portion of a payment received from the 
agency would constitute a payment for the subcontractor's performance 
that fails to conform to the subcontract agreement and may be withheld, 
under 31 U.S.C. 3905(e);
    (5) Interest payment on unearned amounts to the government under 31 
U.S.C. 3905(a)(2) or 3905(e)(6), shall:
    (i) Be computed on the basis of the average bond equivalent rates of 
91-day Treasury bills auctioned at the most recent auction of such bills 
prior to the date the vendor received the unearned amount;
    (ii) Be deducted from the next available payment to the vendor; and
    (iii) Revert to the Treasury.
    (b) Required documentation. (1) Substantiation of the amount(s) 
requested shall include:
    (i) An itemization of the amounts requested related to the various 
elements of work specified in the contract;
    (ii) A listing of the amount included for work performed by each 
subcontractor under the contract;
    (iii) A listing of the total amount for each subcontract under the 
contract;
    (iv) A listing of the amounts previously paid to each subcontractor 
under the contract; and
    (v) Additional supporting data and detail in a form required by the 
contracting officer.
    (2) Certification by the prime vendor is required, to the best of 
the vendor's knowledge and belief, that:
    (i) The amounts requested are only for performance in accordance 
with the specifications, terms, and conditions of the contract;
    (ii) Payments to subcontractors and suppliers have been made from 
previous payments received under the contract, and timely payments will 
be made from the proceeds of the payment covered by the certification, 
in accordance with their subcontract agreements and the requirements of 
31 U.S.C. chapter 39; and
    (iii) The application does not include any amounts which the prime 
vendor intends to withhold or retain from a subcontractor or supplier, 
in accordance with the terms and conditions of their subcontract.
    (c) Interest penalties. (1) Agencies will pay interest on:
    (i) A progress payment request (including a monthly percentage-of-
completion progress payment or milestone payments for completed phases, 
increments, or segments of any project) that is approved as payable by 
the agency pursuant to paragraph (b) of this section, and remains unpaid 
for:
    (A) A period of more than 14 days after receipt of the payment 
request by the designated agency office; or
    (B) A longer period specified in the solicitation and/or contract if 
required,

[[Page 148]]

to afford the Government a practicable opportunity to adequately inspect 
the work and to determine the adequacy of the vendor's performance under 
the contract;
    (ii) Any amounts that the agency has retained pursuant to a prime 
contract clause providing for retaining a percentage of progress 
payments otherwise due to a vendor and that are approved for release to 
the vendor, if such retained amounts are not paid to the vendor by a 
date specified in the contract, or, in the absence of such a specified 
date, by the 30th day after final acceptance;
    (iii) Final payments, based on completion and acceptance of all work 
(including any retained amounts), and payments for partial performances 
that have been accepted by the agency, if such payments are made after 
the later of:
    (A) The 30th day after the date on which the designated agency 
office receives a proper invoice; or
    (B) The 30th day after agency acceptance of the completed work or 
services. Acceptance shall be deemed to have occurred on the effective 
date of contract settlement on a final invoice where the payment amount 
is subject to contract settlement actions.
    (2) For the purpose of computing interest penalties, acceptance 
shall be deemed to have occurred on the seventh day after work or 
services have been completed in accordance with the terms of the 
contract.