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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: August 28, 2000

FROM: Barry McVay, CPCM

SUBJECT: Federal Acquisition Regulation (FAR); Prompt Payment and the Recovery of Overpayment

SOURCE: Federal Register, August 28, 2000, Vol. 65, No. 167, page 52243

AGENCIES: Department of Defense (DOD), General Services Administration (GSA), and National Aeronautics and Space Administration (NASA)

ACTION: Proposed Rule

SYNOPSIS: It is proposed that the FAR (particularly FAR Subpart 32.9, Prompt Payment) be amended reflect changes made by the Office of Management and Budget (OMB) to the prompt payment regulations; rewrite the prompt payment coverage so it is simpler and clearer, and is in "plain language" as required by the June 1, 1998, presidential memorandum "Plain Language in Government Writing"; and require the contractor to notify the contracting officer of any overpayments.

DATES: Submit comments on or before October 27, 2000.

ADDRESSES: Submit comments to General Services Administration, FAR Secretariat (MVRS), 1800 F Street, NW, Room 4035, ATTN: Laurie Duarte, Washington, DC 20405, e-mail: farcase.1999-023@gsa.gov. Cite FAR case 1999-023 in all correspondence related to this proposed rule.

FOR FURTHER INFORMATION CONTACT: Jeremy Olson at 202-501-0692.

SUPPLEMENTAL INFORMATION: On September 29, 1999, OMB rescinded OMB Circular A-125, Prompt Payment, and codified its rules and guidance in a new Part 1315, Prompt Payment, to Title 5 of the Code of Federal Regulations (CFR) (these regulations are available at http://www.fms.treas.gov/prompt/). To reflect this change, the following revisions to the FAR are proposed (besides an overall rewrite of the FAR to clarify and simplify the language addressing this subject):

In addition, a General Accounting Office (GAO) report published in July 1999 (GAO/NSIAD-99-131, Greater Attention Needed to Identify and Recover Overpayments) pointed out that "under current law, there is no requirement for contractors who have been overpaid to notify the government of overpayments or to return overpayments prior to the government issuing a demand letter". One of the recommendations of the report was that DOD require contractors to promptly notify the government of overpayments made to them. To implement this recommendation, the following paragraph would be added to FAR 52.232-25, FAR 52.232-26, and FAR 52.232-27:

"Overpayments. If the Contractor becomes aware of a duplicate payment or that the Government has otherwise overpaid on an invoice payment, the Contractor shall immediately notify the Contracting Officer and request instructions for disposition of the overpayment."

FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.

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