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Barry McVay's FEDERAL CONTRACTS DISPATCH

DATE: February 1, 2000

FROM: Barry McVay, CPCM

SUBJECT: Department of Defense; Mandatory Electronic Funds Transfer (EFT) and Central Contractor Registration (CCR)

SOURCE: Under Secretary of Defense (Comptroller) Memorandum, dated December 30, 1999

AGENCIES: Department of Defense (DOD)

ACTION: Notice

SYNOPSIS: On December 30, 1999, Under Secretary of Defense (Comptroller) William Lynn issued a memorandum to the secretaries of the military departments, the Joint Chiefs of Staff, the other under secretaries of defense, and other high-level DOD officials alerting them that DOD contracting activities are to make sure that the appropriate contract clauses requiring payment by EFT and mandating registration in the CCR database are included in all non-exempt contracts, and that the Defense Finance and Accounting Service (DFAS) will return contracts and invoices that are not in compliance with EFT and CCR requirements.

EFFECTIVE DATES: February 1, 2000.

SUPPLEMENTAL INFORMATION: The Debt Collection Improvement Act of 1996 (Public Law 104-134) required that payments to contractors be made by EFT effective January 1, 1999. To implement this statutory requirement, Federal Acquisition Regulation (FAR) Subpart 32.11, Electronic Funds Transfer, was developed. To comply with the requirements of FAR Subpart 32.11, DOD decided to mandate registration in the CCR database (see Defense FAR Supplement (DFARS) Subpart 204.73, Central Contractor Registration.

"While we have made substantial progress in implementing EFT payments, additional effort is required to fully achieve the Department's goals," writes Under Secretary of Defense (Comptroller) William Lynn. "Therefore, I have instructed the Defense Finance and Accounting Service to return contracts and invoices that are not in compliance with current requirements, along with a request for corrective actions, effective February 1, 2000, as well as to take other specific actions." Those specific actions are:

• If a non-exempt contract does not contain the required EFT clause, and the contractor is not registered in the CCR, DFAS will:
  
  
  • Return the contract to the contracting office, and the contracting office will be requested to amend the contract to include the appropriate EFT clause or require the contractor to register in the CCR, and to expedite the action so as not to incur late payment penalties under the Prompt Payment Act.
    
    
  • For each contract that is returned, charge the DOD component an additional amount equal to the amount charged for processing a payment for a contract.
    
    
  • Pay interest amounts on any payments delayed beyond 30 days as a result of returning a contract. Such interest payments will be charged to the DOD component involved.
    
    
  • If a particular contracting office repeatedly fails to include the appropriate clauses, the DOD component's senior acquisition and senior financial management manager will be notified.
  
  
• If an invoice does not contain the information needed to make payment by EFT, and the contractor is not registered in the CCR, DFAS will:
  
  
  • Notify the contractor and request voluntary compliance, and send a copy to the contracting office.
    
    
  • Charge the DOD component an additional amount equal to the amount charged for processing a payment for a contract.
    
    
  • If a particular contractor refuses to comply or threatens litigation, DFAS will pay the contractor, notify the applicable acquisition manager of the contractor's unwillingness to comply with EFT and CCR requirements, and request that the appropriate clauses be inserted in all existing and future contracts with that contractor.
    
    
  • Charge the DOD component an additional amount equal to the amount charged for processing a payment for a contract whenever DFAS has to pay by means other than EFT if the contract does not contain the appropriate EFT clauses and the contractor does not voluntarily comply.
    
    
  • Charge the DOD component an additional amount equal to the amount charged for processing a payment for a contract when the contractor is not registered in the CCR if the contract does not require such registration and the contractor does not voluntarily comply.
    
    
  • Pay interest amounts on any payments delayed beyond 30 days as a result of requesting a contractor to comply with EFT or CCR requirements. Such interest payments will be charged to the DOD component involved.

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

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