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Panoptic Enterprises' FEDERAL CONTRACTS DISPATCH

DATE: Octobber 18, 2001

SUBJECT: Federal Acquisition Regulation (FAR); Payments Under Fixed-Price Construction Contracts

SOURCE: Federal Register, October 18, 2001, Vol. 66, No. 202, page 53049

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 certification language in FAR 52.232-5, Payments Under Fixed-Price Construction Contracts, which must accompany each progress payment request, be amended to clarify that the contractor certifies that all payments due to subcontractors and suppliers have been made by the prime contractor from previous progress payments received from the government.

DATES: Comments on the proposed rule must be submitted no later than December 17, 2001.

ADDRESSES: Submit comments to General Services Administration, FAR Secretariat (MVP), 1800 F Street, NW, Room 4035, ATTN: Laurie Duarte, Washington, DC 20405; e-mail to: farcase.2001-012@gsa.gov.

FOR FURTHER INFORMATION CONTACT: Jeremy Olson, 202-501-3221.

SUPPLEMENTAL INFORMATION: The Prompt Payment Act Amendments of 1988 was passed by Congress, in part, to make sure that subcontractors and suppliers were being promptly paid by prime contractors. As a result, contractors must certify, with each progress payment request, that payments to subcontractors and suppliers have been made from previous payments received under the contracts. This certification language is reflected in paragraph (c) of FAR 52.232-5.

In 1999, the United States Court of Appeals for the Sixth Circuit decided that having a prime contractor certify it has made payments to its subcontractors and suppliers is not the same as having a prime contractor certify it has made all payments due to subcontractors and suppliers (United States vs. Gatewood (173 F.3d 983, April 2, 1999)). Therefore, this proposed rule would amend paragraph (c) of the certification to reflect the "all payments due" requirement as follows:

"(c)(2) All payments due to subcontractors and suppliers from previous payments received under the contract have been made, and timely payments will be made from the proceeds of the payment covered by this certification, in accordance with subcontract agreements and the requirements of Chapter 39 of Title 31, United States Code..."

FOR FURTHER INFORMATION CONTACT: Panoptic Enterprises at 703-451-5953 or by e-mail to Panoptic@FedGovContracts.com.

Copyright 2001 by Panoptic Enterprises. All Rights Reserved.

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