FAR 13.402—Conditions for use.
Plain-English Summary
FAR 13.402 explains when the fast payment procedure may be used for small purchases and what safeguards must be in place before an agency relies on it. It covers the dollar threshold for individual purchasing instruments, the special allowance for higher limits in executive agencies on a case-by-case basis, the need for geographic separation and inadequate communications between receiving and disbursing activities, the title-passage rules for supplies, the supplier’s agreement to replace, repair, or correct nonconforming or lost/damaged supplies, the types of purchasing instruments eligible for fast payment, and the internal system required to document performance, provide timely feedback on deficiencies, and identify suppliers who abuse the procedure. In practice, this section is designed to speed payment when normal acceptance-based payment would be impractical, while still protecting the Government from paying for undelivered or defective supplies. It is a risk-based exception to standard payment processing, so agencies must confirm that all listed conditions are present and that using fast payment is consistent with the rest of the purchase. Contractors should understand that fast payment can improve cash flow, but it also shifts some risk to the supplier because payment may occur before full Government acceptance evidence is available.
Key Rules
All conditions must exist
Fast payment may be used only if the conditions in paragraphs (a) through (f) are present, and only if the procedure is also consistent with the other terms of the purchase. This means the authority is conditional, not automatic.
Dollar limit applies
Individual purchasing instruments generally may not exceed $45,000. Executive agencies may authorize higher limits for specified activities or items, but only on a case-by-case basis.
Remote delivery situation required
The supplies must be delivered where there is both geographic separation and inadequate communications between receiving and disbursing activities, making timely payment based on evidence of Government acceptance impractical. The rule is aimed at locations where normal acceptance-to-payment processing would be too slow or difficult.
Title must pass by shipment or receipt
Title to the supplies must pass to the Government either when the goods are delivered to a post office or common carrier for shipment to destination, or when the Government receives them if another delivery method is used. This helps define when the Government assumes ownership risk for the supplies.
Supplier must stand behind the goods
The supplier must agree to replace, repair, or correct supplies that are not received at destination, are damaged in transit, or do not conform to purchase requirements. Fast payment is therefore tied to a contractual remedy for delivery and quality problems.
Eligible instruments are limited
The purchasing instrument must be a firm-fixed-price contract, a purchase order, or a delivery order for supplies. The procedure is not broadly available for all contract types or services.
Monitoring system is required
A system must exist to document contractor performance, provide timely feedback to the contracting officer about deficiencies, and identify suppliers with a current history of abusing fast payment. This safeguard supports oversight and helps prevent repeated misuse.
Responsibilities
Contracting Officer
Determine whether all fast payment conditions are met before authorizing use, ensure the purchasing instrument is an eligible type, and rely on the monitoring system to receive timely feedback on contractor deficiencies. The contracting officer should also consider whether use of fast payment is consistent with the rest of the purchase and whether any supplier has a history of abuse.
Agency
Maintain the internal system needed to document performance, communicate deficiencies promptly, and identify suppliers abusing the procedure. Executive agencies may also establish higher dollar limits for specified activities or items on a case-by-case basis.
Receiving and Disbursing Activities
Operate in a way that reflects the geographic separation and communications limitations contemplated by the rule, and support the documentation and feedback process so payment can be made without normal acceptance-based timing.
Supplier/Contractor
Agree to replace, repair, or correct supplies that are lost, damaged, or nonconforming, and perform in a way that does not trigger abuse concerns. The supplier should understand that fast payment does not eliminate responsibility for delivery and quality.
Practical Implications
Fast payment is useful when normal acceptance-based payment would be too slow because the receiving point and payment office are far apart or poorly connected. It is meant for logistics-heavy situations, not as a general shortcut for routine buys.
The $45,000 ceiling is a key screening point, so contracting personnel should verify the dollar value of each purchasing instrument before using the procedure. If an agency wants to exceed that limit, it needs an executive-agency, case-by-case authorization.
Title-passage language matters because it affects when the Government assumes ownership and how loss or damage is handled. If shipping terms are unclear, the fast payment arrangement can create disputes over who bears the risk.
The supplier’s promise to replace, repair, or correct defective or missing supplies is essential protection for the Government. Without that commitment, fast payment would expose the Government to paying before it has the usual acceptance safeguards.
The monitoring requirement is often where programs fail in practice: if deficiencies are not documented or reported quickly, the agency may keep using fast payment with poor performers. Contracting officers should watch for repeat problems and stop or limit use when a supplier shows a pattern of abuse.
Official Regulatory Text
If the conditions in paragraphs (a) through (f) of this section are present, the fast payment procedure may be used, provided that use of the procedure is consistent with the other conditions of the purchase. The conditions for use of the fast payment procedure are as follows: (a) Individual purchasing instruments do not exceed $45,000, except that executive agencies may permit higher dollar limitations for specified activities or items on a case-by-case basis. (b) Deliveries of supplies are to occur at locations where there is both a geographical separation and a lack of adequate communications facilities between Government receiving and disbursing activities that will make it impractical to make timely payment based on evidence of Government acceptance. (c) Title to the supplies passes to the Government- (1) Upon delivery to a post office or common carrier for mailing or shipment to destination; or (2) Upon receipt by the Government if the shipment is by means other than Postal Service or common carrier. (d) The supplier agrees to replace, repair, or correct supplies not received at destination, damaged in transit, or not conforming to purchase requirements. (e) The purchasing instrument is a firm-fixed-price contract, a purchase order, or a delivery order for supplies. (f) A system is in place to ensure- (1) Documentation of evidence of contractor performance under fast payment purchases; (2) Timely feedback to the contracting officer in case of contractor deficiencies; and (3) Identification of suppliers that have a current history of abusing the fast payment procedure (also see subpart 9.1 ).