FAR 32.1101—Statutory requirements.
Plain-English Summary
FAR 32.1101 states the basic statutory rule that federal contract payments must be made by electronic funds transfer (EFT), not by paper check, when the payment is covered by 31 U.S.C. 3332 and the Treasury implementing regulations at 31 CFR part 208. This section is the legal foundation for the government’s move to electronic payment methods in contracting, and it ties the FAR payment system to Treasury’s governmentwide EFT requirements. In practice, it means contracting officers, payment offices, and contractors must treat EFT as the default method for contract disbursements and must ensure the contractor’s banking information is available and accurate. The section also signals that the FAR rule is not standalone; it operates subject to Treasury’s regulations, which control the details of how EFT is implemented, including any exceptions or procedural requirements. For contractors, the practical significance is that payment setup, banking data accuracy, and compliance with EFT enrollment requirements are essential to avoid delayed or failed payments. For agencies, it means payment processes must be designed around electronic disbursement and aligned with Treasury’s governmentwide payment rules.
Key Rules
EFT is mandatory
Contract payments must be made by electronic funds transfer. The rule establishes EFT as the required payment method for federal contracts covered by the statute.
Treasury regulations control implementation
The EFT requirement applies subject to the Secretary of the Treasury’s implementing regulations at 31 CFR part 208. Those regulations govern the operational details and any exceptions.
Applies to all contract payments
The statutory requirement is broad and covers contract payments generally, not just a narrow category of invoices or payment types, unless an exception is provided elsewhere in law or regulation.
Responsibilities
Contracting Officer
Ensure contract administration and payment arrangements reflect the statutory EFT requirement and that contract terms and payment instructions are consistent with Treasury’s EFT rules.
Payment Office / Finance Office
Process contract disbursements through EFT and maintain procedures that comply with 31 CFR part 208 and agency payment systems.
Contractor
Provide accurate EFT banking information and maintain current payment account details so the government can make timely electronic payments.
Agency
Implement payment systems and internal controls that support EFT as the standard method for contract payments and comply with Treasury regulations.
Treasury
Issue and maintain the implementing regulations in 31 CFR part 208 that govern how EFT is used for federal payments.
Practical Implications
Contractors should expect EFT to be the normal payment method and should be ready to furnish banking information early in the award or invoicing process.
Incorrect or outdated bank account data is a common cause of delayed or returned payments, so contractors should keep payment information current.
Contracting officers and payment personnel should not assume paper checks are acceptable unless a specific legal or regulatory exception applies.
Because the FAR section points to Treasury regulations, users must check 31 CFR part 208 for the operational details and any exceptions rather than relying on this section alone.
Agencies should align contract payment procedures, vendor enrollment, and financial systems with EFT requirements to avoid compliance gaps and payment disruptions.
Official Regulatory Text
31 U.S.C.3332 requires, subject to implementing regulations of the Secretary of the Treasury at 31 CFR Part 208 , that EFT be used to make all contract payments.