FAR 32.1108—Payment by Governmentwide commercial purchase card.
Plain-English Summary
FAR 32.1108 explains how the Governmentwide commercial purchase card works as a payment method for contract payments, including the role of the third-party card issuer, when the payment clause at 52.232-36, Payment by Third Party, must be used, and how the Government handles reimbursement after the card issuer pays the contractor. It also addresses when a purchase card may still be used even if the contract does not contain the clause, provided the contractor agrees to accept that method of payment. A major compliance topic in this section is the Treasury Offset Program (TOP): when a contract or order above the micro-purchase threshold may be paid by purchase card, the contracting officer must check SAM for delinquent debt and must not authorize purchase-card payment while the debt flag is active. The section also clarifies that the presence of a SAM debt flag cannot be used to deny award or order placement, but it can require a different payment method such as EFT under 52.232-33 or 52.232-34. Finally, it specifies what the contract must identify about the third party and card, and what it must not include, namely the purchase card account number, which must be provided separately to the contractor. In practice, this section is about making purchase-card payments legally, securely, and in a way that avoids improper payment, debt-offset, and account-security problems.
Key Rules
Third-party payment mechanism
A Governmentwide commercial purchase card charge authorizes the card issuer to pay the contractor immediately, with the Government reimbursing the issuer later. This means the contractor is paid by the third party, not directly by the Government at the moment of charge.
Use the payment clause
When a contractor submits a charge for contract payment, the clause at 52.232-36 governs the request and requires payment only when the contract’s payment terms authorize it and only for the amount due under the contract. If the payment would otherwise be proper, the charge should not be disputed when reported by the third party.
Remove improper charges
If the charge would not otherwise be approved, an authorized individual must act to remove it, such as disputing the charge with the third party or obtaining a credit from the contractor. The rule is designed to prevent improper or unauthorized purchase-card payments from standing.
Clause inclusion and consent
Written contracts to be paid by purchase card should include 52.232-36 as prescribed by FAR 32.1110(d). Even if the clause is absent, purchase-card payment may still be used if the contractor agrees to accept that payment method.
TOP debt screening required
For contracts or orders above the micro-purchase threshold where purchase-card payment is contemplated, the contracting officer must check SAM for delinquent debt subject to the Treasury Offset Program at award and order placement. If the SAM debt flag is active, purchase-card payment cannot be authorized.
Use EFT when debt flag exists
When SAM shows delinquent debt subject to TOP, payment must be made under the applicable EFT clause, either 52.232-33 or 52.232-34, as appropriate. The purchase card is not available as the payment method during that period.
No award exclusion based on debt flag
The contracting officer may not use the SAM debt flag as a reason to exclude the contractor from award or order placement. The flag affects the payment method, not the contractor’s eligibility to compete or receive the contract.
Contract identification requirements
The contract must identify the third party and the specific purchase card to be used, but it must not include the purchase card account number. The account number must be provided separately to the contractor to protect sensitive payment information.
Responsibilities
Contracting Officer
Determine whether purchase-card payment is contemplated, verify SAM for delinquent TOP debt at award and order placement when required, avoid authorizing purchase-card payment while the debt flag is active, switch to the proper EFT clause when necessary, and ensure the contract identifies the third party and card without including the account number.
Authorized Individual
When a charge would not otherwise be approved, take action to remove the charge by disputing it with the third party or obtaining a credit from the contractor. This person is responsible for correcting improper purchase-card charges.
Contractor
Submit payment requests by charging the Government account with the third party only when the contract authorizes payment, for the correct amount due, and accept purchase-card payment when agreed even if the clause is not included. The contractor must also credit back improper charges when directed or appropriate.
Third-Party Card Issuer
Make immediate payment to the contractor when the purchase card is charged and later receive reimbursement from the Government. The issuer also reports charges to the Government for review and dispute handling.
Government
Reimburse the third-party issuer after it pays the contractor and ensure payment is made under the correct method, including EFT when purchase-card payment is barred by a TOP debt flag.
Practical Implications
Purchase-card payment is not just a convenience; it is a regulated payment method with specific clause, screening, and security requirements.
The SAM/TOP check is a key gatekeeper: if delinquent debt is flagged, the contracting officer must stop using the purchase card and move to EFT.
A purchase-card charge that is proper under the contract should generally not be disputed, but improper charges must be actively removed to avoid payment errors.
Contract files should clearly identify the third party and card, but never include the account number in the contract itself; that number must be handled separately.
The debt flag does not bar award, but it can change how the Government pays, so contracting officers need to distinguish eligibility issues from payment-method restrictions.
Official Regulatory Text
A Governmentwide commercial purchase card charge authorizes the third party ( e.g., financial institution) that issued the purchase card to make immediate payment to the contractor. The Government reimburses the third party at a later date for the third party’s payment to the contractor. (a) The clause at 52.232-36 , Payment by Third Party, governs when a contractor submits a charge against the purchase card for contract payment. The clause provides that the contractor shall make such payment requests by a charge to a Government account with the third party at the time the payment clause(s) of the contract authorizes the contractor to submit a request for payment, and for the amount due in accordance with the terms of the contract. To the extent that such a payment would otherwise be approved, the charge against the purchase card should not be disputed when the charge is reported to the Government by the third party. To the extent that such payment would otherwise not have been approved, an authorized individual (see 1.603-3 ) shall take action to remove the charge, such as by disputing the charge with the third party or by requesting that the contractor credit the charge back to the Government under the contract. (b) (1) Written contracts to be paid by purchase card should include the clause at 52.232-36 , Payment by Third Party, as prescribed by 32.1110 (d). However, payment by a purchase card also may be made under a contract that does not contain the clause to the extent the contractor agrees to accept that method of payment. (2) (i) When it is contemplated that the Governmentwide commercial purchase card will be used as the method of payment, and the contract or order is above the micro-purchase threshold, contracting officers are required to verify by looking in the System for Award Management (SAM) whether the contractor has any delinquent debt subject to collection under the Treasury Offset Program (TOP) at contract award and order placement. Information on TOP is available at http://fms.treas.gov/debt/index.html . (ii) The contracting officer shall not authorize the Governmentwide commercial purchase card as a method of payment during any period the SAM indicates that the contractor has delinquent debt subject to collection under the TOP. In such cases, payments under the contract shall be made in accordance with the clause at 52.232-33 , Payment by Electronic Funds Transfer-System for Award Management, or 52.232-34 , Payment by Electronic Funds Transfer-Other Than System for Award Management, as appropriate (see FAR 32.1110 (d)). (iii) Contracting officers shall not use the presence of the SAM debt flag indicator to exclude a contractor from receipt of the contract award or issuance or placement of an order. (iv) The contracting officer may take steps to authorize payment by Governmentwide commercial purchase card when a contractor alerts the contracting officer that the SAM debt flag indicator has been changed to no longer show a delinquent debt. (c) The clause at 52.232-36 , Payment by Third Party, requires that the contract- (1) Identify the third party and the particular purchase card to be used; and (2) Not include the purchase card account number. The purchase card account number should be provided separately to the contractor.