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    Home/FAR Navigator/32/32.1/32.111

    FAR Navigator

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    Up to 32.1
    SectionUpdated April 16, 2026

    FAR 32.111—Contract clauses for non-commercial purchases.

    Plain-English Summary

    FAR 32.111 tells contracting officers which payment-related clauses must be inserted in non-commercial solicitations and contracts, and it ties each clause to the contract type it applies to. It covers fixed-price supply and service contracts, nonregulated communication services, fixed-price research and development, personal services, transportation and transportation-related services, fixed-price construction, regulated communication services by common carriers, time-and-materials and labor-hour contracts, architect-engineer contracts, and clauses dealing with prompt-payment discounts, withholding limits, and extras. The section also addresses when payment due dates may need to be modified under agency regulations and gives special guidance for withholding under the time-and-materials/labor-hour payment clause, including the ability to require a 5 percent withhold up to $50,000 when needed to protect the Government’s interests. In practice, this section is a clause-selection rule: it helps the contracting officer match the payment clause to the contract structure so the Government pays correctly, preserves leverage where needed, and avoids using the wrong payment terms. It also matters because the wrong clause, or a missing clause, can create payment disputes, administrative errors, and compliance problems.

    Key Rules

    Match clause to contract type

    The contracting officer must insert the specific payment clause that corresponds to the contemplated contract type. FAR 32.111 lists the required clause for fixed-price supply, service, R&D, personal services, transportation, construction, communication services, T&M/labor-hour, and architect-engineer contracts.

    Modify payment due dates as needed

    Each required clause must be inserted with payment due dates appropriately modified in accordance with agency regulations. This means the basic clause is mandatory, but the timing details may be adjusted to fit agency-specific payment procedures.

    Use prompt-payment discount clause

    For fixed-price supply and fixed-price service contracts, the contracting officer must include the Discounts for Prompt Payment clause. This clause supports taking advantage of early-payment discounts when offered.

    Limit withholding when multiple clauses apply

    If a contract includes two or more terms that authorize temporary withholding of amounts otherwise payable, the contracting officer must include a clause substantially the same as the Limitation on Withholding of Payments clause. This prevents excessive or duplicative withholding across multiple contract terms.

    Special withholding authority for T&M/labor-hour

    Under the T&M/labor-hour payment clause, the contracting officer may unilaterally modify the contract to require withholding of 5 percent of amounts due, up to a maximum of $50,000, if needed to protect the Government’s interests. The modification must state the percentage and total withhold amount.

    Withholding usually unnecessary with timely releases

    The regulation says there is normally no need to withhold payment when the contractor has a record of timely submission of the release that discharges the Government from all liabilities, obligations, and claims under paragraph (g) of the clause. This ties payment administration to proper closeout documentation.

    Use extras clause for certain fixed-price and transportation contracts

    The Extras clause must be inserted in fixed-price supply contracts, fixed-price service contracts, and transportation contracts when those contract types are contemplated. This clause addresses how extra work or changes are handled under those arrangements.

    Responsibilities

    Contracting Officer

    Select and insert the correct payment clause for the contemplated contract type; modify payment due dates in accordance with agency regulations; include the prompt-payment discount clause where required; include a limitation-on-withholding clause when multiple withholding terms exist; and, for T&M/labor-hour contracts, determine whether withholding is necessary and, if so, issue a unilateral modification stating the percentage and total amount withheld.

    Agency

    Provide regulations and procedures governing how payment due dates are modified and how payment clauses are administered. Agency rules also shape implementation of withholding, prompt-payment practices, and other payment administration details.

    Contractor

    Perform under the applicable payment clause, submit required invoices and releases on time, and comply with any withholding or payment administration terms in the contract. For T&M/labor-hour contracts, timely submission of the release can reduce the likelihood of withholding.

    Practical Implications

    1

    Clause selection is not optional: using the wrong payment clause can create payment disputes or make the contract inconsistent with FAR requirements.

    2

    Contracting officers need to check the contract type before award, because the required clause changes depending on whether the procurement is supply, service, R&D, construction, transportation, personal services, communication services, T&M/labor-hour, or architect-engineer.

    3

    The T&M/labor-hour withholding authority is limited and must be documented carefully; the modification must specify both the percentage and the total dollar cap, and the cap cannot exceed $50,000.

    4

    Prompt submission of releases matters in practice because a contractor with a good record of timely releases should generally not be subject to withholding.

    5

    When more than one clause allows temporary withholding, the contracting officer must avoid stacking withholds in a way that over-penalizes the contractor; the limitation-on-withholding clause is meant to keep withholding reasonable and controlled.

    Official Regulatory Text

    (a) The contracting officer shall insert the following clauses, appropriately modified with respect to payment due dates, in accordance with agency regulations- (1) The clause at 52.232-1 , Payments, in solicitations and contracts when a fixed-price supply contract, a fixed-price service contract, or a contract for nonregulated communication services is contemplated; (2) The clause at 52.232-2 , Payment under Fixed-Price Research and Development Contracts, in solicitations and contracts when a fixed-price research and development contract is contemplated; (3) The clause at 52.232-3 , Payments under Personal Services Contracts, in solicitations and contracts for personal services; (4) The clause at 52.232-4 , Payments under Transportation Contracts and Transportation-Related Services Contracts, in solicitations and contracts for transportation or transportation-related services; (5) The clause at 52.232-5 , Payments under Fixed-Price Construction Contracts, in solicitations and contracts for construction when a fixed-price contract is contemplated; (6) The clause at 52.232-6 , Payments under Communication Service Contracts with Common Carriers, in solicitations and contracts for regulated communication services by common carriers; and (7) The clause at 52.232-7 , Payments under Time-and-Materials and Labor-Hour Contracts, in solicitations and contracts when a time-and-materials or labor-hour contract is contemplated. If the contracting officer determines that it is necessary to withhold payment to protect the Government’s interests, paragraph (a)(7) of the clause permits the contracting officer to unilaterally issue a modification requiring the contractor to withhold 5 percent of amounts due, up to a maximum of $50,000 under the contract. The contracting officer shall ensure that the modification specifies the percentage and total amount of the withhold payment. Normally, there should be no need to withhold payment for a contractor with a record of timely submittal of the release discharging the Government from all liabilities, obligations, and claims, as required by paragraph (g) of the clause. (b) The contracting officer shall insert the following clauses, appropriately modified with respect to payment due dates in accordance with agency regulations: (1) The clause at 52.232-8 , Discounts for Prompt Payment, in solicitations and contracts when a fixed-price supply contract or fixed-price service contract is contemplated. (2) A clause, substantially the same as the clause at 52.232-9 , Limitation on Withholding of Payments, in solicitations and contracts when a supply contract, research and development contract, service contract, time-and-materials contract, or labor-hour contract is contemplated that includes two or more terms authorizing the temporary withholding of amounts otherwise payable to the contractor for supplies delivered or services performed. (c) The contracting officer shall insert the following clauses, appropriately modified with respect to payments due dates in accordance with agency regulations: (1) The clause at 52.232-10 , Payments under Fixed-Price Architect-Engineer Contracts, in fixed-price architect-engineer contracts. (2) The clause at 52.232-11 , Extras, in solicitations and contracts when a fixed-price supply contract, fixed-price service contract, or a transportation contract is contemplated.

    Back to 32.1FAR Navigator
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