FAR 32.611—Contract clause.
Plain-English Summary
FAR 32.611 tells contracting officers when to include the FAR clause at 52.232-17, Interest, in solicitations and contracts. The section is about clause insertion, not the substantive interest rules themselves, and it identifies the default rule, the categories of contracts that are exempt from the mandatory insertion requirement, and the limited situations where the clause may still be used even though an exception applies. In practice, this means the contracting officer must decide at solicitation and award whether the contract is one of the listed categories—such as simplified acquisitions, intergovernmental contracts, nonprofit no-profit/no-fee arrangements, paid advertisements, or other agency-authorized exceptions—and then determine whether the Interest clause should be included. The rule matters because the clause governs the Government’s and contractor’s rights and obligations regarding interest, so incorrect inclusion or omission can affect contract administration and payment disputes. It also reinforces that agency procedures may create additional exceptions, so contracting officers must check both the FAR and their agency supplements before finalizing the contract.
Key Rules
Insert Interest clause by default
The contracting officer must include FAR 52.232-17, Interest, in solicitations and contracts unless the contract is expected to fall within one of the listed exceptions. This is the baseline rule and applies broadly to covered procurements.
Simplified acquisitions are excluded
Contracts at or below the simplified acquisition threshold are excepted from the mandatory insertion requirement. For these smaller buys, the clause is not required unless the contracting officer chooses to include it under paragraph (b).
Intergovernmental contracts are excepted
Contracts with Government agencies, State or local governments or instrumentalities, and foreign governments or instrumentalities are listed exceptions. The clause is not required for these categories unless the contracting officer elects to insert it.
Nonprofit no-profit/no-fee contracts are excepted
Contracts with a nonprofit organization that contain no provision for profit or fee are excluded from the mandatory clause requirement. The contracting officer may still insert the clause if appropriate under the circumstances.
Paid advertisements are excepted
Contracts described in FAR subpart 5.5, Paid Advertisements, are exempt from the mandatory insertion rule. These arrangements are treated separately from ordinary supply or service contracts.
Agency-specific exceptions may apply
Any other exceptions authorized under agency procedures may also remove the requirement to insert the clause. Contracting officers must consult applicable agency regulations or procedures to determine whether additional exceptions exist.
Permissive insertion remains available
Even when a contract falls within one of the exception categories, the contracting officer may still insert FAR 52.232-17 if contemplated under paragraph (b). This gives the Government discretion to use the clause where it is useful or appropriate.
Responsibilities
Contracting Officer
Determine whether the contemplated contract falls within any exception category before award or solicitation issuance. Insert FAR 52.232-17 when required, and exercise discretion under paragraph (b) if the clause should still be used for an excepted contract. Also verify any agency-specific exceptions or procedures that may affect clause selection.
Agency
Establish any additional exceptions authorized under agency procedures and ensure contracting personnel know when those exceptions apply. Provide guidance so contracting officers apply the Interest clause consistently across procurements.
Contractor
Review the solicitation and contract to confirm whether FAR 52.232-17 is included and understand that its presence or absence affects interest-related rights and obligations. Raise questions during solicitation review if the clause appears inconsistent with the contract type or stated exception category.
Practical Implications
This section is a clause-selection rule, so the main day-to-day task is making the right inclusion decision before award; mistakes here can create avoidable disputes later.
A common pitfall is assuming the Interest clause is always required or always excluded for small or intergovernmental buys; the rule is more nuanced and depends on the contract category and agency procedures.
Contracting officers should check both the FAR exceptions and any agency supplements before finalizing the solicitation or contract, especially where local procedures create additional exclusions.
Contractors should not assume that omission of the clause means interest can never be charged or that inclusion automatically applies in every situation; the contract type and governing rules still matter.
When in doubt, the safest practice is to document the rationale for including or omitting the clause, especially if the contract falls near an exception boundary or involves an unusual party or funding arrangement.
Official Regulatory Text
(a) The contracting officer shall insert the clause at 52.232-17 , Interest, in solicitations and contracts unless it is contemplated that the contract will be in one or more of the following categories: (1) Contracts at or below the simplified acquisition threshold. (2) Contracts with Government agencies. (3) Contracts with a State or local government or instrumentality. (4) Contracts with a foreign government or instrumentality. (5) Contracts without any provision for profit or fee with a nonprofit organization. (6) Contracts described in subpart 5.5 , Paid Advertisements. (7) Any other exceptions authorized under agency procedures. (b) The contracting officer may insert the FAR clause at 52.232-17 , Interest, in solicitations and contracts when it is contemplated that the contract will be in any of the categories specified in 32.611 (a).