FAR 33.208—Interest on claims.
Plain-English Summary
FAR 33.208 explains when the Government must pay interest on a contractor’s claim, how that interest is calculated, and how defective certifications affect the start date for interest. It ties interest to the date the contracting officer receives the claim, or to the date payment otherwise would have been due if that is later, and it continues until payment is made. The section also establishes that the interest is simple interest, not compound interest, and that the applicable rate comes from the Treasury Secretary under the Disputes statute, with the rate potentially changing every 6 months during the life of the claim. In addition, it points readers to the Government’s corresponding right to collect interest on its own claims under the contract clause at 52.232-17. Finally, it addresses a special rule for claims with defective certifications, including the October 29, 1992 cutoff and the exception for a later proper certification after an earlier defective one. In practice, this section matters because it affects claim valuation, settlement timing, and the financial consequences of delays or certification errors.
Key Rules
Interest starts on receipt or due date
The Government must pay interest on the amount found due and unpaid from the date the contracting officer receives the claim, if certification is required, or from the date payment otherwise would have been due if that date is later. This prevents interest from running before the claim is properly before the Government or before payment was actually due.
Interest runs until payment
Interest continues to accrue on the unpaid amount until the date the Government actually pays the claim. The rule applies only to the amount found due and unpaid, not necessarily the full amount originally claimed.
Simple interest only
The statute requires simple interest, not compound interest. Interest is calculated using the Treasury rate applicable when the contracting officer receives the claim and then the rate for each successive 6-month period while the claim remains pending.
Treasury-set rates apply
The interest rate is fixed by the Secretary of the Treasury under the Disputes statute. Because the rate can change every 6 months, the applicable rate must be tracked over the life of the claim rather than using a single static rate.
Defective certification rule
For claims with defective certifications, interest generally runs from the date the contracting officer initially receives the claim or October 29, 1992, whichever is later. This limits interest where the claim was submitted with a certification defect.
Proper later certification exception
If a contractor submitted a defective certification but provided a proper certificate before October 29, 1992, interest runs from the date the Government received the proper certificate. This exception preserves earlier interest accrual when the defect was cured before the statutory cutoff.
Government claims are separate
The section notes that the Government may collect interest on its own claims under the clause at 52.232-17. That is a separate mechanism from contractor claim interest and should not be confused with the contractor’s entitlement under this section.
Responsibilities
Contracting Officer
Determine when the claim was received, whether certification was required, whether the certification was defective, and what date interest begins to accrue. The contracting officer must also identify the amount found due and ensure the correct Treasury interest rates are applied through payment.
Contractor
Submit the claim with the required certification when applicable, because certification affects when interest begins and whether the claim is valid for payment purposes. The contractor should also track the amount due, the accrual period, and any certification defects that could delay or reduce interest.
Agency/Payment Office
Calculate and pay the correct amount of interest on the unpaid claim amount through the date of payment, using the applicable Treasury rates for each 6-month period. The agency must also ensure payment records reflect the principal amount and interest separately.
Treasury Secretary
Establish the interest rates applicable under the Disputes statute, including the rate in effect when the claim is received and the rates for each subsequent 6-month period during the pendency of the claim.
Practical Implications
Interest can materially increase the cost of delaying claim resolution, so both sides have an incentive to resolve claims promptly once they are properly submitted.
A defective certification can delay the start of interest, which can significantly reduce the contractor’s recovery if the defect is not corrected quickly.
Because the rate changes every 6 months, parties should not estimate interest using a single annual rate for the entire claim period.
The amount on which interest is paid is the amount found due and unpaid, so partial allowances or offsets can change the interest base.
Contractors should verify whether certification was required under FAR 33.207 and whether the claim was properly received, since those facts control the interest start date.
Official Regulatory Text
(a) The Government shall pay interest on a contractor’s claim on the amount found due and unpaid from the date that- (1) The contracting officer receives the claim (certified if required by 33.207 (a)); or (2) Payment otherwise would be due, if that date is later, until the date of payment. (b) Simple interest on claims shall be paid at the rate, fixed by the Secretary of the Treasury as provided in the Disputes statute, which is applicable to the period during which the contracting officer receives the claim and then at the rate applicable for each 6-month period as fixed by the Treasury Secretary during the pendency of the claim. (See the clause at 52.232-17 for the right of the Government to collect interest on its claims against a contractor.) (c) With regard to claims having defective certifications, interest shall be paid from either the date that the contracting officer initially receives the claim or October 29,1992, whichever is later. However, if a contractor has provided a proper certificate prior to October 29,1992, after submission of a defective certificate, interest shall be paid from the date of receipt by the Government of a proper certificate.