FAR 52.232-26—Prompt Payment for Fixed-Price Architect-Engineer Contracts.
Plain-English Summary
FAR 52.232-26 sets the payment rules for fixed-price architect-engineer (A-E) contracts and overrides any conflicting payment terms in the contract. It explains when invoice payments are due, how progress payments are timed, what makes an invoice “proper,” what the Government must do if an invoice is defective, and when interest penalties are owed for late payment. The clause also defines when payment is considered made, how weekends and legal holidays affect due dates, and how to compute interest under the Office of Management and Budget’s prompt payment regulations at 5 CFR part 1315. In practice, this clause is important because A-E contractors depend on timely payment for completed work, progress billings, and final invoices, while contracting offices and payment offices must follow strict receipt, acceptance, and documentation rules to avoid automatic interest penalties. It also ties payment timing to Government acceptance or approval, so delays in review, acceptance, or invoice processing can directly affect when money is due. The clause further requires proper invoice content, including contract references, billing details, EFT information, and contact information, so contractors must submit complete and accurate invoices to start the payment clock.
Key Rules
Clause controls payment terms
This clause governs invoice payment timing for fixed-price A-E contracts and takes precedence over any other payment terms in the contract. Payment is considered made on the date of the check or EFT, not when the payment is mailed or initiated.
Payment due date rules
For completed work or services, payment is due on the later of 30 days after the billing office receives a proper invoice or 30 days after Government acceptance. For progress payments, the due date is 30 days after Government approval of the contractor’s estimates.
Receipt date matters
If the billing office does not stamp or annotate the actual receipt date on the invoice, the due date is generally 30 days after the contractor’s invoice date, provided a proper invoice was received and there is no dispute over quantity, quality, or compliance.
Proper invoice requirements
The contractor must submit invoices to the designated billing office and include all required information, such as contractor name and address, invoice date and number, contract number, description of work, payment terms, payee information, invoice contact, TIN if required, EFT information if required, and any other contract-required documentation.
Defective invoices returned quickly
If an invoice is not proper, the billing office must return it within 7 days and explain the defects. Untimely notice of an improper invoice can affect how any interest penalty is calculated.
Automatic interest for late payment
If the Government misses the due date and the required conditions are met, the payment office must pay interest automatically without a contractor request. No late-payment interest is charged if payment is made on the next working day after a due date that falls on a Saturday, Sunday, or legal holiday.
Interest calculation follows OMB rules
Any interest penalty is computed under 5 CFR part 1315. The clause also uses constructive acceptance or approval rules for interest purposes when actual acceptance or approval is delayed, subject to the clause’s exceptions.
Final invoice settlement rule
For a final invoice where payment depends on settlement actions such as release of claims, acceptance is deemed to occur on the effective date of the settlement. This prevents the payment clock from starting before settlement is complete.
Responsibilities
Contractor
Prepare and submit invoices to the designated billing office and ensure each invoice is proper and complete. Include all required billing data, contract references, EFT information if required, and any other contract-specific documentation, and correct any defects identified by the Government.
Designated Billing Office
Receive invoices, annotate the actual receipt date when received, review invoices for propriety, and return defective invoices within 7 days with reasons for rejection. The billing office also helps establish the payment due date by documenting receipt and forwarding proper invoices for processing.
Government Acceptance/Approving Official
Accept completed work or approve progress payment estimates in a timely manner because acceptance or approval starts or affects the payment due date. For interest purposes, actual acceptance or approval dates may control over constructive dates if they occur within the applicable period.
Designated Payment Office
Make payment by the due date and automatically calculate and pay any interest penalty when late payment conditions are met. The payment office must apply the prompt payment rules and use the OMB interest computation method.
Contracting Officer
Ensure the contract includes the clause when required, administer payment-related contract terms, and resolve issues involving final settlement, invoice requirements, and any contract-specific documentation or payment conditions.
Agency
Maintain procedures that support proper invoice handling, EFT payment processing, prompt acceptance/approval, and compliance with prompt payment regulations and any applicable agency billing practices.
Practical Implications
Contractors should make invoices complete the first time; missing contract numbers, EFT data, or required attachments can delay payment and may cause the invoice to be returned as improper.
Government offices should date-stamp or otherwise record invoice receipt immediately, because the receipt date can control the payment clock and affect interest exposure.
Acceptance and invoice review delays can create automatic interest liability, so program offices, CORs, and billing offices need coordinated internal timelines.
For final invoices, contractors should expect payment timing to depend on settlement actions such as release of claims, so unresolved closeout issues can delay the start of the payment period.
Weekend and holiday timing matters: if the due date falls on a nonworking day, payment may be made the next working day without interest, but agencies should still avoid routine last-day processing delays.
Official Regulatory Text
As prescribed in 32.908 (a) , insert the following clause: Prompt Payment for Fixed-Price Architect-Engineer Contracts (Jan 2017) Notwithstanding any other payment terms in this contract, the Government will make invoice payments under the terms and conditions specified in this clause. The Government considers payment as being made on the day a check is dated or the date of an electronic funds transfer. Definitions of pertinent terms are set forth in sections 2.101 , 32.001 , and 32.902 of the Federal Acquisition Regulation. All days referred to in this clause are calendar days, unless otherwise specified. (However, see paragraph (a)(3) of this clause concerning payments due on Saturdays, Sundays, and legal holidays.) (a) Invoice payments- (1) Due date . The due date for making invoice payments is- (i) For work or services completed by the Contractor, the later of the following two events: (A) The 30th day after the designated billing office receives a proper invoice from the Contractor (except as provided in paragraph (a)(1)(iii) of this clause). (B) The 30th day after Government acceptance of the work or services completed by the Contractor. For a final invoice, when the payment amount is subject to contract settlement actions ( e.g., release of claims), acceptance is deemed to occur on the effective date of the settlement. (ii) The due date for progress payments is the 30 thday after Government approval of Contractor estimates of work or services accomplished. (iii) If the designated billing office fails to annotate the invoice or payment request with the actual date of receipt at the time of receipt, the payment due date is the 30 thday after the date of the Contractor’s invoice or payment request, provided the designated billing office receives a proper invoice or payment request and there is no disagreement over quantity, quality, or Contractor compliance with contract requirements. (2) Contractor's invoice . The Contractor shall prepare and submit invoices to the designated billing office specified in the contract. A proper invoice must include the items listed in paragraphs (a)(2)(i) through (a)(2)(x) of this clause. If the invoice does not comply with these requirements, the designated billing office will return it within 7 days after receipt, with the reasons why it is not a proper invoice. When computing any interest penalty owed the Contractor, the Government will take into account if the Government notifies the Contractor of an improper invoice in an untimely manner. (i) Name and address of the Contractor. (ii) Invoice date and invoice number. (The Contractor should date invoices as close as possible to the date of mailing or transmission.) (iii) Contract number or other authorization for work or services performed (including order number and line item number). (iv) Description of work or services performed. (v) Delivery and payment terms ( e.g., discount for prompt payment terms). (vi) Name and address of Contractor official to whom payment is to be sent (must be the same as that in the contract or in a proper notice of assignment). (vii) Name (where practicable), title, phone number, and mailing address of person to notify in the event of a defective invoice. (viii) Taxpayer Identification Number (TIN). The Contractor shall include its TIN on the invoice only if required elsewhere in this contract. (ix) Electronic funds transfer (EFT) banking information. (A) The Contractor shall include EFT banking information on the invoice only if required elsewhere in this contract. (B) If EFT banking information is not required to be on the invoice, in order for the invoice to be a proper invoice, the Contractor shall have submitted correct EFT banking information in accordance with the applicable solicitation provision ( e.g., 52.232-38 , Submission of Electronic Funds Transfer Information with Offer), contract clause ( e.g., 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), or applicable agency procedures. (C) EFT banking information is not required if the Government waived the requirement to pay by EFT. (x) Any other information or documentation required by the contract. (3) Interest penalty . The designated payment office will pay an interest penalty automatically, without request from the Contractor, if payment is not made by the due date and the conditions listed in paragraphs (a)(3)(i) through (a)(3)(iii) of this clause are met, if applicable. However, when the due date falls on a Saturday, Sunday, or legal holiday, the designated payment office may make payment on the following working day without incurring a late payment interest penalty. (i) The designated billing office received a proper invoice. (ii) The Government processed a receiving report or other Government documentation authorizing payment and there was no disagreement over quantity, quality, Contractor compliance with any contract term or condition, or requested progress payment amount. (iii) In the case of a final invoice for any balance of funds due the Contractor for work or services performed, the amount was not subject to further contract settlement actions between the Government and the Contractor. (4) Computing penalty amount . The Government will compute the interest penalty in accordance with the Office of Management and Budget prompt payment regulations at 5 CFR Part 1315 . (i) For the sole purpose of computing an interest penalty that might be due the Contractor, Government acceptance or approval is deemed to occur constructively as shown in paragraphs (a)(4)(i)(A) and (B) of this clause. If actual acceptance or approval occurs within the constructive acceptance or approval period, the Government will base the determination of an interest penalty on the actual date of acceptance or approval. Constructive acceptance or constructive approval requirements do not apply if there is a disagreement over quantity, quality, Contractor compliance with a contract provision, or requested progress payment amounts. These requirements also do not compel Government officials to accept work or services, approve Contractor estimates, perform contract administration functions, or make payment prior to fulfilling their responsibilities. (A) For work or services completed by the Contractor, Government acceptance is deemed to occur constructively on the 7 thday after the Contractor completes the work or services in accordance with the terms and conditions of the contract. (B) For progress payments, Government approval is deemed to occur on the 7th day after the designated billing office receives the Contractor estimates. (ii) The prompt payment regulations at 5 CFR 1315.10(c) do not require the Government to pay interest penalties if payment delays are due to disagreement between the Government and the Contractor over the payment amount or other issues involving contract compliance, or on amounts temporarily withheld or retained in accordance with the terms of the contract. The Government and the Contractor shall resolve claims involving disputes, and any interest that may be payable in accordance with the clause at FAR 52.233-1 , Disputes. (5) Discounts for prompt payment . The designated payment office will pay an interest penalty automatically, without request from the Contractor, if the Government takes a discount for prompt payment improperly. The Government will calculate the interest penalty in accordance with 5 CFR Part 1315 . (6) Additional interest penalty. (i) The designated payment office will pay a penalty amount, calculated in accordance with the prompt payment regulations at 5 CFR Part 1315 , in addition to the interest penalty amount only if- (A) The Government owes an interest penalty of $1 or more; (B) The designated payment office does not pay the interest penalty within 10 days after the date the invoice amount is paid; and (C) The contractor makes a written demand to the designated payment office for additional penalty payment, in accordance with paragraph (a)(6)(ii) of this clause, postmarked not later than 40 days after the date the invoice amount is paid. (ii) (A) The Contractor shall support written demands for additional penalty payments with the following data. The Government will not request any additional data. The Contractor shall- (1) Specifically assert that late payment interest is due under a specific invoice, and request payment of all overdue late payment interest penalty and such additional penalty as may be required; (2) Attach a copy of the invoice on which the unpaid late payment interest is due; and (3) State that payment of the principal has been received, including the date of receipt. (B) If there is no postmark or the postmark is illegible- (1) The designated payment office that receives the demand will annotate it with the date of receipt, provided the demand is received on or before the 40 thday after payment was made; or (2) If the designated payment office fails to make the required annotation, the Government will determine the demand’s validity based on the date the Contractor has placed on the demand, provided such date is no later than the 40 thday after payment was made. (iii) The additional penalty does not apply to payments regulated by other Government regulations ( e.g., payments under utility contracts subject to tariffs and regulation). (b) Contract financing payments . If this contract provides for contract financing, the Government will make contract financing payments in accordance with the applicable contract financing clause. (c) Overpayments . If the Contractor becomes aware of a duplicate contract financing or invoice payment or that the Government has otherwise overpaid on a contract financing or invoice payment, the Contractor shall- (1) Remit the overpayment amount to the payment office cited in the contract along with a description of the overpayment including the- (i) Circumstances of the overpayment ( e.g. , duplicate payment, erroneous payment, liquidation errors, date(s) of overpayment); (ii) Affected contract number and delivery order number if applicable; (iii) Affected line item or subline item, if applicable; and (iv) Contractor point of contact. (2) Provide a copy of the remittance and supporting documentation to the Contracting Officer. (End of clause)