FAR 52.232-33—Payment by Electronic Funds Transfer-System for Award Management.
Plain-English Summary
FAR 52.232-33 requires federal contract payments to be made by electronic funds transfer (EFT) and ties that payment process to the contractor’s registration and banking information in the System for Award Management (SAM). This clause covers the basic EFT payment requirement, what happens if the Government cannot make an EFT payment, how contractors must keep their EFT data current in SAM, the payment mechanisms the Government may use (ACH or Fedwire), and the consequences of incorrect EFT information. It also addresses how EFT interacts with prompt payment rules, including when a payment is considered timely, when interest penalties may apply, and when an invoice or financing request is not proper because EFT data is wrong. In addition, the clause covers assignment of claims, requiring assignees to register separately in SAM and be paid by EFT, and it limits payment to the contractor or a properly recognized assignee. Finally, it allocates liability for errors caused by the Government, the contractor, or the contractor’s financial agent, and it requires the Government to provide payment information in a usable format when available. In practice, this clause makes SAM accuracy critical: if banking data is wrong or outdated, payment can be delayed, deemed made, or redirected, and prompt payment rights can be affected.
Key Rules
EFT is the default payment method
All Government payments under the contract must be made by EFT unless the Government cannot release one or more payments by EFT. If EFT is unavailable, the contractor must either accept another mutually agreeable payment method or request a payment-date extension.
SAM controls EFT information
The Government pays using the EFT information in SAM, and the contractor is responsible for keeping that information current. If the contractor changes banking information, it must update SAM promptly to avoid payment problems.
Government may use ACH or Fedwire
The Government may make EFT payments through the ACH network or the Fedwire Transfer System. ACH payments are subject to the National Automated Clearing House Association rules and the Federal payment rules in 31 CFR part 210.
Incorrect EFT data can suspend payment
If the EFT information in SAM is incorrect, the Government need not pay until correct information is entered. In that situation, invoices or financing requests are not proper invoices for prompt payment purposes, and prompt payment notice and interest-delay rules still apply.
Liability depends on who caused the error
If the Government used the contractor’s EFT information incorrectly, the Government remains responsible for making the correct payment, paying any prompt payment penalty, and recovering misdirected funds. If the contractor’s information was wrong, or was changed within 30 days before the EFT instruction was released, liability depends on whether the funds are still under Government control.
Timely payment is measured by settlement date
A payment is timely if the EFT instruction released to the Federal Reserve System specifies a settlement date on or before the prompt payment due date, as long as that date is valid under Federal Reserve rules.
Assignment of claims has special EFT rules
If the contractor assigns contract proceeds, the assignee must register separately in SAM and be paid by EFT. Payment to anyone other than the contractor or a properly recognized assignee is not allowed, and incorrect assignee banking data is treated as incorrect EFT information.
Financial agent changes do not shift Government liability
The Government is not liable for errors caused by changes to EFT information made by the contractor’s financial agent. The contractor bears the risk of those changes.
Payment information must be provided
The payment office must forward available payment information suitable for transmission as of the EFT release date. The contractor may request a preferred format or delivery method, but the Government is not required to use any particular one and may use the method most convenient to it.
Responsibilities
Contracting Officer / Government
Ensure the contract uses EFT as the payment method, rely on SAM EFT data for payment, and process payments through ACH or Fedwire as appropriate. If EFT cannot be made, coordinate alternate payment or a due-date extension, apply prompt payment rules correctly, and handle liability for Government-caused EFT errors, including correcting payment and paying any required interest penalties.
Payment Office / Disbursing Office
Release EFT payment instructions using the contractor’s SAM information, determine whether the settlement date meets prompt payment timing, suspend payment when SAM EFT data is incorrect, and provide available payment information in a usable format or by mail if payment is made by check.
Contractor
Maintain accurate and current EFT information in SAM, accept EFT as the normal payment method, choose an alternate payment method or request a due-date extension only when EFT cannot be made, and recover misdirected funds when the contractor’s own incorrect EFT data caused the error. The contractor must also ensure any assigned proceeds comply with the clause.
Assignee under Assignment of Claims
Register separately in SAM, receive payment by EFT in accordance with the clause, and comply with all EFT and payment-information requirements as if the assignee were the contractor.
Contractor’s Financial Agent
Avoid making unauthorized or erroneous changes to EFT information; changes made by the financial agent do not create Government liability, so the contractor must manage and monitor those banking relationships carefully.
Practical Implications
Keep SAM banking data current at all times. A stale account number, routing number, or remittance address can stop payment, delay prompt payment, or cause funds to go to the wrong place.
A contractor cannot assume that submitting an invoice is enough if EFT data is wrong. Incorrect SAM information can make the invoice or financing request not a proper invoice for prompt payment purposes.
The 30-day rule matters. If banking information is changed shortly before the Government releases the EFT instruction, liability may shift to the contractor if the funds are misdirected.
Assignment of claims does not bypass SAM. Assignees must register separately and meet the same EFT requirements, or payment problems can arise.
Contractors should monitor both their SAM record and their financial institution’s changes. Errors made by a financial agent are not the Government’s responsibility, so internal controls are important.
Official Regulatory Text
As prescribed in 32.1110 (a)(1) , insert the following clause: Payment by Electronic Funds Transfer-System for Award Management (Oct 2018) (a) Method of payment. (1) All payments by the Government under this contract shall be made by electronic funds transfer (EFT), except as provided in paragraph (a)(2) of this clause. As used in this clause, the term "EFT" refers to the funds transfer and may also include the payment information transfer. (2) In the event the Government is unable to release one or more payments by EFT, the Contractor agrees to either- (i) Accept payment by check or some other mutually agreeable method of payment; or (ii) Request the Government to extend the payment due date until such time as the Government can make payment by EFT (but see paragraph (d) of this clause). (b) Contractor's EFT information . The Government shall make payment to the Contractor using the EFT information contained in the System for Award Management (SAM). In the event that the EFT information changes, the Contractor shall be responsible for providing the updated information to SAM. (c) Mechanisms for EFT payment . The Government may make payment by EFT through either the Automated Clearing House (ACH) network, subject to the rules of the National Automated Clearing House Association, or the Fedwire Transfer System. The rules governing Federal payments through the ACH are contained in 31 CFR Part 210 . (d) Suspension of payment . If the Contractor’s EFT information in the SAM is incorrect, then the Government need not make payment to the Contractor under this contract until correct EFT information is entered into the SAM; and any invoice or contract financing request shall be deemed not to be a proper invoice for the purpose of prompt payment under this contract. The prompt payment terms of the contract regarding notice of an improper invoice and delays in accrual of interest penalties apply. (e) Liability for uncompleted or erroneous transfers. (1) If an uncompleted or erroneous transfer occurs because the Government used the Contractor’s EFT information incorrectly, the Government remains responsible for- (i) Making a correct payment; (ii) Paying any prompt payment penalty due; and (iii) Recovering any erroneously directed funds. (2) If an uncompleted or erroneous transfer occurs because the Contractor’s EFT information was incorrect, or was revised within 30 days of Government release of the EFT payment transaction instruction to the Federal Reserve System, and- (i) If the funds are no longer under the control of the payment office, the Government is deemed to have made payment and the Contractor is responsible for recovery of any erroneously directed funds; or (ii) If the funds remain under the control of the payment office, the Government shall not make payment, and the provisions of paragraph (d) of this clause shall apply. (f) EFT and prompt paymen t. A payment shall be deemed to have been made in a timely manner in accordance with the prompt payment terms of this contract if, in the EFT payment transaction instruction released to the Federal Reserve System, the date specified for settlement of the payment is on or before the prompt payment due date, provided the specified payment date is a valid date under the rules of the Federal Reserve System. (g) EFT and assignment of claims . If the Contractor assigns the proceeds of this contract as provided for in the assignment of claims terms of this contract, the Contractor shall require as a condition of any such assignment, that the assignee shall register separately in SAM and shall be paid by EFT in accordance with the terms of this clause. Notwithstanding any other requirement of this contract, payment to an ultimate recipient other than the Contractor, or a financial institution properly recognized under an assignment of claims pursuant to subpart 32.8 , is not permitted. In all respects, the requirements of this clause shall apply to the assignee as if it were the Contractor. EFT information that shows the ultimate recipient of the transfer to be other than the Contractor, in the absence of a proper assignment of claims acceptable to the Government, is incorrect EFT information within the meaning of paragraph (d) of this clause. (h) Liability for change of EFT information by financial agent . The Government is not liable for errors resulting from changes to EFT information made by the Contractor’s financial agent. (i) Payment information . The payment or disbursing office shall forward to the Contractor available payment information that is suitable for transmission as of the date of release of the EFT instruction to the Federal Reserve System. The Government may request the Contractor to designate a desired format and method(s) for delivery of payment information from a list of formats and methods the payment office is capable of executing. However, the Government does not guarantee that any particular format or method of delivery is available at any particular payment office and retains the latitude to use the format and delivery method most convenient to the Government. If the Government makes payment by check in accordance with paragraph (a) of this clause, the Government shall mail the payment information to the remittance address contained in SAM. (End of clause)