FAR 52.232-34—Payment by Electronic Funds Transfer-Other than System for Award Management.
Plain-English Summary
FAR 52.232-34 requires federal contract payments to be made by electronic funds transfer (EFT) and explains how that payment method works when the contract is not using the System for Award Management (SAM) for EFT data collection. This clause covers the mandatory submission of EFT information, where and when the contractor must provide it, how the Government may pay through ACH or Fedwire, what happens if EFT information is missing or changes, when payment may be suspended, how liability is allocated for uncompleted or erroneous transfers, how EFT interacts with prompt payment rules, and how assignment of claims affects payment instructions. In practice, the clause is designed to ensure the Government can pay contractors efficiently and securely while protecting both sides when banking information is wrong, outdated, or unavailable. It also ties EFT compliance directly to prompt payment timing, so a contractor’s failure to provide accurate banking data can delay payment and affect interest accrual. For contracting officers, the clause requires careful insertion of the correct deadline and designated office for EFT data. For contractors, it creates an affirmative duty to keep banking information current and to understand that incorrect or late EFT data can shift risk and delay payment.
Key Rules
EFT is the default 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 that payment due dates be extended until EFT can be used.
Contractor must submit EFT data
The contractor must provide the banking information needed for EFT to the designated office by the deadline inserted in the contract. If the contract does not specify another office, the payment office receives the EFT information, and the contractor must update the office whenever the information changes.
Multiple contracts need clear applicability
If the contractor gives EFT information that applies to more than one contract, it must clearly state which contracts it covers in a way acceptable to the designated office. EFT data submitted to one designated office applies only to contracts that identify that office as the recipient of EFT information.
Government may use ACH or Fedwire
The Government may make EFT payments through the Automated Clearing House (ACH) network or the Fedwire Transfer System. ACH payments are subject to the rules in 31 CFR Part 210.
Missing or wrong EFT data can suspend payment
The Government is not required to pay until it receives correct EFT information. Until then, invoices and contract financing requests are not proper invoices for prompt payment purposes, although notice and interest-delay rules still apply under the contract’s prompt payment terms.
Changed EFT data has a transition period
If EFT information changes after correct information has been submitted, the Government must begin using the new information no later than 30 days after the designated office receives it, to the extent payment is made by EFT. The contractor may also request that payments be suspended until the new information is implemented.
Risk depends on who caused the error
If the Government uses 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 incorrect, or was changed within 30 days of the EFT instruction being released, the allocation of risk depends on whether the funds are still under Government control.
Prompt payment timing is preserved by settlement date
A payment is considered 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 must preserve EFT compliance
If the contractor assigns contract proceeds, the assignee must provide the required EFT information and be paid by EFT under the clause. EFT information showing a different ultimate recipient is incorrect unless there is a proper assignment of claims acceptable to the Government.
Responsibilities
Contracting Officer
Insert the required EFT submission deadline, identify the designated office for receipt of EFT information, and ensure the contract reflects the correct payment administration point. The contracting officer must also apply the clause consistently with prompt payment and assignment of claims requirements.
Contractor
Provide accurate EFT information by the required deadline, submit updates whenever banking information changes, identify the applicability of EFT data when it covers multiple contracts, and accept the payment consequences if the contractor’s information is wrong or changed too late. The contractor must also coordinate with any assignee so the assignee provides its own EFT information when an assignment of claims exists.
Government Payment Office / Designated Office
Receive and maintain EFT information, use the correct banking data for payment, implement changes within the required timeframe, and handle payment suspension or resumption when EFT information is missing or updated. The office must also recover funds when a transfer is misdirected due to Government error.
Assignee under Assignment of Claims
Provide the EFT information required by the clause and accept payment by EFT as if it were the contractor. The assignee must ensure its banking data is accurate and properly tied to the assignment accepted by the Government.
Agency
Ensure internal payment systems and procedures support EFT, ACH, and Fedwire payments, and align contract administration with Treasury and prompt payment requirements. The agency must also ensure the clause is used only where prescribed.
Practical Implications
A missing or late EFT submission can stop payment entirely, because the Government does not have to pay until it receives correct banking information. Contractors should treat EFT setup as a contract administration priority, not a back-office detail.
If banking information changes, the contractor must notify the designated office promptly; otherwise, a payment can go to the wrong account and the contractor may bear the loss. This is a common source of disputes when companies change banks, merge, or reorganize.
The clause can affect prompt payment interest. An invoice may not count as proper until correct EFT data is on file, and a contractor-requested suspension can extend the payment due date if it would otherwise be late.
Contractors using multiple contracts should be careful to state exactly which contracts a set of EFT instructions applies to. Ambiguous instructions can cause payment delays or misapplication of banking data.
Where an assignment of claims exists, the assignee must be set up correctly for EFT. If the payment instructions point to a different recipient without a valid assignment, the Government can treat the EFT data as incorrect.
Official Regulatory Text
As prescribed in 32.1110 (a)(2) , insert the following clause: Payment by Electronic Funds Transfer-Other than System for Award Management (Jul 2013) (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 payment due dates until such time as the Government makes payment by EFT (but see paragraph (d) of this clause). (b) Mandatory submission of Contractor's EFT information. (1) The Contractor is required to provide the Government with the information required to make payment by EFT (see paragraph (j) of this clause). The Contractor shall provide this information directly to the office designated in this contract to receive that information (hereafter: "designated office") by _______________ [ the Contracting Officer shall insert date, days after award, days before first request, the date specified for receipt of offers if the provision at 52.232-38 is utilized, or "concurrent with first request" as prescribed by the head of the agency; if not prescribed, insert "no later than 15 days prior to submission of the first request for payment" ] . If not otherwise specified in this contract, the payment office is the designated office for receipt of the Contractor’s EFT information. If more than one designated office is named for the contract, the Contractor shall provide a separate notice to each office. In the event that the EFT information changes, the Contractor shall be responsible for providing the updated information to the designated office(s). (2) If the Contractor provides EFT information applicable to multiple contracts, the Contractor shall specifically state the applicability of this EFT information in terms acceptable to the designated office. However, EFT information supplied to a designated office shall be applicable only to contracts that identify that designated office as the office to receive EFT information for that contract. (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. (1) The Government is not required to make any payment under this contract until after receipt, by the designated office, of the correct EFT payment information from the Contractor. Until receipt of the correct EFT information, 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. (2) If the EFT information changes after submission of correct EFT information, the Government shall begin using the changed EFT information no later than 30 days after its receipt by the designated office to the extent payment is made by EFT. However, the Contractor may request that no further payments be made until the updated EFT information is implemented by the payment office. If such suspension would result in a late payment under the prompt payment terms of this contract, the Contractor’s request for suspension shall extend the due date for payment by the number of days of the suspension. (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) shall apply. (f) EFT and prompt payment . 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 provide the EFT information required by paragraph (j) of this clause to the designated office, and shall be paid by EFT in accordance with the terms of this clause. 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 provided 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 in the contract. (j) EFT information . The Contractor shall provide the following information to the designated office. The Contractor may supply this data for this or multiple contracts (see paragraph (b) of this clause). The Contractor shall designate a single financial agent per contract capable of receiving and processing the EFT information using the EFT methods described in paragraph (c) of this clause. (1) The contract number (or other procurement identification number). (2) The Contractor’s name and remittance address, as stated in the contract(s). (3) The signature (manual or electronic, as appropriate), title, and telephone number of the Contractor official authorized to provide this information. (4) The name, address, and 9-digit Routing Transit Number of the Contractor’s financial agent. (5) The Contractor’s account number and the type of account (checking, saving, or lockbox). (6) If applicable, the Fedwire Transfer System telegraphic abbreviation of the Contractor’s financial agent. (7) If applicable, the Contractor shall also provide the name, address, telegraphic abbreviation, and 9-digit Routing Transit Number of the correspondent financial institution receiving the wire transfer payment if the Contractor’s financial agent is not directly on-line to the Fedwire Transfer System; and, therefore, not the receiver of the wire transfer payment. (End of clause)