FAR 52.232-36—Payment by Third Party.
Plain-English Summary
FAR 52.232-36, Payment by Third Party, tells the parties how the Government may pay a contractor through an intermediary instead of paying the contractor directly. It covers the basic agreement to accept third-party payment, the special rule that Governmentwide commercial purchase card payment is not allowed when SAM shows delinquent debt subject to Treasury Offset Program collection, how the contractor must submit payment requests to the third party, when the contractor may have to follow special instructions from the contracting officer, and the requirement that the contractor and third party have an agreement in place before payment is due. It also addresses documentation of charges, the effect on assignment of claims, and how other payment clauses in the contract still control the content and submission of invoices or other payment requests. In practice, this clause is used when an agency wants to route payment through a financial agent, card issuer, or other third party, and it shifts some payment mechanics away from direct Government disbursement. It is important because it changes how payment is requested and processed, and it also removes Prompt Payment Act coverage for amounts paid or due by the third party under this clause. Contractors and contracting officers must make sure the third-party arrangement, invoice instructions, and contract payment clauses all line up before performance and billing begin.
Key Rules
Third-party payment is the default
The contractor agrees to accept payment through a third party instead of directly from the Government, unless the clause specifically provides otherwise. The third party and any applicable Governmentwide commercial purchase card must be identified elsewhere in the contract.
Purchase card barred with delinquent debt
The Governmentwide commercial purchase card may not be used as a payment method while SAM shows the contractor has delinquent debt subject to Treasury Offset Program collection. If SAM later shows the debt is no longer delinquent, the contractor may ask the contracting officer to reauthorize card payment.
Payment requests go to the third party
The contractor must submit payment requests by charging the Government account with the third party, at the time and for the amount due, consistent with the contract’s invoicing, financing, or other payment clauses. If the card is no longer authorized, the contractor must follow the contracting officer’s alternate instructions.
Third-party agreement is required first
Payment is due only when the contractor and third party have an agreement covering how payment requests will be submitted and paid. Until that agreement exists, no payment is due under this clause.
No Prompt Payment Act coverage
Amounts paid or due by the third party are not payments made by the Government and are not subject to the Prompt Payment Act or any related contract implementation. This means the normal Government prompt-payment timing and interest rules do not apply to the third-party payment process.
Documentation must be provided on request
The contractor must provide documentation of each charge against the Government’s account when the contracting officer asks for it. This gives the Government oversight over charges made through the third-party mechanism.
Assignment of claims is prohibited
If any payment is made under this clause, the contractor may not assign contract payments under the contract’s assignment of claims terms or under the Assignment of Claims Act. This prevents a separate assignment structure from applying to payments made through this arrangement.
Other payment clauses still control
The contract’s other payment terms still govern what information and documents must be included with payment requests. If those requirements are not covered in the third-party agreement, the contractor must get instructions from the contracting officer before submitting the request.
Responsibilities
Contractor
Accept payment through the designated third party, submit payment requests in the required manner, ensure a valid third-party agreement is in place before expecting payment, follow alternate instructions if card payment is suspended, provide documentation of charges when requested, and obtain contracting officer instructions when contract payment requirements are not addressed in the third-party agreement.
Contracting Officer
Identify the third party and any applicable purchase card in the contract, determine whether the Governmentwide commercial purchase card is authorized based on SAM delinquent-debt status, notify the contractor when card payment is no longer authorized, provide alternate payment instructions during suspension periods, and give instructions when payment-request content or documents are not covered by the third-party agreement.
Third Party
Accept payment requests and process payment according to the agreement with the contractor and any financial agent, and make payments under the agreed terms and conditions.
Government/Agency
Use the third-party payment mechanism only when properly established, monitor SAM for delinquent debt restrictions, and retain oversight through documentation requests and contract administration.
Contractor’s Financial Agent, if any
Participate in the third-party agreement and support the agreed payment process, if the contractor uses a financial agent.
Practical Implications
This clause changes the billing workflow: contractors do not simply invoice the Government and wait for direct payment; they must follow the third-party process exactly.
A common pitfall is assuming the Governmentwide commercial purchase card can always be used. If SAM shows delinquent debt subject to TOP, card payment is off-limits until the debt status changes and the contracting officer reauthorizes it.
Another frequent issue is mismatch between the contract’s payment clauses and the third-party agreement. If required invoice data or supporting documents are missing from the third-party arrangement, the contractor must get CO instructions before submitting.
Because Prompt Payment Act protections do not apply to third-party payments under this clause, contractors should not rely on Government prompt-payment interest rules for timing disputes.
Contracting officers should verify that the contract clearly identifies the third party and any card, and that the contractor understands when alternate payment instructions apply if card use is suspended.
Official Regulatory Text
As prescribed in 32.1110 (d) , insert the following clause: Payment by Third Party (May 2014) (a) General . (1) Except as provided in paragraph (a)(2) of this clause, the Contractor agrees to accept payments due under this contract, through payment by a third party in lieu of payment directly from the Government, in accordance with the terms of this clause. The third party and, if applicable, the particular Governmentwide commercial purchase card to be used are identified elsewhere in this contract. (2) The Governmentwide commercial purchase card is not authorized as a method of payment during any period the System for Award Management (SAM) indicates that the Contractor has delinquent debt that is subject to collection under the Treasury Offset Program (TOP). Information on TOP is available at http://fms.treas.gov/debt/index.html . If the SAM subsequently indicates that the Contractor no longer has delinquent debt, the Contractor may request the Contracting Officer to authorize payment by Governmentwide commercial purchase card. (b) Contractor payment request . (1) Except as provided in paragraph (b)(2) of this clause, the Contractor shall make payment requests through a charge to the Government account with the third party, at the time and for the amount due in accordance with those clauses of this contract that authorize the Contractor to submit invoices, contract financing requests, other payment requests, or as provided in other clauses providing for payment to the Contractor. (2) When the Contracting Officer has notified the Contractor that the Governmentwide commercial purchase card is no longer an authorized method of payment, the Contractor shall make such payment requests in accordance with instructions provided by the Contracting Officer during the period when the purchase card is not authorized. (c) Payment . The Contractor and the third party shall agree that payments due under this contract shall be made upon submittal of payment requests to the third party in accordance with the terms and conditions of an agreement between the Contractor, the Contractor’s financial agent (if any), and the third party and its agents (if any). No payment shall be due the Contractor until such agreement is made. Payments made or due by the third party under this clause are not payments made by the Government and are not subject to the Prompt Payment Act or any implementation thereof in this contract. (d) Documentation . Documentation of each charge against the Government’s account shall be provided to the Contracting Officer upon request. (e) Assignment of claims . Notwithstanding any other provision of this contract, if any payment is made under this clause, then no payment under this contract shall be assigned under the provisions of the assignment of claims terms of this contract or the Assignment of Claims Act of1940 ( 31 U.S.C.3727 , 41 U.S.C. 6305 ). (f) Other payment terms . The other payment terms of this contract shall govern the content and submission of payment requests. If any clause requires information or documents in or with the payment request, that is not provided in the third party agreement referenced in paragraph (c) of this clause, the Contractor shall obtain instructions from the Contracting Officer before submitting such a payment request. (End of clause)