FAR 52.241-13—Capital Credits.
Plain-English Summary
FAR 52.241-13, Capital Credits, addresses how a government customer is treated when it is a member of a cooperative utility and how any capital credits earned under that cooperative arrangement are to be identified, reported, and paid. The clause ties the Government’s rights to the cooperative’s bylaws, which govern the contractor’s obligation to allocate and pay capital credits and the timing and method of payment. It also requires the contractor to provide periodic written reports of accrued credits by contract number, year, and delivery point, so the contracting officer can track amounts owed. Finally, it prescribes how payment must be made—by check to the named agency, sent to the contracting officer at the designated address unless otherwise directed, and labeled with the relevant contract number and whether the payment is partial or final. In practice, this clause is a bookkeeping and payment-control mechanism that helps ensure the Government receives the same cooperative-member benefits as other members while giving the contracting officer visibility into accrued amounts and payment status.
Key Rules
Government is a cooperative member
The clause states that the Government is a member of the named cooperative and is entitled to capital credits just like any other member. The Government’s rights and the contractor’s obligations are governed by the cooperative’s bylaws, including how credits are earned, when they become payable, and the method of payment.
Bylaws control payment terms
The contractor’s duty to pay capital credits is not created in the abstract by the clause alone; it is tied to the cooperative’s bylaws. Those bylaws must specify both the obligation to pay and the method and timing of payment, so the contracting officer should understand the governing cooperative rules.
Periodic written credit reports required
The contractor must furnish the contracting officer, or the designated representative, a written list of accrued credits on the specified periodic basis inserted in the clause. The report must identify credits by contract number, year, and delivery point, allowing the Government to reconcile amounts across contracts and locations.
Payment must be by check to the agency
Capital credit payments must be made by check payable to the named agency and sent to the contracting officer at the specified address, unless the contracting officer directs otherwise in writing. This gives the Government control over where and how payments are delivered.
Checks must identify contract and payment status
Each check must cite the current or last contract number and state whether it is a partial or final payment for all capital credits accrued. This requirement helps prevent misapplication of funds and clarifies whether additional credits remain outstanding.
Responsibilities
Contracting Officer
Identify the cooperative name, reporting period, agency name, and mailing address in the clause; receive and review periodic credit reports; direct any alternate payment instructions in writing if needed; and ensure payments are properly credited to the correct contract and agency records.
Contractor
Follow the cooperative bylaws governing capital credits; calculate and pay credits owed to the Government; provide written periodic reports of accrued credits by contract number, year, and delivery point; and issue checks with the required payee, address, contract reference, and partial/final notation.
Cooperative
Maintain bylaws that establish the member’s entitlement to capital credits and the method and timing of payment; administer the cooperative accounting that generates accrued credits; and support the contractor’s compliance with the cooperative’s member-credit obligations.
Agency
Receive capital credit payments as the named payee and maintain internal records to track amounts received, outstanding credits, and whether payments are partial or final under the applicable contract.
Practical Implications
This clause is mainly about tracking and remitting money that may accumulate over time, so accurate contract-by-contract and delivery-point accounting is essential.
A common pitfall is failing to match payments to the correct contract or failing to indicate whether a check is partial or final, which can delay posting and reconciliation.
The reporting interval must be filled in correctly; if the period is vague or inconsistent with cooperative accounting cycles, the Government may not receive timely visibility into accrued credits.
Because the clause relies on the cooperative’s bylaws, contracting personnel should confirm those bylaws actually address capital credits and payment timing before relying on the clause.
If the contracting officer wants payments sent somewhere other than the default address, the instruction must be in writing; informal directions can create misdelivery or audit issues.
Official Regulatory Text
As prescribed in 41.501 (d)(7) , insert a clause substantially the same as the following: Capital Credits (Feb 1995) (a) The Government is a member of the ____________ [ insert cooperative name ] , and as any other member, is entitled to capital credits consistent with the bylaws of the cooperative, which states the obligation of the Contractor to pay capital credits and which specifies the method and time of payment. (b) The Contractor shall furnish to the Contracting Officer, or the designated representative of the Contracting Officer, in writing, on an _________ basis [ insert period of time ] a list of accrued credits by contract number, year, and delivery point. (c) Payment of capital credits will be made by check, payable to the _________ [ insert agency name ] , and forwarded to the Contracting Officer at ________________ [ insert agency address ] , unless otherwise directed in writing by the Contracting Officer. Checks shall cite the current or last contract number and indicate whether the check is partial or final payment for all capital credits accrued. (End of clause)