52.232-12 — Advance Payments.

FAR 52.232-12 — Advance Payments.. This clause is part of the Federal Acquisition Regulation and may be included in government contracts as a solicitation provision or contract clause.

52.232-12 Advance Payments. As prescribed in 32.412(a), insert the following clause: Advance Payments (MAY 2001) (a) Requirements for payment. Advance payments will be made under this contract (1) upon submission of properly certified invoices or vouchers by the Contractor, and approval by the administering office, ____ [ Insert the name of the office designated under agency procedures ], or (2) under a letter of credit. The amount of the invoice or voucher submitted plus all advance payments previously approved shall not exceed $___ If a letter of credit is used, the Contractor shall withdraw cash only when needed for disbursements acceptable under this contract and report cash disbursements and balances as required by the administering office. The Contractor shall apply terms similar to this clause to any advance payments to subcontractors. (b) Special account. Until (1) the Contractor has liquidated all advance payments made under the contract and related interest charges and (2) the administering office has approved in writing the release of any funds due and payable to the Contractor, all advance payments and other payments under this contract shall be made by check payable to the Contractor marked for deposit only in the Contractor's special account with the ____ [ insert the name of the financial institution ]. None of the funds in the special account shall be mingled with other funds of the Contractor. Withdrawals from the special account may be made only by check of the Contractor countersigned by the Contracting Officer or a Government countersigning agent designated in writing by the Contracting Officer. (c) Use of funds. The Contractor may withdraw funds from the special account only to pay for properly allocable, allowable, and reasonable costs for direct materials, direct labor, and indirect costs. Other withdrawals require approval in writing by the administering office. Determinations of whether costs are properly allocable, allowable, and reasonable

• The amount of the invoice or voucher submitted plus all advance payments previously approved shall not exceed $___ If a letter of credit is used, the Contractor shall withdraw cash only when needed for disbursements acceptable under this contract and report cash disbursements and balances as required by the administering office.
• The Contractor shall apply terms similar to this clause to any advance payments to subcontractors.
• Until (1) the Contractor has liquidated all advance payments made under the contract and related interest charges and (2) the administering office has approved in writing the release of any funds due and payable to the Contractor, all advance payments and other payments under this contract shall be made by check payable to the Contractor marked for deposit only in the Contractor's special account with the ____ [ insert the name of the financial institution ].
• None of the funds in the special account shall be mingled with other funds of the Contractor.
• Other withdrawals require approval in writing by the administering office.
• Determinations of whether costs are properly allocable, allowable, and reasonable shall be in accordance with generally accepted accounting principles, subject to any applicable subparts of part 31 of the Federal Acquisition Regulation.
• Whenever requested in writing to do so by the administering office, the Contractor shall repay to the Government any part of unliquidated advance payments considered by the administering office to exceed the Contractor's current requirements or the amount specified in paragraph (a) above.
• When the sum of all unliquidated advance payments, unpaid interest charges, and other payments exceed _ percent of the contract price, the Government shall withhold further payments to the Contractor.
• On completion or termination of the contract, the Government shall deduct from the amount due to the Contractor all unliquidated advance payments and all interest charges payable.
• If previous payments to the Contractor exceed the amount due, the excess amount shall be paid to the Government on demand.
• For purposes of this paragraph, the contract price shall be considered to be the stated contract price of $___, less any subsequent price reductions under the contract, plus (1) any price increases resulting from any terms of this contract for price redetermination or escalation, and (2) any other price increases that do not, in the aggregate, exceed $___ [ Insert an amount not higher than 10 percent of the stated contract amount inserted in this paragraph ].
• Any payments withheld under this paragraph shall be applied to reduce the unliquidated advance payments.
• If full liquidation has been made, payments under the contract shall resume.
• (1) The Contractor shall pay interest to the Government on the daily unliquidated advance payments at the daily rate specified in subparagraph (f)(3) below.
• Interest shall be computed at the end of each calendar month for the actual number of days involved.
• For the purpose of computing the interest charge— (i) Advance payments shall be considered as increasing the unliquidated balance as of the date of the advance payment check; (ii) Repayments by Contractor check shall be considered as decreasing the unliquidated balance as of the date on which the check is received by the Government authority designated by the Contracting Officer; and (iii) Liquidations by deductions from Government payments to the Contractor shall be considered as decreasing the unliquidated balance as of the date of the check for the reduced payment.
• (2) Interest charges resulting from the monthly computation shall be deducted from payments, other than advance payments, due the Contractor.
• If the accrued interest exceeds the payment due, any excess interest shall be carried forward and deducted from subsequent payments.
• Interest carried forward shall not be compounded.
• Interest on advance payments shall cease to accrue upon satisfactory completion or termination of the contract for the convenience of the Government.