Defense Acquisition: Guidance Is Needed on Payments for Conditionally Accepted Items
Abstract
When acquirihg goods or services by contract, U.S. government policy is generally to pay only for completed work. The purpose of this policy is to reduce the government's risk of financial exposure in the event a contractor falls to perform. In the case of payments at the time of conditional acceptance, this would generally mean withholdihg sufficient funds to cover the estimated cost and profit associated with completing the work. This policy of only paying for completed work is grounded in the prohibition against advance payments contained in title 31, section 3324 of the United States Code, which states that "a payment under a contract to provide a service or deliver an article for the United States Government may not be more than the value of the service already provided or the article already delivered." This policy is also evident in the provisions governing progress payments, which state that agencies "shall ensure that any payment for work in progress... is commensurate with the work accomplished. ... The statutory exceptions to this policy apply conditions or restrictions to the transaction. For example, a written determination is required from the head of an agency, or his or her designee, that the use of advance payments is in the public interest.
Document Details
- Document Type
- Technical Report
- Publication Date
- Dec 01, 1997
- Accession Number
- ADA332740
Entities
Organizations
- United States Government Accountability Office