Fast Pay Clause in Government Contracts

Fast Pay

Fast Pay and Accelerated Pay

Prompt Payment Act Interest Rate

The Prompt Payment Act (PPA) offered by SAP includes features to handle the Fast Pay and Accelerated Pay requirements stipulated by Federal legislation.

Use the links below to access detailed information on these features. The documentation includes scenarios, giving examples of how processing in Fast Pay and Accelerated Pay takes place.

Fast Pay

The Fast Pay function applies payment terms of net 15 days to the purchase order items to which it is applied.

Accelerated Pay

With Accelerated Pay, you can choose to pay purchase order items earlier than their usual payment terms, in light of certain specified criteria.

The Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (Councils) have agreed on a final rule amending the Federal Acquisition Regulation (FAR) by revising fast payment procedures. The revision permits, but does not require, fast payment when invoices and / or outer shipping containers are not marked ``Fast Pay'' provided the contract includes the ``Fast Payment Procedure'' clause. As highlighted in the clause, if the clause is in the contract, the invoices will no longer be rejected, as is the current practice. Instead, they will be paid using either fast payment or normal payment procedures. In addition, the revision deletes the requirement for marking invoices ``No Receiving Report Prepared.''

DATES: Effective Date: May 19, 2006.

For clarification of content, contact Mr. Jeremy Olson, Procurement Analyst, at (202) 501-3221. Please cite FAC 2005-09, FAR case 2004-031. For information pertaining to status or publication schedules, contact the FAR Secretariat at (202) 501-4755.


A. Background

    DoD, GSA, and NASA published a proposed rule, FAR case 2004-031, at 70 FR 40279 on July 13, 2005, to obtain comments on a proposal to amend the policies and contract clause regarding Fast Pay procedures. No comments were submitted and the rule was converted to a final rule without change from the proposed rule. FAR 52.213-1, Fast Payment Procedure, is revised to permit acceptance and payment under invoices that are not prominently marked ``FAST PAY.''    This change provides the payment office flexibility to make fast payments when invoices and/or outer shipping containers are not marked ``FAST PAY.'' The change permits, but does not require, fast payment when invoices and/or outer shipping containers are not marked ``FAST PAY'' provided the contract includes the ``Fast Payment Procedure'' clause. However, if the payment office decides to not process invoices as ``FAST PAY'' because the proper markings are not present, the payment date will be the payment date that would have applied had the ``Fast Payment Procedure'' clause not been in the contract. In this manner, an unmarked invoice will not be rejected. This change does not eliminate the requirement for the contractor to annotate an invoice ``FAST PAY;'' the contractor remains at risk that fast payment procedures will not be applied unless the invoice is annotated accordingly.    If a receiving report is not prepared, it is imperative that the invoice includes sufficient information to facilitate follow-up verification that the item was received. The FAR revision does not eliminate that requirement for such information on the invoice. However, the revision does not require the statement ``No Receiving Report Prepared'' on the invoice.    This is not a significant regulatory action and, therefore, was not subject to
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review under Section 6(b) of Executive Order 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

B. Regulatory Flexibility Act

The Department of Defense, the General Services Administration, and
the National Aeronautics and Space Administration certify that this
final rule will not have a significant economic impact on a substantial
number of small entities within the meaning of the Regulatory
Flexibility Act, 5 U.S.C. 601, et seq., because it will have a
beneficial, but small, impact. Under the prior policy and clause, small
businesses which failed to follow the fast payment clause instructions
to mark the invoice ``FAST PAY'' had their invoices rejected, which
means they would not be paid until they sent a corrected invoice. The
clause revisions mean the invoices would not have to be automatically
rejected. No comments were received from small entities or other
members of the public.

C. Paperwork Reduction Act

 The Paperwork Reduction Act does not apply because the changes to
the FAR do not impose information collection requirements that require
the approval of the Office of Management and Budget under 44 U.S.C.
3501, et seq.

List of Subjects in 48 CFR Parts 52

    Government procurement.

    Dated: April 12, 2006.
Gerald Zaffos,
Director,Contract Policy Division.

Therefore, DoD, GSA, and NASA amend 48 CFR part 52 as set forth below:


1. The authority citation for 48 CFR part 52 continues to read as

    Authority: 40 U.S.C. 121(c); 10 U.S.C. chapter 137; and 42
U.S.C. 2473(c).

2. Amend section 52.213-1 by revising the date of the clause and paragraphs (c)(1)(ii), (c)(3), and (e) to read as follows:

52.213-1  Fast Payment Procedure.
    (c) * * *
    (1) * * *
    (ii) Display prominently on the invoice ``FAST PAY.'' Invoices not prominently marked ``FAST PAY'' via manual or electronic means may be accepted by the payment office for fast payment. If the payment office declines to make fast payment, the Contractor shall be paid in accordance with procedures applicable to invoices to which the Fast Payment clause does not apply.

* * * * *
    (3) If this contract, order, or blanket purchase agreement requires the preparation of a receiving report, the Contractor shall either--
    (i) Submit the receiving report on the prescribed form with the invoice; or
    (ii) Include the following information on the invoice:
    (A) Shipment number.
    (B) Mode of shipment.
    (C) At line item level--
    (1) National stock number and/or manufacturer's part number;
    (2) Unit of measure;
    (3) Ship-To Point;
    (4) Mark-For Point, if in the contract; and
    (5) FEDSTRIP/MILSTRIP document number, if in the contract.
* * * * *
    (e) Fast pay container identification.

The Contractor shall mark all outer shipping containers ``FAST PAY.'' When outer shipping containers are not marked ``FAST PAY,'' the payment office may make fast payment. If the payment office declines to make fast payment, the Contractor shall be paid in accordance with procedures applicable to invoices to which the Fast Payment clause does not apply.
    (End of clause)
[FR Doc. 06-3686 Filed 4-18-06; 8:45 am]



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