What is a clause payment?

Conditional Payment Clause — a part of a contract, such as a construction contract, that conditions payment on some other event. For example, a general contractor may include a clause that conditions its payment of subcontractors on receiving payment from the project owner.

Under what circumstances are progress payments appropriate?

Progress payments must be commensurate with the fair value of work accomplished in accordance with contract requirements. The contracting officer must adjust progress payments when necessary to ensure that the fair value of undelivered work equals or exceeds the amount of unliquidated progress payments.

What FAR clauses Flowdown to subcontractors?

FAR clauses included in Government contracts that prime contractors are required to flow down to their subcontractors in their subcontracts. Agency supplemental regulations also include clauses with flow down requirements. Flow Down Clauses can significantly impact the obligations and risk of performing a subcontract.

What is the difference between fixed-price and firm fixed-price?

A fixed price contract places minimum administrative burden on contracting parties, but subjects a contractor to maximum risk arising from full responsibility for all cost escalations. Firm fixed price contracts are also called firm price contracts.

How do you write payment terms in an agreement?

Best Practices for Writing Invoice Terms and Conditions

  1. Use of simple, polite, and straightforward language.
  2. Mentioning the complete details of the firm and the client.
  3. Complete details of the product or service, including taxes or discounts.
  4. The reference number or invoice number.
  5. Mentioning the payment mode.

What is the difference between progress payments and performance based payments?

Suspension or reduction of traditional progress payments for lack of progress requires a specific action by the government, whereas PBPs are made only when performance actually takes place.

What is lowest price technically acceptable?

(a) The lowest price technically acceptable source selection process is appropriate when best value is expected to result from selection of the technically acceptable proposal with the lowest evaluated price.

What is a Flowdown clause?

Clauses in a subcontract which incorporate the general contract by reference, and which bind the subcontractor to the general contractor to the same extent the general contractor is bound to the owner, are referred to as “flow down” clauses. Their use is widespread, and they are found in most subcontract forms.

Does far apply to subcontractors?

Subcontractor status is important to prime and subcontractors. A federal prime contractor is required to flow-down multiple Federal Acquisition Regulation (“FAR”) clauses to its subcontractors.

When to insert a payment of price clause in construction contracts?

Basic (May 2014) (Current) As prescribed in 32.111 (a) (5), the contracting officer shall insert the clause at 52.232-5, Payments under Fixed-Price Construction Contracts, in solicitations and contracts for construction when a fixed-price contract is contemplated. (a) Payment of price.

What are the payments under fixed price construction contracts?

48 CFR § 52.232-5 – Payments Under Fixed-Price Construction Contracts. 52.232-5 Payments Under Fixed-Price Construction Contracts. (a) Payment of price. The Government shall pay the Contractor the contract price as provided in this contract. (b) Progress payments.

What is a firm fixed price level-of-effort contract?

A firm-fixed-price, level-of-effort term contract is suitable for investigation or study in a specific research and development area. The product of the contract is usually a report showing the results achieved through application of the required level of effort.

When to use firm-fixed-price or fixed price contracts?

The contracting officer shall use firm-fixed-price or fixed-price with economic price adjustment contracts when acquiring commercial products and commercial services, except as provided in 12.207 (b). (b) Time-and-materials contracts and labor-hour contracts are not fixed-price contracts. 16.202 Firm-fixed-price contracts. 16.202-1 Description.