3.6 Fast Payment Procedures & Unpriced Purchase Orders (FAR 13.4 & 13.2)

3.6 Fast Payment Procedures & Unpriced Purchase Orders (FAR 13.4 & 13.2)

Under specific operational circumstances, obtaining firm price quotes or waiting for formal government receipt and inspection prior to payment is impractical or inefficient. FAR Subpart 13.4 (Fast Payment Procedure) and FAR 13.302-2 (Unpriced Purchase Orders) establish specialized simplified acquisition tools designed to maintain acquisition velocity while establishing strict administrative risk controls.

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Fast Payment Procedures (FAR Subpart 13.4)

Fast payment procedures allow the Federal Government to pay commercial contractors upon submission of an invoice based solely on contractor certification that supplies have been shipped, prior to actual government inspection, receipt, and acceptance (FAR 13.401). This procedure reduces payment lead times, lowers government interest liabilities under the Prompt Payment Act, and eliminates administrative paperwork processing for routine supply shipments.

Statutory Ceiling & Monetary Limitations (FAR 13.402(a))

Fast payment procedures are strictly limited to acquisitions of supplies not exceeding $45,000 (unless individual agency FAR supplements authorize higher limits for specialized acquisitions).

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Fast Payment Invoice & Risk Control Safeguards

When fast payment procedures are utilized, the contractor must include explicit legal certifications on its invoice pursuant to FAR 52.213-1:

[Contractor Fast Payment Invoice Certification]
"I certify that on [Date], the contractor delivered the supplies specified in Contract [Number] to [Carrier] for shipment to the destination specified, in accordance with contract terms, and that supplies meet the specified quality standards."

Post-Payment Audit & Overpayment Recovery

Although payment is executed prior to inspection, the Government does not forfeit its legal right to inspect and test supplies upon delivery (FAR 13.403). If receiving activities subsequently inspect the shipment and discover damaged, missing, or non-conforming items:

1. The receiving activity immediately notifies the Contracting Officer;
2. The CO contacts the contractor to demand immediate replacement or repair at contractor expense;
3. If the contractor fails to replace non-conforming goods, the CO initiates administrative set-off against future contractor invoices or issues a formal demand for refund under the recovery provisions of FAR 52.213-1.

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Unpriced Purchase Orders (FAR 13.302-2)

An unpriced purchase order is an order for supplies or services issued without a fixed price established at the time of award, because it is impossible or impractical to obtain firm pricing in advance (FAR 13.302-2).

Operational Examples requiring Unpriced Purchase Orders:

• Urgent emergency repairs to complex machinery or building systems where the exact extent of damage cannot be determined until equipment is dismantled;
• Overhauling specialized military or scientific equipment in remote locations;
• Purchasing custom replacement parts where commercial catalog pricing does not exist.

Mandatory Operational Conditions & Ceilings (FAR 13.302-2(a)):

1. Impracticality: Issuance is authorized only when it is impossible or impractical to obtain pricing prior to order issuance.
2. Monetary Ceiling Price Required: The Contracting Officer MUST establish a firm monetary ceiling price on the unpriced purchase order.
3. SAT Ceiling Limit: The monetary ceiling price MUST NOT exceed the Simplified Acquisition Threshold ($350,000) (or applicable commercial test program limits under FAR 13.5).
4. Full Obligation of Funds: Government funds MUST be obligated up to the full amount of the monetary ceiling price at the time of order issuance.
5. Notice to Supplier: The order must explicitly state that the ceiling price represents the maximum Government liability under the purchase order.

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Mandatory Post-Award Definitization

Unpriced purchase orders are temporary procurement vehicles. Under FAR 13.302-2(b), the Contracting Officer must actively follow up with the contractor to obtain firm pricing and convert the order into a standard Firm-Fixed-Price agreement (definitization) as soon as performance details or cost data become available.