Surety Bond Quarterly - Summer 2017 - 28

Feature

How Can Construction Contractors Expedite

Payment on Federal Contracts?
Part 1 of 2

BY ADRIAN L. BASTIANELLI, III AND LORI ANN LANGE
THE FEDERAL GOVERNMENT is not
known for the speed that it does
anything, including making payment
on a construction contract. So what
can the contractor do to expedite its
payment? The primary key is for the
contractor to understand that it cannot change the system, which is set in
regulatory stone. Instead, the contractor needs to learn how to work within
the system and make the system work
for the contractor. Set out below are
some tips how the contractor can do
this and thereby expedite its payment.
Before the Work Commences
First and foremost, the contractor
needs to read the payment clauses of
its contract. Generally speaking, the
construction contract will contain two
important clauses: (1) the Payments
under Fixed-Price Construction

28

Contracts clause, FAR 52.232-5,
which states that the government will
make progress payments monthly as
the work proceeds, or at more frequent intervals as determined by the
Contracting Officer, on estimates of
work accomplished that meets the
standards of quality established
under the contract, as approved by
the Contracting Officer; and (2) the
Prompt Payment for Construction
Contracts clause, FAR 52.232-27,
which states that the due date for
making progress payments is fourteen days after the designated billing office receives a proper payment
request and the due date for making
final payment is thirty days after the
designated billing office receives a
proper invoice from the contractor
or the government accepts the work,
whichever is later. The contracting

SURETY BOND QUARTERLY | SUMMER 2017

agency may add additional payment
provisions, but these generally concern the type of information required
to be submitted by the contractor in
order to receive payment.
The contractor needs to perform
the ground work even before it
receives the Notice to Proceed from
the government in order to achieve
timely payment once work commences. While regulations govern
all federal agencies, each government
agency and office within each agency
has its own way of doing business.
The contractor needs to understand
how the particular office with which
it has the contract handles payment,
which may not be the contracting
office. Even before the work starts,
it is important for the contractor to
discuss the payment process with the
government representatives, understand what is important to that office,
and reach agreement on an effective
process to expeditiously handle payment applications and payment.
An issue that often plagues the contractor and can slow down reaching
agreement on the pricing of changes
and claims are equipment and overhead rates. The Federal Acquisition
Regulation (FAR) allows the parties
to enter into advance agreements on
equipment and overhead rates that



Table of Contents for the Digital Edition of Surety Bond Quarterly - Summer 2017

NASBP Upcoming Meetings & Events
2017–2018 Executive Committee
From the CEO: Bringing Summer Heat: A Rundown of “Hot” Stuff in the Evolving World Surrounding Surety
Howard Cowan—Building on a Solid Foundation
Mitigating the Hidden Risks in the “New Normal” Construction Environment
Acting Director of the U.S. SBA Office of Surety Guarantees
Drones Take Flight in the Construction Industry
2017 AIA Contract Documents: Selected Key Changes
NASBP to Release Continuing Education Course: Joint Ventures in Construction
How Can Construction Contractors Expedite Payment on Federal Contracts?
Insurtech for Surety: The Future Is Closer than You Think!
Index to Advertisers
Surety Bond Quarterly - Summer 2017 - Intro
Surety Bond Quarterly - Summer 2017 - cover1
Surety Bond Quarterly - Summer 2017 - cover2
Surety Bond Quarterly - Summer 2017 - 3
Surety Bond Quarterly - Summer 2017 - 4
Surety Bond Quarterly - Summer 2017 - 5
Surety Bond Quarterly - Summer 2017 - 6
Surety Bond Quarterly - Summer 2017 - 2017–2018 Executive Committee
Surety Bond Quarterly - Summer 2017 - 8
Surety Bond Quarterly - Summer 2017 - From the CEO: Bringing Summer Heat: A Rundown of “Hot” Stuff in the Evolving World Surrounding Surety
Surety Bond Quarterly - Summer 2017 - Howard Cowan—Building on a Solid Foundation
Surety Bond Quarterly - Summer 2017 - 11
Surety Bond Quarterly - Summer 2017 - Mitigating the Hidden Risks in the “New Normal” Construction Environment
Surety Bond Quarterly - Summer 2017 - 13
Surety Bond Quarterly - Summer 2017 - 14
Surety Bond Quarterly - Summer 2017 - 15
Surety Bond Quarterly - Summer 2017 - 16
Surety Bond Quarterly - Summer 2017 - 17
Surety Bond Quarterly - Summer 2017 - 18
Surety Bond Quarterly - Summer 2017 - 19
Surety Bond Quarterly - Summer 2017 - Acting Director of the U.S. SBA Office of Surety Guarantees
Surety Bond Quarterly - Summer 2017 - 21
Surety Bond Quarterly - Summer 2017 - Drones Take Flight in the Construction Industry
Surety Bond Quarterly - Summer 2017 - 23
Surety Bond Quarterly - Summer 2017 - 2017 AIA Contract Documents: Selected Key Changes
Surety Bond Quarterly - Summer 2017 - 25
Surety Bond Quarterly - Summer 2017 - 26
Surety Bond Quarterly - Summer 2017 - NASBP to Release Continuing Education Course: Joint Ventures in Construction
Surety Bond Quarterly - Summer 2017 - How Can Construction Contractors Expedite Payment on Federal Contracts?
Surety Bond Quarterly - Summer 2017 - 29
Surety Bond Quarterly - Summer 2017 - 30
Surety Bond Quarterly - Summer 2017 - 31
Surety Bond Quarterly - Summer 2017 - Insurtech for Surety: The Future Is Closer than You Think!
Surety Bond Quarterly - Summer 2017 - 33
Surety Bond Quarterly - Summer 2017 - Index to Advertisers
Surety Bond Quarterly - Summer 2017 - cover3
Surety Bond Quarterly - Summer 2017 - cover4
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