February 4, 1991
Subject: FAR Clause 52,232-12 Advance Payments, Alternate V: Advance Payments Without Special Bank Account (JUL 1990)
In 1985, we proposed to the FAR Secretariat that an alternate in FAR clause 52,232-12, Advance Payments, be added for advance payments without special bank account. The final clause, FAR 52,232-12, Alternate V, Advance Payments Without Special Bank Account (JUL 1990), was published in the June 21, 1990 Federal Register. When 52,232-12 Alternate V is used, it replaces FAR 52,232-12. Complete copies of these clauses are attached.
FAR 32.409-3(e) currently permits federal Contracting Officers to omit the requirement for deposit of advance payments in a special bank account in connection with advance payments to state or local governments or instrumentalities of a state or local government. FAR 32.412(f) authorizes federal Contracting Officers to omit the terms pertaining to a special bank account in accordance with 32,409-3(e) but places the burden on the Contracting Officer to delete the related language from the clause at 52,232-12.
Since deleting the language pertaining to special bank accounts is a complex task, the new Alternate provides the same clause with pertinent language deleted to facilitate use of the option provided by 32,409-3(e). There are no new changes in existing requirements with this Alternate. The only differences between FAR 52.232-12, Advance Payments (APR 1984), and FAR 52.232-12 Alternate V, Advance Payments Without Special Bank Account (JUL 1990), are that all references to special bank accounts are removed from Alternate V. Otherwise, the language in Alternate V is the same as that in the original clause.
In order to obtain advance payments in federal contracts, Contract and Grant Officers should now be finding or requesting FAR 52.232-12 Alternate V in federal contracts entered into since July 23, 1990, the effective date of this clause, unless those contracts are under the Army, Navy or Air Force Advance Payment Pool Agreements. This Alternate should be used in combination with Alternative II for cost-reimbursement contracts and Alternative IV for advance payments at no interest. FAR 32.407(d)(1) states that interest on advance payments need not be charged to nonprofit educational institutions.
Refer: Samuela A. Evans
Subject Index: 06
Organization Index: F-622
cc: Accounting Officers
David F. Mears