Progress Payments

See the clause at FAR 52.232-16, Progress Payments (APR 2003), paragraph (, "Liquidation Rates." It says that progress payments will be liquidated by deducting from any payment due to the contractor the amount of the unliquidated progress payments or 80 percent of the amount invoiced, "whichever is less," unless the Government chooses to establish an alternate rate. Alternate rates are discussed in FAR 32.503-9, which permits the use of a rate that is lower than 80 percent. It appears that the CO cannot set a higher liquidation rate without contractor consent, but the CO might be able to set a higher liquidation rate at the contractor's request. As a practical matter, Government financial information processing systems may be set up such that it is not possible to set a higher liquidation rate. The best way to get a good answer to your question is to ask the office that processes progress payment requests.

See the clause at FAR 52.232-16, Progress Payments (APR 2003), paragraph (, "Liquidation Rates." It says that progress payments will be liquidated by deducting from any payment due to the contractor the amount of the unliquidated progress payments or 80 percent of the amount invoiced, "whichever is less," unless the Government chooses to establish an alternate rate. Alternate rates are discussed in FAR 32.503-9, which permits the use of a rate that is lower than 80 percent. It appears that the CO cannot set a higher liquidation rate without contractor consent, but the CO might be able to set a higher liquidation rate at the contractor's request. As a practical matter, Government financial information processing systems may be set up such that it is not possible to set a higher liquidation rate. The best way to get a good answer to your question is to ask the office that processes progress payment requests.

Thanks Vern!

I submit monthly progress payments at liquidation rate of 80%. Is the CO able to authorize a higher liquidation rate if I request it?

Why would you want a higher liquidation rate? I could understand a desire for a higher progress payment rate, because it would improve your cash flow, but wouldn't a higher liquidation rate have the opposite effect?

Why would you want a higher liquidation rate? I could understand a desire for a higher progress payment rate, because it would improve your cash flow, but wouldn't a higher liquidation rate have the opposite effect?

You are correct. I meant to say a Higher Progress Payment Rate versus higher liquidation rate.

Thanks.