Getting Paid on Federal Contracts

How federal payment works, in one paragraph

The government pays against proper invoices submitted electronically to the billing office named in your contract, after the work or delivery has been accepted. For most fixed-price work the Prompt Payment Act sets a 30-day clock and requires the agency to pay interest automatically if it pays late. Cost-reimbursement and time-and-materials contracts are paid through vouchers, which follow their own clauses and end with a completion voucher after the work — and, for cost-type contracts, indirect rates — are settled. Almost every payment problem a small business runs into traces to one of three things: an invoice that is not "proper," a missing acceptance, or a registration and routing mismatch.

The Prompt Payment Act: the 30-day rule and interest

The Prompt Payment Act (31 U.S.C. Chapter 39), implemented at FAR Subpart 32.9, 5 CFR Part 1315, and the clause at FAR 52.232-25 (or the payment terms in FAR 52.212-4 for commercial contracts), controls when the government must pay.

• Standard due date: 30 days. Under FAR 32.904, payment is due on the later of the 30th day after the designated billing office receives a proper invoice, or the 30th day after government acceptance.
• Constructive acceptance: 7 days. For computing interest, acceptance is deemed to occur on the 7th day after you deliver supplies or perform services, unless the contract specifies a longer period (for example, for testing). The government cannot sit on acceptance indefinitely to stop the clock.
• Construction. Progress payments are due 14 days after receipt of a proper payment request; the final payment follows the 30-day rule.
• Perishables. Meat, poultry, and fish: 7 days after delivery; perishable agricultural commodities: 10 days; dairy products: 10 days after receipt of the invoice.

Interest on late payments

If the agency pays after the due date and you submitted a proper invoice, acceptance occurred, and there is no dispute over quantity, quality, or compliance, the payment office must add an interest penalty automatically — you do not have to ask (FAR 32.907). Interest is computed under 5 CFR Part 1315 using the rate the Treasury publishes every six months; for July 1 through December 31, 2026 the Prompt Payment interest rate is 4.75%. Interest compounds in 30-day increments.

If the payment office pays the principal but not the interest owed (and the interest is at least $1), you can demand an additional penalty — but only by a written demand to the payment office postmarked within 40 days after the invoice amount was paid. Interest is not owed on amounts in dispute or on amounts properly withheld under the contract; those are resolved under the Disputes clause.

Small business accelerated payment

Under FAR 32.009-1, agencies must provide accelerated payments to small business contractors, to the fullest extent permitted by law, with a goal of paying within 15 days after receipt of a proper invoice. Primes that receive accelerated payments are expected to pay their small business subcontractors within 15 days of receiving the government's payment (clause 52.232-40). This is a goal, not an entitlement — late-payment interest still runs from the 30-day Prompt Payment due date.

What makes an invoice "proper" (FAR 32.905)

The Prompt Payment clock does not start until the billing office receives a proper invoice. FAR 32.905(b) lists what it must contain:

• Your name and address, exactly as in SAM.gov
• Invoice date and invoice number (use a unique number every time)
• Contract number, order number if any, and the contract line item number (CLIN)
• Description, quantity, unit of measure, unit price, and extended price of what was delivered or performed
• Shipping and payment terms, including shipment number and date where applicable
• Name and address of the official to whom payment is to be sent
• Name, title, and phone number of the person to notify about a defective invoice
• Taxpayer Identification Number, if required
• Electronic funds transfer banking information, if required (usually drawn from your SAM record)
• Any other information or documentation the contract requires, such as timesheets or evidence of shipment

If an invoice is missing something, the billing office must return it within 7 days of receipt with the reasons it is defective. If it returns it late, the number of days available for timely payment is reduced accordingly. Either way, a rejected invoice resets your clock — so the fastest way to get paid is to get it right the first time.

Where you submit: WAWF (PIEE) for DoD, IPP and agency systems for civilian work

Paper invoices are largely gone. Your contract's payment clauses name the system and the routing data you must use.

Payment itself is made by electronic funds transfer to the bank account in your SAM.gov registration (FAR 52.232-33). An expired registration or a changed bank account that was not updated in SAM is a common, entirely avoidable cause of delayed payments. Keep your UEI and CAGE code details consistent across SAM, PIEE, and IPP.

Invoicing on time-and-materials and cost-type contracts

Time-and-materials and labor-hour

Under FAR 52.232-7, you bill hours at the contract's fixed hourly rates plus allowable materials. Vouchers may be submitted not more than once every two weeks, though small businesses may receive more frequent payments. Be ready to substantiate hours with timesheets and to show that each person billed meets the labor category qualifications. The contracting officer may require a 5% withhold of amounts due, capped at $50,000 for the contract, released when you deliver the final release. The completion voucher is due as promptly as practicable after the work is complete and no later than 120 days after completion unless the contracting officer approves a longer period.

Cost-reimbursement vouchers and DCAA

Under the Allowable Cost and Payment clause (FAR 52.216-7), you submit interim public vouchers (traditionally on the SF 1034 format, now electronically) for allowable costs incurred, billed at provisional indirect rates. Large businesses may bill no more than once every two weeks; small businesses may bill more often. On DoD contracts, vouchers route through WAWF, where the Defense Contract Audit Agency (DCAA) reviews them or provisionally approves them for payment and samples them afterward.

Two deadlines in that clause drive final payment:

• Final indirect cost rate proposal — due within 6 months after the end of each of your fiscal years (often called the incurred cost submission).
• Completion voucher — due within 120 days after settlement of the final annual indirect cost rates for all years of a physically complete contract, unless the contracting officer approves a longer period in writing.

If you miss the completion voucher deadline, the contracting officer may determine the amounts due on their own and issue a unilateral modification — which becomes a final decision under the Disputes clause. That is rarely in the contractor's favor. Getting to this stage requires an accounting system that can segregate costs by contract; see DCAA compliance and indirect rate structures.

Final invoices after the contract ends: how long do you have?

This is one of the most-searched questions about federal billing, and the honest answer is that it depends on the contract type and its clauses:

Three practical risks make "later" expensive even where no hard deadline applies:

• Closeout and release of claims. Once you sign a contractor's release (required on cost-type and T&M contracts before final payment), unbilled amounts are generally gone. Reconcile before you sign.
• Cancelled appropriations. Funds on a contract remain available for adjustments for five fiscal years after they expire, after which the account closes (31 U.S.C. 1552). Paying an old invoice after that requires current-year money and is subject to limits, which slows things considerably.
• De-obligation. During closeout, the contracting officer de-obligates excess funds. A late invoice may arrive after the money on the contract has been removed.

If you discover an unbilled amount on a closed contract, contact the contracting officer in writing, explain the amount, and submit the invoice through the contract's system if it is still open to you. If payment is refused, the path is a claim under the Disputes clause. The contract closeout guide covers the rest of the closeout sequence.

Assignment of claims: letting a lender get paid directly

Small businesses financing a contract through a bank or factor often need the government to pay the lender. The Assignment of Claims Act, implemented at FAR Subpart 32.8 and clause 52.232-23, allows it only if:

• The contract provides for payments totaling $1,000 or more;
• The assignment is to a bank, trust company, or other financing institution;
• It covers all unpaid amounts payable under the contract and is not further assigned (with limited exceptions); and
• The assignee files written notice and a true copy of the assignment with the contracting officer, the surety on any bond, and the disbursing officer.

Until the notice is filed and acknowledged, the government keeps paying you. A contract may also prohibit assignment, and a no-setoff commitment is available only in limited circumstances.

Common reasons invoices are rejected

• Wrong or missing contract, order, or CLIN numbers — or billing against a CLIN that is not funded.
• Routing errors in WAWF — a pay office or acceptor DoDAAC that does not match 252.232-7006, or the wrong document type.
• Billing before acceptance, or without the receiving report or supporting documentation the contract requires.
• Prices or rates that do not match the contract — including escalated rates from an option year that has not been exercised.
• Billing outside the period of performance or above the funded amount.
• Duplicate invoice numbers, which systems flag automatically.
• SAM registration issues — an expired record, or a name, address, or bank account that differs from what appears on the invoice.
• Missing labor detail on T&M or cost vouchers — hours by labor category, employee, and period.

Keep a simple invoice log (number, date submitted, amount, status, date paid, interest paid). It makes late payments easy to spot and gives you the record you need if you have to escalate to the contracting officer or pursue a claim. For changes that affect what you can bill, see contract modifications.

Related pages

• Contract management overview
• Contract closeout — final invoice, release of claims, and records
• Federal contract types — which payment clause applies
• Contract modifications — changes that affect billing
• DCAA compliance — accounting systems for cost-type vouchers
• SAM.gov registration — EFT data used for payment

Authoritative sources: FAR Subpart 32.9 — Prompt Payment, FAR 52.216-7, Treasury Prompt Payment, and IPP. This page is general information, not legal advice; your contract's payment clauses control.