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Clauses · FAR · Payment and financing

FAR 52.232-32 Performance-Based Payments

Does the regulation require it to flow down?

No

The clause itself contains no flow-down paragraph: the APR 2012 text runs (a) through (m) and mentions subcontractors only in the reduction/suspension grounds at (e)(3) and in the certification at (m)(2). Worth flagging: FAR 32.504(f) states that 'the Performance-Based Payments clause at 52.232-32 requires that the subcontract terms include the substance of the Performance-Based Payments clause' — but no such requirement is in 52.232-32. The operative text lives in the PROGRESS PAYMENTS clause, 52.232-16(j)(4), so the requirement only exists when the prime contract carries 52.232-16 and the prime elects to finance the sub with performance-based payments. Absent that, primes carry 52.232-32 in the matrix as a prime-level financing clause; standing alone it reaches the sub only as the template the prime copies when it builds its own milestone schedule. BAE's goods terms show the real-world shape: the supplier must not let cumulative performance-based payments exceed cumulative cost incurred, and must submit supporting information in the DFARS 252.232-7012 format.

A clause can reach your subcontract without a mandate. Once it is in your document, it is a contract term all the same. The missing mandate is a fact about the regulation. It is not a ruling on your order.

Checked against acquisition.gov on 2026-08-05 · edition APR 2012 · base v0.9.3 Read the text ↗

What it makes you produce

5 items for your checklist, slowest first.

  1. A program you have to be running

    You are either running it or you are not, and what the prime asks for is the date it started.

    • Records and controls adequate to administer the clause — paragraph (h) removes entitlement to payment for any period they are found inadequate

      FAR 52.232-32(h)

  2. Something you write

    Days to weeks, and nobody outside your company has to agree to it.

    • The evidence substantiating any event, which the payer may call for at any time

      FAR 52.232-32(c)(1)

  3. Something you fill in and send back2

    Hours, once you know which one is missing.

    • A request for payment listing every completed event in one itemized submission, no more often than monthly

      Owed only where the buyer elects to finance you on completed events rather than on cost or delivery

      FAR 52.232-32(b)

    • A certification signed by an official authorized to bind the company — that the request is true and correct and prepared from your books and records, that payments to your own suppliers and subcontractors are current or will be when due, and that the property carries no undisclosed encumbrance

      FAR 52.232-32(m)

  4. Nothing to send now

    It does not hold the order. It decides what money moves later — what you can claim, what can be claimed from you, and what can be held back — and none of that changes after signature.

    • Title to the property vests in the Government on the date of the first performance-based payment under paragraph (f)(1), risk of loss stays with you until delivery and acceptance under (g), and these payments are contract financing, so paragraph (c)(2) carries no Prompt Payment Act interest

      FAR 52.232-32(f)(1), (g) and (c)(2)

When it is used

FAR 32.1005(a): insert in solicitations that may result in contracts providing for performance-based payments, and in fixed-price contracts under which the Government will provide them. The gates are in FAR 32.1003: the contracting officer and offeror agree on the terms; the contract, order or line item is fixed-price type; and the contract (or, under an indefinite-delivery contract, the individual order) does not provide for progress payments. Performance-based payments and cost-based progress payments cannot coexist on the same contract or order. Not for cost-reimbursement work, and commercial buys are financed under 32.202-1/32.206 instead. Amounts and limits are not in the clause — paragraph (a) says they are whatever the contract's description of the basis for payment specifies.

Read closely

Entitlement runs on the event or performance criterion being accomplished, not on cost incurred. Payments liquidate out of the delivery payments under paragraph (d)(1), and where property is lost the related event is treated as not payable and the money comes back.

The 2 templates that name it, with the line
10BAE Systems Inc. USGOVGOODS — General Clauses for Subcontracts/Purchase Orders for Goods under a U.S. Government Prime ContractBAE Systemsline 624273BAE Systems Inc. USGOVA — FAR/DFARS Flow Down Provisions for Subcontracts/Purchase Orders under a U.S. Government (DoD) Prime ContractBAE Systemsline 390

Source: acquisition.gov, FAR 52.232-32, FAR 32.1003, FAR 32.1005, FAR 32.504(f) and FAR 52.232-16(j)(4) (verified 2026-08-05)

This is research, not legal advice. It states what the regulation says about this clause and cites the paragraph behind it. It does not rule on your order, and it does not rule on whether a prime's markings are correct.