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FAR and DFARS › FAR Part 32: Contract Financing › Subpart 32.10

FAR 32.1010 Risk of loss.

The codified text (eCFR, as of 2026-10-02). Under the Revolutionary FAR Overhaul ↗, agencies follow class deviations with new text for many parts while the formal rules go through the Federal Register: check the solicitation and your contract's clauses, which rule.

In plain English

This section explains who bears the risk of loss for Government property when performance-based payments are used. Generally, the contractor bears that risk unless the Government expressly assumes it, and if a loss occurs on property the contractor is responsible for, the contractor must repay related performance-based payments. If the Government assumed the risk, the contractor does not have to repay, but a serious loss can still affect contract progress and the contractor's ability to certify under the clause.

Applies to: Contractors receiving performance-based payments under FAR 52.232-32

What it requires

  • Repay the Government performance-based payments related to property lost if the contractor bears the risk and the property is needed for performance

Key terms: risk of loss · performance-based payments · Government property · title · normal spoilage

Written by AI from this section's text. A guide, not legal advice: the text below rules.

The text

(a) Under the clause at 52.232-32, Performance-Based Payments, and except for normal spoilage, the contractor bears the risk of loss for Government property, even though title is vested in the Government, unless the Government has expressly assumed this risk. The clauses prescribed in this regulation related to performance-based payments, default, and terminations do not constitute a Government assumption of risk.

(b) If a loss occurs in connection with property for which the contractor bears the risk, and the property is needed for performance, the contractor is obligated to repay the Government the performance-based payments related to the property.

(c) The contractor is not obligated to pay for the loss of property for which the Government has assumed the risk of loss. However, a serious loss may impede the satisfactory progress of contract performance, so that the contracting officer may need to act under paragraph (e)(2) of the Performance-Based Payments clause. In addition, while the contractor is not required to repay previous performance-based payments in the event of a loss for which the Government has assumed the risk, such a loss may prevent the contractor from making the certification required by the Performance-Based Payments clause.

Sections it refers to

← 32.1009 Title. · 32.1100 Scope of subpart. →

Rule changes for FAR Part 32

Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.

FAR 32.1010 Risk of loss · SpendQuery