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FAR and DFARS › FAR Part 32: Contract Financing › Subpart 32.5

FAR 32.501-1 Customary progress payment rates.

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 sets the standard progress payment rates: 80% of total contract costs generally, and 85% for small business concerns. Higher rates are considered unusual and require advance agency approval, and for undefinitized contract actions, the progress payment rate is capped at 80%.

Applies to: Government contractors, especially small businesses, receiving progress payments.

What it requires

  • Contracting officer must consider any rate higher than the customary rates as an unusual progress payment.
  • Contracting officer must not include a higher rate in a contract without advance agency approval.
  • When advance payments and progress payments are authorized under the same contract, contracting officer must not authorize a progress payment rate higher than the customary rate.
  • Contracting officer must not authorize a progress payment rate higher than 80% for undefinitized contract actions.

Key terms: progress payment rate · customary progress payment · small business concerns · unusual progress payment · undefinitized contract actions

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

The text

(a) The customary progress payment rate is 80 percent, applicable to the total costs of performing the contract. The customary rate for contracts with small business concerns is 85 percent.

(b) The contracting officer must—

(1) Consider any rate higher than those permitted in paragraph (a) of this section an unusual progress payment; and

(2) Not include a higher rate in a contract unless advance agency approval is obtained as prescribed in 32.501-2.

(c) When advance payments and progress payments are authorized under the same contract, the contracting officer must not authorize a progress payment rate higher than the customary rate.

(d) In accordance with 10 U.S.C. 3804(b) and 41 U.S.C. 4504(b), the limit for progress payments is 80 percent on work accomplished under undefinitized contract actions. The contracting officer must not authorize a higher rate under unusual progress payments or other customary progress payments for the undefinitized actions.

Sections it refers to

Sections that refer to it

  • 32.110 Payment of subcontractors under cost-reimbursement prime contracts.
  • 32.402 General.
  • 32.502-2 Contract finance office clearance.
  • 32.502-4 Contract clauses.
  • 52.232-16 Progress Payments.

← 32.501 General. · 32.501-2 Unusual progress payments. →

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 32.501-1 Customary progress payment rates · SpendQuery