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

FAR 32.503-12 Maximum unliquidated amount.

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 requires the contracting officer to promptly correct any excess of unliquidated progress payments over the contractual limit. It lists specific actions the contracting officer may take and circumstances that commonly cause such excess. Contractors should be aware that if their progress payments exceed the limit, the government may increase the liquidation rate, reduce the progress payment rate, or suspend progress payments.

Applies to: Government contracts involving progress payments

Key terms: unliquidated progress payments · contractual limitation · Progress Payments clause · liquidation rate · progress payment rate

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

The text

(a) The contracting officer shall ensure that any excess of the unliquidated progress payments over the contractual limitation in paragraph (a) of the Progress Payments clause in the contract is promptly corrected through one or more of the following actions:

(1) Increasing the liquidation rate.

(2) Reducing the progress payment rate.

(3) Suspending progress payments.

(b) The excess described in paragraph (a) above is most likely to arise under the following circumstances:

(1) The costs of performance exceed the contract price.

(2) The alternate method of liquidation (see 32.503-9) is used and the actual costs of performance exceed the cost estimates used to establish the liquidation rate.

(3) The rate of progress or the quality of contract performance is unsatisfactory.

(4) The rate of rejections, waste, or spoilage is excessive.

(c) As required, the services of the responsible audit agency or office should be fully utilized, along with the services of qualified cost analysis and engineering personnel.

Sections it refers to

  • 32.503-9 Liquidation rates—alternate method.

← 32.503-11 Adjustments for price reduction. · 32.503-13 [Reserved] →

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 32.503-12 Maximum unliquidated amount · SpendQuery