FAR and DFARS › FAR Part 32: Contract Financing › Subpart 32.6
FAR 32.601 General.
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 defines what a contract debt is: money the government paid to a contractor that the contractor is not currently entitled to, or money otherwise owed by the contractor under the contract. It also lists many examples of contract debts, such as overpayments, price reductions, and costs from noncompliance or defective performance. Contractors should understand that these amounts can be collected by the government.
Applies to: Government contractors
Key terms: contract debts · price redetermination · incentive type contracts · defective certified cost or pricing data · financing payments
Written by AI from this section's text. A guide, not legal advice: the text below rules.
The text
(a) Contract debts are amounts that—
(1) Have been paid to a contractor to which the contractor is not currently entitled under the terms and conditions of the contract; or
(2) Are otherwise due from the contractor under the terms and conditions of the contract.
(b) Contract debts include, but are not limited to, the following:
(1) Billing and price reductions resulting from contract terms for price redetermination or for determination of prices under incentive type contracts.
(2) Price or cost reductions for defective certified cost or pricing data.
(3) Financing payments determined to be in excess of the contract limitations at 52.232-16(a)(7), Progress Payments, or 52.232-32(d)(2), Performance—Based Payments, or any contract clause for financing of commercial products or commercial services.
(4) Increases to financing payment liquidation rates.
(5) Overpayments disclosed by quarterly statements required under price redetermination or incentive contracts.
(6) Price adjustments resulting from Cost Accounting Standards (CAS) noncompliances or changes in cost accounting practice.
(7) Reinspection costs for nonconforming supplies or services.
(8) Duplicate or erroneous payments.
(9) Damages or excess costs related to defaults in performance.
(10) Breach of contract obligations concerning progress payments, performance-based payments, advance payments, financing of commercial products or commercial services, or Government-furnished property.
(11) Government expense of correcting defects.
(12) Overpayments related to errors in quantity or billing or deficiencies in quality.
(13) Delinquency in contractor payments due under agreements or arrangements for deferral or postponement of collections.
(14) Reimbursement of amounts due under 33.102(b)(3) and 33.104(h)(8).
← 32.600 Scope of subpart. · 32.602 Responsibilities. →
Rule changes for FAR Part 32
- Federal Acquisition Regulation: Inflation Adjustment of Acquisition-Related Thresholds ↗ · final rule 2025-08-27 · effective 2025-10-01
- Federal Acquisition Regulation; Technical Amendments ↗ · final rule 2025-08-07 · effective 2025-08-07
- Federal Acquisition Regulation: Inflation Adjustment of Acquisition-Related Thresholds ↗ · proposed 2024-11-29 · comments due 2025-01-28
Source: eCFR, 48 CFR chapters 1 and 2 (GPO GovInfo bulk data) ↗. Plain words for the terms: glossary.