Request for Clarification of Prior Decision

A clarification was requested of a statement in a GAO decision concerning the limitations placed on progress payments. In response, GAO stated that, according to the prior decision and applicable legislation, progress payments may not exceed the unpaid contract price. The cost to the contractor to complete a contract may be more or less than the contract price, but payments may not exceed the amount obligated in the contract for complete performance. This restriction protects the Government from making any overpayments. Agencies are authorized to retain a portion of the progress payments, reduce them, suspend them, or increase the rate of their liquidation. Reduction or suspension can occur when the contractor has so failed to make progress that the unliquidated progress payments exceed the fair value of the work accomplished on the undelivered portion of the contract.