PRIA Logo™
Title 41, Public ContractsRelease 119-110

§4505 Payments for Commercial Products and Commercial Services

Title 41 › Subtitle I — Federal Procurement Policy › CHAPTER 45 — CONTRACT FINANCING › § 4505

Last updated Sep 22, 2026|Official source

Summary

Agency heads may buy commercial products and services using payment terms like those used in private business, if those terms are customary and are in the government’s best interest. The agency must get adequate security for payments. If that security is a lien, it becomes the top lien right away on the first payment, with no filing or notice needed. Advance payments before any work starts can’t be more than 15% of the contract price. Other normal federal conditions do not have to apply if the agency head decides they would conflict with the commercial terms.

Full Legal Text

Title 41, §4505

Public Contracts, Source: USLM XML via OLRC

(a)Terms and Conditions for Payments.—
Payments under section 4501 of this title for commercial products or commercial services may be made under terms and conditions that the head of the executive agency determines are appropriate or customary in the commercial marketplace and are in the best interests of the Federal Government.
(b)Security for Payments.—
The head of the executive agency shall obtain adequate security for the payments. If the security is in the form of a lien in favor of the Federal Government, the lien is paramount to all other liens and is effective immediately on the first payment, without filing, notice, or other action by the Federal Government.
(c)Limitation on Advance Payments.—
Advance payments made under section 4501 of this title for commercial products or commercial services may include payments, in a total amount not more than 15 percent of the contract price, in advance of any performance of work under the contract.
(d)Nonapplication of Certain Conditions.—
The conditions of section 4503 and 4504 of this title need not be applied if they would be inconsistent, as determined by the head of the executive agency, with commercial terms and conditions pursuant to this section.

Legislative History

Notes & Related Subsidiaries

Historical and Revision Notes

Revised SectionSource (U.S. Code)Source (Statutes at Large) 450541:255(f).June 30, 1949, ch. 288, title III, § 305(f), as added Pub. L. 103–355, title II, § 2051(e), Oct. 13, 1994, 108 Stat. 3304, as amended Pub. L. 104–106, title XLIII, § 4321(a)(4), Feb. 10, 1996, 110 Stat. 671.

Editorial Notes

Amendments

2018—Pub. L. 115–232, § 836(b)(18)(B)(i), substituted “Payments for commercial products and commercial services” for “Payments for commercial items” in section catchline. Subsecs. (a), (c). Pub. L. 115–232, § 836(b)(18)(A), substituted “commercial products or commercial services” for “commercial items”.

Statutory Notes and Related Subsidiaries

Effective Date

of 2018 AmendmentAmendment by Pub. L. 115–232 effective Jan. 1, 2020, subject to a

Savings Provision

, see section 836(h) of Pub. L. 115–232, set out as an

Effective Date

of 2018 Amendment;

Savings Provision

note under section 453b of Title 6, Domestic Security.

Reference

Citations & Metadata

Citation

41 U.S.C. § 4505

Title 41, Public Contracts

Last Updated

Sep 22, 2026

Release point: 119-110