48 CFR § 42.709-5 - 42.709-5 Computing interest.
---
identifier: "/us/cfr/t48/s42.709-5"
source: "ecfr"
legal_status: "authoritative_unofficial"
title: "48 CFR § 42.709-5 - 42.709-5 Computing interest."
title_number: 48
title_name: "Federal Acquisition Regulations System"
section_number: "42.709-5"
section_name: "42.709-5 Computing interest."
chapter_number: 1
chapter_name: "FEDERAL ACQUISITION REGULATION"
subchapter_number: "G"
subchapter_name: "CONTRACT MANAGEMENT"
part_number: "42"
part_name: "CONTRACT ADMINISTRATION AND AUDIT SERVICES"
positive_law: false
currency: "2026-04-05"
last_updated: "2026-04-05"
format_version: "1.1.0"
generator: "[email protected]"
authority: "41 U.S.C. 1121(b); 40 U.S.C. 121(c); 10 U.S.C. chapter 4 and 10 U.S.C. chapter 137 legacy provisions (see 10 U.S.C. 3016); and 51 U.S.C. 20113."
regulatory_source: "48 FR 42370, Sept. 19, 1983, unless otherwise noted."
cfr_part: "42"
---
# 42.709-5 42.709-5 Computing interest.
For 42.709-2(a)(1)(ii), compute interest on any paid portion of the disallowed cost as follows:
(a) Consider the overpayment to have occurred, and interest to have begun accumulating, from the midpoint of the contractor's fiscal year. Use an alternate equitable method if the cost was not paid evenly over the fiscal year.
(b) Use the interest rate specified by the Secretary of the Treasury pursuant to Pub. L. 92-41 (85 Stat. 97).
(c) Compute interest from the date of overpayment to the date of the demand letter for payment of the penalty.
(d) Determine the paid portion of the disallowed costs in consultation with the contract auditor.
[60 FR 42659, Aug. 16, 1995. Redesignated and amended at 86 FR 44255, Aug. 11, 2021]