Yes to both of your questions.
I believe I have answered my own question though. Because the contract contains 252.232-7012 and the contractor is required to submit their requests using the format identified under this clause, the form itself identifies cumulative events completed, total costs incurred to date and cumulative amount of payments previously requested, the calculations allow them to bill for any value of the milestones they were not able to obtain due to lack of incurred costs. So they can continue requesting payments.
I am the ACO on this contract and the contracting officer I was referring to was the PCO. And, the contractor wasn't trying to invoice for payments in excess of their incurred costs.
The contractor wasn't trying to invoice for payments in excess of their incurred costs. They were submitting invoices for payments they had not yet received because they had not yet incurred enough costs to receive the entire milestone payment.