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Significant delays in voucher review/approval


LM_ABITWT

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Moving the goal posts.

I encounter this situation all too frequently where I have worked where the invoice and payment execution process is not particularly efficient:

The lamentable misunderstanding between the contracting side and the financial side concerning proper execution of payments for contractors - from receiving of the invoice to payment and all that goes on in between. Often, as I have seen it, what goes on "in between" is excessively complicated and prone to delay and missteps at each node in what is referred to as a "three way match."

E.g.; 14 day construction progress payment.

1. Proper and fully COR vetted invoice for the work is received at the Designated Billing Office, my desk, as specified on the SF-1442, on Jan 3rd. I approve it and highlight Jan. 3rd as the pay from date.

2. I have the "receiver" input the invoice into the bowels of the financial system with Jan. 3rd and in this case the receiver did not do that until Jan 9th but still utilized Jan. 3rd as the receipt date for the system.

3. The invoice and documentation with a very transparent Jan. 3 date is sent to the final approving office early Jan. 9th. Still time to batch and meet the target pay date of on or about Jan. 17th.

I follow up on the payment by querying the arcane financial system and see the payment was made on Jan. 22 - about five days late, no interest and confirmed by the Contractor. And I also see that the financial final approver had "moved the goal post" on the pay from date from Jan. 3 to Jan. 9. Telephone calls and emails not returned by the finance. Not surprising.

I take the issue up the ladder a bit. And it was revealed to me that "we use the Payment Office as the starting point for determining pay from dates." Further discussions concerning the basics of the payment clause and prompt payment act were met with a blank stare. I am used to this kind of discussion and I doubt Clarence Darrow would be cogent enough.

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H2H, note I said "frequently." The abuse is generally heaped upon smaller contractors who do not have the resources to push back with much power. Unfortunately, sometimes I think the government takes the positions it does with these companies because it knows it can and get away with it because the contractor is afraid if it pushes back, it will not get further awards. I have heard this over and over again from contractors, even when they are being extorted by the government.

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Our OIG wants our CORs to perform a full audit on all invoices before they approve them for payment down to the point of reviewing every time card for signatures. They also want us to make sure every receipt of property has been cosigned by a Government employee and then they brought up the archaic requirement to have boarding passes for every travel. We have been wasting lots of time pushing back by informing them that incurred cost audits catch mis-billings but they are sticking to thier guns and insisting we make SOPs that conform to thier thinking. So much for quick payment. DCAA told me that they have short list of things they quickly check before payment and use the incurred cost audits. They also said they have a constant battle with the DoD OIG about not intensifying pre-payment reviews.

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Guest Vern Edwards

I think there is a lot of confusion about the proper role of a CO(T)R in the contractor payment process. (I'm using CO(T)R to indicate a person from the requiring activity who is monitoring or managing some part of contractor performance.)

Let's first consider fixed-price contracts for supplies and services. The standard non-commercial item payment clause is FAR 52.232-1. It says that the contractor is entitled to payment upon receipt of a proper invoice for supplies delivered and accepted or services rendered and accepted, at the prices stipulated. So a contractor submits an invoice. What must the CO do? Answer four questions:

  1. Have the supplies and services described in the invoice have been received?
  2. Are the deliveries "acceptable" (see FAR 46.101and Subpart 46.5)?
  3. Is the invoice "proper"?
  4. Are the prices invoiced are the prices stipulated in the contract?

If the answer to all of those questions is yes, then the contractor must be paid. All of that must be done within the times prescribed in the contract.

The role of the CO(T)R evolved from the role of inspectors, who primary job was to determine whether the work has been received and whether it is acceptable. Thus, questions 1 and 2 should be answered by the CO(T)R. Should the CO(T)R also answer questions 3 and 4? I don't see why not, unless the CO(T)R's organization does not want her to. The CO cannot force a CO(T)R to do whatever the CO wants him to do if the CO(T)R is in another organization.

Now consider reimbursement of costs under a cost-reimbursement contract pursuant to FAR 52.216-7. First, note that successful performance is not a condition of reimbursement. The contractor gets its allowable costs even if it defaults. See FAR 52.249-6(h). What it might not get is fee. While confirmation of receipt and contract quality assurance are important to sound contract management, they are not essential to determining whether a contractor should be reimbursed. The CO(T)R as inspector has no role. It may be appropriate to require the CO(T)R to review the invoice as part of his or her contract management duties, but such review is not essential to payment and should not be on the critical path to payment. The same is true for T&M contracts.

Most CO(T)Rs are not qualified to determine whether costs are allowable in accordance with FAR 31.2 and should have no role in the process. That's what auditor's do.

In short, allowing a cost-reimbursement or T&M payment voucher to be held up for 60 days because a CO(T)R has not "reviewed" it is unconscionable and, to me, a sign of an incompetent CO and contracting office. I say: Sue their butts off. File claims when they are late. File a claim the very first time it happens. File one for each and every late payment. Demand a timely CO final decision and appeal on a deemed denial basis the very instant he or she is late in issuing it. Make it clear that you will uphold your end of the contract and that they must uphold theirs. If the CO gets irritated, tell her its not personal, its business. Then take the gun AND the cannoli.

Of course, if you are going to do that you had better have your own act together.

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Guest Vern Edwards

Our OIG wants our CORs to perform a full audit on all invoices before they approve them for payment down to the point of reviewing every time card for signatures.

Please cite that IG report.

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Moving the goal posts.

I encounter this situation all too frequently where I have worked where the invoice and payment execution process is not particularly efficient:

The lamentable misunderstanding between the contracting side and the financial side concerning proper execution of payments for contractors - from receiving of the invoice to payment and all that goes on in between. Often, as I have seen it, what goes on "in between" is excessively complicated and prone to delay and missteps at each node in what is referred to as a "three way match."

E.g.; 14 day construction progress payment.

1. Proper and fully COR vetted invoice for the work is received at the Designated Billing Office, my desk, as specified on the SF-1442, on Jan 3rd. I approve it and highlight Jan. 3rd as the pay from date.

2. I have the "receiver" input the invoice into the bowels of the financial system with Jan. 3rd and in this case the receiver did not do that until Jan 9th but still utilized Jan. 3rd as the receipt date for the system.

3. The invoice and documentation with a very transparent Jan. 3 date is sent to the final approving office early Jan. 9th. Still time to batch and meet the target pay date of on or about Jan. 17th.

I follow up on the payment by querying the arcane financial system and see the payment was made on Jan. 22 - about five days late, no interest and confirmed by the Contractor. And I also see that the financial final approver had "moved the goal post" on the pay from date from Jan. 3 to Jan. 9. Telephone calls and emails not returned by the finance. Not surprising.

I take the issue up the ladder a bit. And it was revealed to me that "we use the Payment Office as the starting point for determining pay from dates." Further discussions concerning the basics of the payment clause and prompt payment act were met with a blank stare. I am used to this kind of discussion and I doubt Clarence Darrow would be cogent enough.

The date of receipt of the invoice is NOT the date of receipt at the payment office. The office designated for receipt is the billing office and the payment office should know that. It it is stated in the prompt payment clause and is defined in 32.001. In fact this was discussed in the OMB Circular that directed implementation of the Prompt Payment Act Amendments of 1988, which implemented the 14 day period for construction contract progress payments. I'm out of town this week but I have a 3 inch thick folder that dates back to that period.

I might not be aware of recent changes but I'd be highly surprised if it has been changed.

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